Does Delaware Tax Social Security or Pensions?

Delaware does not tax Social Security benefits at all, and it lets retirees 60 and older exclude up to $12,500 of other retirement income per person. The Delaware Code now ties that 60-and-older exclusion to how long you have been legally domiciled in the state, so anyone who moved to Delaware to retire should confirm eligibility with the Division of Revenue before counting on it.1 A Delaware taxpayer under 60 gets the greater of two amounts: up to $2,000 of pension income from an employer, the federal government, or the state, or up to $12,500 of a United States military pension.1 So a military retiree under 60 is not held to the $2,000 figure; the larger military branch applies instead.1 For taxpayers 60 and older, Delaware's exclusion reaches pensions, IRA and 401(k) withdrawals, and even certain interest, dividends, and capital gains.1 Retirement income above the exclusion is taxed at Delaware's graduated rates, which reach 6.6 percent.1 The per-person structure, the age-60 threshold, and the domicile condition decide how much you actually keep.

This guide breaks down how Social Security, pensions, IRA and 401(k) income, and the senior exclusion each work, and where the age and per-person rules matter most.

In This Guide

• Delaware Retirement Income Tax at a Glance
• Delaware Retirement Income Tax: How It Works
• Social Security
• The Pension Exclusion
• Pensions, IRAs, and 401(k)s
• Putting It Together
• Frequently Asked Questions
• Next Steps

Delaware Retirement Income Tax at a Glance

Delaware handles retirement income in two moves: Social Security is fully out, and a single Pension Exclusion covers most other retirement income. The size of that exclusion turns on your age, and it applies per person rather than per household. At 60 and older, the Delaware Code now also conditions it on how long you have been legally domiciled in the state.1 The table below lays out each source.

Delaware's graduated income tax runs from 2.2 percent to 5.55 percent on taxable income under $60,000, and reaches 6.6 percent on taxable income of $60,000 or more.1 Taxable income of exactly $60,000 sits in the 6.6 percent band. Whatever retirement income falls outside the exclusion above is taxed under that schedule.

There is also a second, separate break tied to age 65 rather than age 60. Under 30 Del. C. § 1108(b), $2,500 is added to the standard deduction in each of four circumstances, and they stack: for a taxpayer who has attained the age of 65 before the close of the taxable year; for a taxpayer who is blind at the close of the taxable year; and, where a joint return is not made, for a spouse who has attained 65 or who is blind, provided that spouse has no gross income and is not another taxpayer's dependent.1 Because the statute adds $2,500 in each circumstance that applies, a Delawarean who is 66 and blind adds $5,000, not $2,500.1 That addition is not part of the Pension Exclusion and does not come out of the $12,500 cap; it is a larger deduction, claimed on the return alongside whatever the exclusion shelters. The base standard-deduction amounts it is added to are set on the current Delaware resident return and its instructions, so take those figures from the Delaware Division of Revenue rather than from this page.

Delaware Retirement Income Tax: How It Works

Delaware builds its system around one broad Pension Exclusion rather than separate rules for each income type. The Delaware Division of Revenue fully exempts Social Security and Railroad Retirement benefits, then lets eligible taxpayers exclude a set amount of other retirement income.1

The exclusion is age-gated, and the under-60 rule has two branches. Taxpayers 60 and older can exclude up to $12,500 per person of eligible retirement income. A taxpayer under 60 takes the greater of up to $2,000 received as a pension from an employer, the United States, the state of Delaware, or one of its subdivisions, or up to $12,500 received as a United States military pension.1 Those are the amounts 30 Del. C. § 1106(b)(3)b sets for taxable years beginning on January 1, 2022, and ending before January 1, 2027.1 The line falls on 60 itself: a taxpayer who is exactly 60 is under the 60-and-older rule, with the full $12,500 against eligible retirement income rather than the narrower under-60 branches. Delaware sets the exclusion as a cap by age rather than an amount that shrinks as income rises, so a high-income retiree 60 or older who meets the domicile condition still reaches the full $12,500.1 The limits are the domicile condition, the breadth of what counts, and the per-person structure, which together decide how much of your income the exclusion actually shelters.

