Does Delaware Tax Retirement Income?

No. Delaware does not tax Social Security benefits.

Social Security benefits are not taxed by Delaware.

The Delaware answer is separate from the federal one. Depending on combined income, up to 85% of Social Security benefits can be taxable on the federal return regardless of what Delaware does, so the state rule changes the state line only. Our guide to states that do not tax Social Security shows where Delaware sits among the states that still tax benefits.

Partly. Delaware taxes some pension income, subject to an exclusion or age rule.

Public and private pension income is generally taxable after the applicable pension exclusion.

The pension exclusion is up to $12,500 for taxpayers age 60 or older. A smaller limit applies below age 60, and eligible U.S. government pension income has additional rules.

Public and private pensions, annuities, and retirement-plan distributions do not always get the same treatment. The pension comparison lists which states exempt pensions broadly, partly, or only for certain plans.

Partly. Delaware taxes some traditional 401(k) and IRA withdrawals, subject to an exclusion or age rule.

Eligible IRA and 401(k) distributions can be included in the pension exclusion, with the remaining taxable amount subject to Delaware rates.

Two timing points matter in Delaware. A Roth conversion is taxable in the year it is done, and Delaware starts from federal adjusted gross income, so a large conversion can land in a year when the state exclusion does not cover it. Qualified Roth withdrawals later are generally not taxable at either level. Required minimum distributions follow the same Delaware rules as any other traditional-account withdrawal.

Every state page on this site runs the same retiree profile so the states can be compared: $30,000 of Social Security, $40,000 withdrawn from a traditional 401(k), and a $20,000 private pension, $90,000 in total.

A 68-year-old with $30,000 of Social Security, $40,000 from a 401(k), and a $20,000 pension excludes Social Security and can apply a $12,500 pension exclusion to the other $60,000. About $47,500 remains before other Delaware deductions.

Delaware starts from federal AGI of about $85,500, removes the $25,500 of federally taxable Social Security, and applies the single $12,500 pension exclusion against the $60,000 of 401(k) and pension income, leaving $47,500. The standard deduction and the age-65 addition, roughly $5,750 combined, bring taxable income to about $41,750. Delaware brackets climb from 0% on the first $2,000 to 5.55% between $25,000 and $60,000, so the tax is roughly $1,900 before personal credits and roughly $1,700 after them. Contrast: a $150,000 lump-sum IRA withdrawal in the same year gets no additional exclusion, fills the rest of the 5.55% bracket, and puts about $131,000 into the 6.6% bracket, adding roughly $9,700 of Delaware tax. On a joint return each spouse 60 or older has a separate $12,500 exclusion, but only against that spouse's own pension and retirement income.

The same $90,000 profile looks different a state line away. The rows below come from the reviewed 51-state table; each state name links to its own guide.

• Pennsylvania: treats Social Security as exempt, pensions as exempt, and 401(k) and IRA withdrawals as exempt, with a top rate of 3.07% and eligible retirement distributions are exempt.
• New Jersey: treats Social Security as exempt, pensions as partially taxed, and 401(k) and IRA withdrawals as partially taxed, with a top rate of 10.75% and large age-62 exclusion subject to income limits.
• Florida: has no individual income tax at all.

Delaware can look like a no-sales-tax retirement haven, but pension and account withdrawals can still reach the 6.6% top state rate after the exclusion is used.

Military retirement: Military pension income qualifies for the same $12,500 exclusion as other pensions, and unlike other pensions it gets the full $12,500 even before age 60. Under SB 219, signed in August 2026, the military exclusion for retirees 60 and older rises to $15,000 for 2027, $20,000 for 2028, and $25,000 for 2029 and later, subject to a three- or five-year Delaware residency requirement. There is no unlimited exemption. See the military retirement tax map for every state's treatment.

Estate and inheritance tax: Delaware has no separate estate or inheritance tax.

Selling a home or investments in Delaware: retirement-income rules do not cover capital gains. See Delaware capital gains tax before selling appreciated property or a brokerage position in the year you move or retire.

• Confirm the exclusion you are claiming. The pension exclusion is up to $12,500 for taxpayers age 60 or older. A smaller limit applies below age 60, and eligible U.S. government pension income has additional rules.
• Part-year residents. If you moved into or out of Delaware during the year, retirement income is generally allocated to the period of residency, and the former state may still tax distributions received before the move. Document the move date, the new domicile, and where each distribution was received.
• Withholding and estimates. Pension and IRA custodians often withhold federal tax but not Delaware tax. If Delaware taxes any part of your retirement income, check whether quarterly estimated payments are needed to avoid an underpayment penalty.
• Federal side. The federal return has its own rules: up to 85% of Social Security can be taxable, the temporary $6,000 federal senior deduction is available for 2025 through 2028 subject to income limits, and Roth conversions are taxed in the conversion year. State exemptions do not change any of that.
• Large one-time distributions. Coordinate the pension exclusion across all eligible streams rather than assuming each account receives its own $12,500 exclusion.

Comparing states before a move? Use the retirement taxes by state table and the moving states tax guide, and read retirement tax planning for how distributions, conversions, and a move are sequenced together.