Delaware does not tax Social Security benefits

Delaware is one of the states that does not impose income tax on Social Security retirement, survivor, or disability benefits. If Social Security is your only income source, you owe no state income tax to Delaware on those payments. This applies whether you receive benefits as a retiree, a surviving spouse or child, or someone with a disability.

However, the federal government may still tax your Social Security benefits depending on your total income. Delaware's exemption covers only state tax, not federal tax. You may also owe Delaware income tax on other types of income—such as wages, pensions, or investment earnings—even if your Social Security is untouched.

Key Takeaways

  • Delaware exempts all Social Security benefits from state income tax, regardless of how much you receive or your age.
  • The federal government may still tax your Social Security if your combined income exceeds certain thresholds, even though Delaware does not.
  • If you have income from pensions, wages, or investments in addition to Social Security, you may owe Delaware state income tax on those other sources.
  • You do not need to report Social Security income on your Delaware tax return, but you must report all other income you received during the year.

How federal taxation of Social Security works

The federal government uses a formula based on your combined income to determine whether your Social Security is taxable. Combined income means your adjusted gross income plus nontaxable interest plus half of your Social Security benefits. If that total exceeds $25,000 for a single filer or $32,000 for married filing jointly, a portion of your benefits becomes subject to federal income tax.

The amount taxed can range from 0 to 85 percent of your benefits, depending on how far your combined income exceeds the threshold. This is a federal rule that applies everywhere in the country, including Delaware. You calculate this on your federal Form 1040 when you file with the IRS, not on your state return.

What income counts toward Delaware state tax

Delaware taxes income from wages, self-employment, pensions, interest, dividends, capital gains, and rental property. If you receive a pension from a former employer or government job, that pension is taxable in Delaware. Withdrawals from traditional IRAs and 401(k) accounts are also taxable. Only Social Security is carved out and exempted.

The state uses a graduated tax rate system. For the 2024 tax year, Delaware's rates range from 2.2 percent on the lowest income bracket to 5.75 percent on the highest. Your rate depends on your filing status and total taxable income. If Social Security is your only income, you fall into the zero percent bracket for state purposes.

Filing requirements if you receive Social Security in Delaware

You must file a Delaware state tax return if your income from all sources (excluding Social Security) exceeds the filing threshold for your age and filing status. For 2024, a single person under 65 must file if they had more than $12,500 in income. A single person 65 or older must file if they had more than $14,500. These thresholds are higher for married filers and vary by year.

When you file, you report all income except Social Security. You do not need to list Social Security on the Delaware return at all. If you also file a federal return—which you likely will if you have other income—you will report your Social Security there and calculate whether any portion is federally taxable.

Pension income and other retirement sources in Delaware

Delaware offers a pension exclusion for certain types of retirement income, but it does not explore to all pensions equally. Military pensions, federal employee pensions, and some other government pensions may may have access to for partial or full exclusion from Delaware state tax, depending on when you earned them and your age. Private employer pensions do not receive this treatment.

If you receive income from an IRA, 401(k), or similar retirement account, that income is fully taxable in Delaware. The state does not offer an age-based exclusion for retirement account withdrawals the way some states do. You should review your specific pension or retirement account with a tax professional to understand what portion, if any, may be excluded.

How to report Social Security on your Delaware return

You do not report Social Security income anywhere on your Delaware Form 1040 (the state income tax return). The form asks for wages, interest, dividends, business income, and other sources—but Social Security has its own line that is straightforward left blank or marked as zero. This makes filing simpler if Social Security is your primary income.

If you receive a Form SSA-1099 from Social Security, keep it for your records, but do not transfer that amount to your Delaware return. You will use the SSA-1099 only when filing your federal return with the IRS. Delaware's tax software and paper forms are designed to skip Social Security entirely.

Planning for taxes when you have multiple income sources

If you have both Social Security and other income—such as part-time wages, a pension, or investment earnings—you need to calculate your total tax burden across both federal and state levels. Delaware will tax the non-Social Security income, and the federal government may tax a portion of your Social Security based on your combined income threshold.

Some retirees reduce their federal tax burden by managing the timing of withdrawals from retirement accounts or by claiming certain deductions. Others work with a tax professional to understand whether their situation calls for estimated quarterly payments. Because the rules differ between federal and state tax, and because your Social Security threshold interacts with your other income, it is worth reviewing your situation with a tax preparer if your income is complex.

Frequently Asked Questions

Do I have to file a Delaware tax return if I only receive Social Security?

No. If Social Security is your only income, you have no Delaware state tax filing requirement and owe no state income tax. You may still need to file a federal return depending on the amount of your Social Security and whether you have other income sources.

Will I owe federal tax on my Social Security even though Delaware does not tax it?

Possibly. Federal taxation of Social Security depends on your combined income (adjusted gross income plus nontaxable interest plus half your benefits). If that total exceeds $25,000 for single filers or $32,000 for married filing jointly, up to 85 percent of your benefits may be federally taxable. Delaware's exemption does not affect this federal calculation.

Is my military pension taxed in Delaware?

Military pensions may may have access to for a partial or full exclusion from Delaware state tax depending on your age and when you earned the pension. You should contact the Delaware Division of Revenue or consult a tax professional to determine whether your specific military pension qualifies for the exclusion.

What if I work part-time and also receive Social Security?

Your wages are fully taxable in Delaware. You report your W-2 wages on your state return and pay Delaware income tax on them. Your Social Security remains exempt from state tax. The federal government may tax a portion of your Social Security if your combined income (wages plus half your benefits) exceeds the federal threshold.

Do I need to report my Social Security to Delaware when I start receiving it?

No. You do not need to notify Delaware that you are receiving Social Security. The state does not track Social Security recipients separately. You straightforward exclude it from your income when you file your state tax return each year.