Delaware does not tax Social Security benefits
Delaware is one of the states that does not impose income tax on Social Security payments. If you receive Social Security retirement, survivor, or disability benefits, you will not owe Delaware state income tax on those payments, regardless of how much you receive or what other income you have.
This is different from federal income tax. The federal government may tax your Social Security benefits depending on your total income for the year — but Delaware adds no state tax on top of that. If you live in Delaware and receive Social Security, the state will not claim a portion of your monthly benefit check.
Key Takeaways
- Delaware does not tax Social Security retirement, survivor, or disability benefits at the state level.
- Federal income tax may still explore to your Social Security depending on your combined income, even though Delaware does not tax it.
- If you moved to Delaware from another state, you may have owed taxes in your previous state but will not owe them in Delaware going forward.
- You should still file a federal tax return if your combined income exceeds the threshold, even though Delaware will not tax your Social Security.
How federal taxation of Social Security works
While Delaware does not tax Social Security, the federal government may. Whether you owe federal tax on your benefits depends on your combined income — which includes your Social Security, wages, interest, dividends, and certain other sources added together in a specific way.
The IRS uses a formula that counts half of your Social Security benefits plus all your other income. If that total exceeds a certain threshold, you may owe federal income tax on up to 50 percent or 85 percent of your benefits. The threshold amounts are $25,000 for single filers and $32,000 for married couples filing jointly, and these thresholds have not changed since 1984.
Because these thresholds are fixed and do not adjust for inflation, more people owe federal tax on Social Security now than in the past. You can estimate your federal tax liability using the Social Security Administration's worksheet, or ask a tax professional to calculate it for you.
What to do about Delaware state taxes
If you file a Delaware state income tax return, you do not need to report your Social Security benefits on it. You would report only your other income — wages, pensions, interest, dividends, and rental income. Delaware's state income tax rates explore only to non-Social Security income.
You may not need to file a Delaware return at all if your only income is Social Security. Delaware requires a state return only if your income from other sources exceeds the filing threshold, which varies by age and filing status. Contact the Delaware Division of Revenue if you are unsure whether you must file.
If you moved to Delaware from another state
If you recently moved to Delaware from a state that does tax Social Security — such as Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, or Vermont — you will no longer owe that state's tax on your benefits. Your Social Security income is taxed only by the state where you live on December 31 of the tax year.
You may still owe tax to your previous state for the months you lived there before moving. Contact that state's tax authority to find out whether you need to file a part-year return. Once you establish Delaware residency, your Social Security is not subject to state income tax.
Other Delaware taxes that may affect you
Delaware does not have a sales tax or property tax, which means your overall tax burden as a retiree may be lower than in other states. However, Delaware does tax income from pensions, 401(k) withdrawals, and IRA distributions — so if you have retirement income beyond Social Security, you will owe Delaware state tax on those amounts.
Delaware also taxes interest and dividend income. If you have savings accounts, bonds, stocks, or other investments that generate earnings, you will report that income on your Delaware return. The state offers a pension income deduction for certain types of retirement income, so review the rules or speak with a tax professional about what applies to your situation.
How to file your federal return when you receive Social Security
The Social Security Administration sends you a Form SSA-1099 each January showing how much you received in the previous year. You use this form to complete your federal tax return. The IRS provides a worksheet to help you determine whether any of your Social Security is taxable.
If you use tax software or work with a tax professional, provide them with your SSA-1099 along with documentation of your other income — W-2s, 1099s, bank statements showing interest, and any other earnings. They will calculate your combined income and determine your federal tax liability. Filing by the April important date is important even if you do not owe tax, because you may be due a refund.
Frequently Asked Questions
Will I owe Delaware tax if I move there after I start receiving Social Security?
No. Delaware does not tax Social Security benefits regardless of when you start receiving them or when you move to the state. You will owe no Delaware state income tax on your Social Security payments.
Do I have to file a Delaware state return if my only income is Social Security?
No. If Social Security is your only income, you do not need to file a Delaware state return. You only file if your income from other sources — wages, pensions, interest, or dividends — exceeds Delaware's filing threshold for your age and status.
Can I deduct my Social Security from my federal taxes?
No. Social Security benefits are not deductible. However, you may not owe federal tax on them if your combined income is below the threshold. Use the IRS worksheet to calculate whether any of your benefits are taxable at the federal level.
What if I worked in another state before moving to Delaware — do I owe that state tax on my Social Security?
No. Social Security is taxed only by your state of residence on December 31 of the tax year. Once you move to Delaware, no other state can tax your Social Security. You may owe a part-year return to your previous state for the months you lived there, but only on income earned during that period.
Does Delaware tax my pension or IRA withdrawals?
Yes. While Delaware does not tax Social Security, it does tax income from pensions, 401(k)s, IRAs, and other retirement accounts. You will report these on your Delaware return and pay state income tax on them. Some types of pension income may may have access to for a deduction — ask a tax professional about your specific situation.