Social Security

Delaware does not tax Social Security or Railroad Retirement benefits.1 Delaware states that exemption with no income test attached, so a retiree with a large pension keeps the same full Social Security exemption as one living on benefits alone.

This is the cleanest piece of the Delaware retirement income tax. Social Security comes out under its own exclusion rather than out of the Pension Exclusion, so your benefits do not count against the $12,500 cap that shelters your pension or account income.1

The Pension Exclusion

The Pension Exclusion is the centerpiece. For taxpayers 60 and older, it shelters up to $12,500 per person of eligible retirement income.1 What matters most is its reach: for taxpayers 60 and older, Delaware defines eligible retirement income broadly to include pensions, qualified plan distributions from IRA, 401(k), and Keogh accounts, government deferred compensation, and certain interest, dividends, capital gains, and net rental income from real property.1 So a retiree without a traditional pension can still use the full amount against investment and account income.

Two conditions limit that "certain" investment income. First, Delaware states this broad definition of eligible retirement income for taxpayers 60 and older; it does not spell out the same reach for the under-60 exclusion, which the statute writes in terms of pension income rather than eligible retirement income, so a taxpayer under 60 should confirm with the Division of Revenue what counts before planning around it. Second, whatever qualifies still shares the single $12,500 per-person cap rather than adding to it, so interest and dividends compete with pension and account income for the same shelter.1 If most of your income is investment income, confirm which of yours counts against the Delaware Division of Revenue's definition of eligible retirement income on the personal income tax FAQs before you assume the full exclusion applies.

For taxpayers under 60, Delaware writes the exclusion as two branches and lets you take whichever is greater.1 The first branch shelters up to $2,000 received as a pension from an employer, the United States, the state of Delaware, or one of its subdivisions. The second shelters up to $12,500 received as a United States military pension.1 Either way it is a ceiling on what you actually received, not a flat amount handed to everyone.

That second branch is the one most people miss, and it changes the number more than sixfold. Under the branch that covers taxable years ending before January 1, 2027, a 55-year-old retired from a civilian employer shelters no more than $2,000 of pension income. A 55-year-old drawing a military pension shelters up to $12,500, the same dollar ceiling that applies at 60 and older. Delaware's statute at 30 Del. C. § 1106 defines a United States military pension as one received for service in the Army, Navy, Air Force, Marine Corps, Space Force, Coast Guard, the commissioned corps of the National Oceanic and Atmospheric Administration, the commissioned corps of the Public Health Service, or the National Guard.1 If you are under 60 and drawing one of those pensions, confirm the military branch with the Delaware Division of Revenue or your tax preparer before you file against the $2,000 figure.

Because the exclusion is per person, a married couple both 60 or older can exclude up to $25,000 combined, provided each has eligible income in their own name and each meets the domicile condition below.1

The domicile condition at 60 and older

As the Delaware Code is published in October 2026, 30 Del. C. § 1106(b)(3)f.4 says a person who is age 60 or older is eligible for the exclusion only if one of two things applies. A person who is age 60 or older and legally domiciled in Delaware before January 1, 2027, is legally domiciled in Delaware for at least 3 years. A person who is age 60 or older and legally domiciled in Delaware on or after January 1, 2027, is legally domiciled in Delaware for at least 5 years.1 For this purpose, a person is legally domiciled in Delaware if the person is a resident individual under 30 Del. C. § 1103.1

If you moved to Delaware to retire, this is the condition to check first. The Code text does not attach a tax year to it, and the Division of Revenue's FAQ, read in October 2026, still describes the $12,500 exclusion without mentioning it.1 Before you count on the exclusion, ask the Delaware Division of Revenue whether the domicile condition applies to the return you are filing and how your years of domicile are counted.

Military pensions from 2027

The same section raises the limit for a United States military pension once the current branch ends. The limit is $15,000 for the taxable year beginning on January 1, 2027, $20,000 for the taxable year beginning on January 1, 2028, and $25,000 for taxable years beginning on or after January 1, 2029.1 In each of those years, a person under 60 takes the greater of up to $2,000 in pensions or the military pension limit, and a person 60 or older takes the greater of up to $12,500 in pensions or eligible retirement income or the military pension limit.1 On a joint return, the dollar limits apply individually to each spouse who is receiving a United States military pension, and the total subtraction may not exceed twice the relevant limit.1

Pensions, IRAs, and 401(k)s

All of these flow through the same Pension Exclusion. For a taxpayer 60 or older, a pension, a traditional IRA withdrawal, and a 401(k) distribution are each eligible retirement income that can be sheltered up to the per-person cap.1 For a retiree living entirely on 401(k) and IRA draws, that means the same $12,500 of shelter a pensioner gets.

