Delaware has no sales tax on most purchases

Delaware is one of five U.S. states with no statewide sales tax. When you buy clothing, groceries, electronics, or most other items in Delaware, you do not pay a sales tax at checkout. This applies whether you shop in a physical store or buy from a Delaware-based online retailer.

However, Delaware does tax certain services and specific goods. Understanding which purchases are taxed and which are not helps you budget accurately and know what to expect when you pay.

Key Takeaways

  • Delaware charges no sales tax on tangible goods like clothing, food, and household items, but does tax some services.
  • Hotel rooms, rental cars, and prepared food are subject to Delaware's 8% to 8.5% tax rate depending on the county.
  • Amusement admissions, parking, and certain professional services are taxed in Delaware even though most retail purchases are not.
  • If you buy something online from out of state, you may owe sales tax to that state, not to Delaware.
  • Tax rates vary by county because Delaware allows counties to add a local tax on top of the state rate.

What Delaware taxes instead of retail goods

Since Delaware does not tax most purchases, the state collects revenue through taxes on services and specific categories. The main taxed categories are hotel and motel rooms, rental vehicles, prepared food and beverages, amusement admissions (movies, concerts, sporting events), and parking. Professional services like haircuts, legal information, and accounting also carry a tax in Delaware.

The state tax rate on these services is 8%, but your actual rate depends on which county you are in. New Castle County adds an additional 0.5% local tax, bringing the total to 8.5%. Kent and Sussex counties keep the rate at 8%. When you check into a hotel or rent a car, the tax will appear on your bill based on the county where the service is provided.

How county taxes affect what you pay

Delaware allows its three counties—New Castle, Kent, and Sussex—to impose their own local tax on top of the state rate. New Castle County, which includes Wilmington and the northern part of the state, charges an extra 0.5% on taxable services. This means a hotel stay in Wilmington costs 8.5% tax, while the same hotel in Dover (Kent County) or Dover (Sussex County) costs 8%.

The county tax applies only to the same categories the state taxes: hotels, rental cars, prepared food, amusement, and parking. It does not create a sales tax on retail goods. If you are comparing prices between counties, remember that the difference is small but real for larger purchases like multi-day hotel stays or car rentals.

Prepared food and restaurant meals

Food you buy at a grocery store to cook at home is not taxed in Delaware. However, food prepared and ready to eat—including restaurant meals, takeout, and food from a deli counter—is subject to the 8% state tax (or 8.5% in New Castle County). This includes pizza, sandwiches, hot foods from a grocery store hot bar, and beverages like coffee or soda purchased at a restaurant or café.

The distinction matters because the same grocery store may sell both taxed and untaxed items. A rotisserie chicken you buy ready-to-eat is taxed; a raw chicken you cook yourself is not. When you order food for delivery or pickup, the tax is included in your total before you pay.

Online and out-of-state purchases

If you buy something online from a retailer based outside Delaware, you typically do not owe Delaware sales tax because Delaware has no sales tax to collect. However, you may owe sales tax to the state where the retailer is located or where the item is shipped. This depends on that state's laws and whether the retailer has a physical presence there.

Many states now require online retailers to collect sales tax even if the retailer has no store in that state. If you live in Delaware and order from an out-of-state retailer, check the retailer's tax policy at checkout. The tax, if any, will be based on the destination state's rules, not Delaware's.

Hotel stays and rental cars

When you book a hotel room in Delaware, the 8% state tax (or 8.5% in New Castle County) applies to your nightly rate. The tax is calculated on the room price before any resort fees or parking charges. Some hotels add resort fees separately, and those fees may or may not be taxed depending on how the hotel structures them—ask when you book if you want the exact total.

Car rentals follow the same rule: 8% state tax applies to the daily or weekly rental rate in Kent and Sussex counties, 8.5% in New Castle County. The tax is added at the rental counter and appears on your final bill. If you rent a car in one county and return it in another, the tax rate of the county where you pick up the car applies.

Amusement, parking, and other services

Admission to movies, concerts, sporting events, and other amusements is taxed at 8% (or 8.5% in New Castle County). Parking fees—whether at a parking garage, lot, or meter—are also taxed. If you pay for parking at an event venue, the tax is included in what you pay.

Personal services like haircuts, manicures, and massage therapy are taxed in Delaware. Professional services including accounting, legal information, and consulting are taxed as well. When you pay for these services, the tax will be added to your bill. The tax rate depends on the county where the service is provided.

Frequently Asked Questions

Do I pay sales tax on clothes and shoes in Delaware?

No. Delaware does not tax clothing or shoes, regardless of price. This applies to all apparel, including accessories like belts and hats. You pay only the price marked on the tag with no tax added at checkout.

What about groceries and food I cook at home?

Groceries are not taxed in Delaware. This includes raw meat, produce, dairy, bread, and packaged foods you buy to prepare at home. The tax applies only to prepared and ready-to-eat food sold by restaurants, delis, and food service businesses.

If I buy something online from a Delaware company, do I owe Delaware sales tax?

No, because Delaware has no sales tax. However, if the Delaware company ships to another state, that state may require the company to collect sales tax for that state. The tax you owe depends on the destination state's rules, not Delaware's.

Why does New Castle County have a higher tax rate than other counties?

Delaware allows each county to set its own local tax rate on top of the state rate. New Castle County chose to add 0.5%, making its total 8.5%, while Kent and Sussex counties did not add a local tax. Counties use this revenue for local services and infrastructure.

Do I have to pay tax on a haircut or massage in Delaware?

Yes. Personal and professional services are taxed in Delaware at 8% (or 8.5% in New Castle County). The tax is added to your bill when you pay for the service.