The limit is the cap itself. The exclusion is shared across all eligible sources for a given person, so $10,000 from a pension plus $8,000 from an IRA does not get two exclusions; a 60-or-older taxpayer excludes $12,500 of the $18,000 combined, leaving $5,500 taxable.1 Above the cap, income is taxed at Delaware's graduated rates.

If you are weighing how much to draw from these accounts to cover care, retirement accounts for care walks through the tradeoffs.

Putting It Together

The practical takeaway is that the value of Delaware's exclusion depends on your age, on how long you have been domiciled in Delaware, and on whether both spouses have eligible income. Social Security comes out cleanly, the Pension Exclusion shelters a large slice of everything else once you turn 60 and meet the domicile condition, and only the remainder hits the graduated schedule.

Picture a married couple, both 65 and both meeting the domicile condition, with $36,000 in combined Social Security and $50,000 in additional retirement income, split as a $30,000 pension for one spouse and a $20,000 IRA draw for the other. The Social Security is fully exempt. Each spouse applies their own $12,500 exclusion, so $25,000 of the $50,000 comes out, leaving $25,000 exposed to the graduated schedule before any other deductions or credits. Because that exposed amount sits under $60,000, it falls in the 2.2 to 5.55 percent range rather than the 6.6 percent top rate.1 The figures here are hypothetical and shown only to illustrate how the per-person exclusion works; they are not a real case and not a prediction of your own outcome.

You take the exclusion on your Delaware resident personal income tax return. Check the current return and its instructions, and the Division of Revenue's own personal income tax FAQs, for the exclusion line and the eligible-income rules before you file.

This is general information rather than personalized tax advice. For taxable years ending before January 1, 2027, the Code sets the amounts at $12,500 per person at 60 and older, and under 60 at the greater of $2,000 of employer, federal, or state pension income or $12,500 of a United States military pension.1 What is worth confirming with the Delaware Division of Revenue or a tax professional is whether the domicile condition applies to your return and which of your investment income counts as eligible retirement income, before you plan withdrawals around it. If retirement savings are part of how you will fund care, building a senior care funding plan is a useful next step.

Next Steps

If you are retired in Delaware, the math starts with your age and the Pension Exclusion. Everything else follows from how much eligible income clears the per-person cap.

• Confirm the Social Security exemption applies; it carries no income limit.
• Check your age against 60 so you know which rule you are under; age 60 itself puts you in the $12,500 band.1
• If you are 60 or older, check how long you have been domiciled in Delaware: the Code now requires at least 3 years for a domicile that began before January 1, 2027, and at least 5 years for one that began on or after that date. Ask the Division of Revenue whether that applies to your return.1
• If you are under 60, check both branches and take the greater: up to $2,000 of employer, federal, or state pension income, or up to $12,500 of a United States military pension. The military limit rises to $15,000 for the taxable year beginning on January 1, 2027.1
• Run all eligible income through the exclusion once you are 60 or older and meet the domicile condition, including pensions, IRA, and 401(k) draws.
• At 65, or if you are blind, claim the standard-deduction addition too: Delaware adds $2,500 to the standard deduction in each of four circumstances (the taxpayer is 65, the taxpayer is blind, or, where no joint return is made, a spouse with no gross income who is 65 or blind), and they stack, separately from the exclusion.1
• If your income is very low, check 30 Del. C. § 1106(b)(2): it subtracts $2,000 ($4,000 for qualifying spouses on a joint return) for a person with a total and permanent disability or over 60, on the statute's earned-income and adjusted-gross-income tests.1
• Title accounts so both spouses qualify if you want the full combined exclusion.

If you are mapping out how to pay for care, how to pay for senior care covers the main routes.

Learn More

Find personalized help making sense of the Delaware retirement income tax at brevy.com.

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.