Delaware has no statewide sales tax, making it one of only five states without one

Delaware does not charge a sales tax on most retail purchases. This applies to clothing, groceries, electronics, and other goods you buy in stores or online from Delaware retailers. The state has chosen not to impose a sales tax, which is unusual — most states rely on sales tax as a major source of revenue.

However, Delaware does tax some specific services and transactions. Understanding which purchases are taxed and which are not helps you budget accurately, especially if you live near the border with states that do charge sales tax.

Key Takeaways

  • Delaware charges no sales tax on tangible goods like clothing, food, furniture, or electronics purchased in the state.
  • Delaware does tax hotel rooms, car rentals, and certain services, so these purchases will include a tax charge.
  • If you buy something online from a Delaware retailer and have it shipped to another state, you typically owe that state's sales tax, not Delaware's.
  • Delaware residents who shop in neighboring states like Pennsylvania or Maryland will pay those states' sales taxes on purchases made there.

What Delaware does not tax

Retail purchases of physical goods are not subject to sales tax in Delaware. This includes clothing of any price, groceries, household items, furniture, appliances, cars, and most other tangible products. If you buy a shirt, a gallon of milk, or a laptop in a Delaware store, you pay only the listed price with no sales tax added at checkout.

This applies whether you shop in person or order from a Delaware-based online retailer for delivery to a Delaware address. The lack of sales tax on goods is the main reason some people choose to shop in Delaware, particularly those living in nearby states where sales taxes are higher.

What Delaware does tax

Delaware taxes certain services and temporary use of goods. Hotel and motel rooms are subject to a 8% tax. Car rentals are taxed at 8%. Restaurant meals are not taxed, but prepared food sold at a deli counter or takeout window may be subject to tax depending on how it is sold.

Telecommunications services, including cell phone plans and internet service, are taxed. Parking fees, amusement park admissions, and certain other services also carry a tax. If you are planning a trip to Delaware or renting a car there, budget for these taxes on your hotel and rental costs.

How Delaware's tax structure affects online shopping

If you order something online from a Delaware retailer and have it shipped to your home in Delaware, you pay no sales tax. If you order from a Delaware retailer but have it shipped to Pennsylvania, Maryland, or another state, you owe that state's sales tax, not Delaware's. The tax obligation follows the destination of the shipment, not the location of the seller.

If you order from a retailer in another state and have it shipped to Delaware, you typically owe no sales tax because Delaware has no sales tax to collect. This is different from ordering from an out-of-state retailer and having it shipped to a state with sales tax — in that case, you usually owe the destination state's tax.

Shopping near state borders

If you live in Pennsylvania, New Jersey, or Maryland and shop in Delaware, you benefit from the lack of sales tax. However, if you buy something in Delaware and bring it back to your home state, you may technically owe your home state's use tax on that purchase. In practice, use tax is rarely enforced for individual shoppers, but it is the law in most states.

Conversely, if you live in Delaware and shop in a neighboring state, you pay that state's sales tax. Pennsylvania charges 6%, Maryland charges 6%, and New Jersey charges 6.625%. These differences add up on large purchases, which is why some Delaware residents travel to shop at home.

Why Delaware has no sales tax

Delaware's lack of sales tax is a historical choice that has shaped the state's economy. The state relies instead on corporate income tax, personal income tax, and other revenue sources. Many large corporations are incorporated in Delaware because of its business-friendly tax laws, which generates significant state revenue without a sales tax on consumers.

Only four other states have no statewide sales tax: Montana, New Hampshire, Oregon, and Alaska. Each has made different choices about which services or goods to tax instead. Understanding Delaware's approach helps explain why prices at checkout are lower here than in surrounding states.

Frequently Asked Questions

Do I pay sales tax on groceries in Delaware?

No. Groceries and food items are not taxed in Delaware. This includes fresh produce, meat, dairy, bread, and other items you buy at a supermarket. Prepared foods like deli items or restaurant meals may have different rules depending on how they are sold.

Is there sales tax on clothes in Delaware?

No. Clothing of any kind and any price is not subject to sales tax in Delaware. This applies to shoes, accessories, and all apparel. Many people from neighboring states travel to Delaware specifically to buy clothes without paying sales tax.

What about sales tax on cars in Delaware?

Delaware does not charge sales tax on vehicle purchases. However, you will owe registration and title fees to the state. If you buy a car in Delaware but register it in another state, you may owe that state's sales tax or use tax on the purchase.

Do I owe Delaware sales tax if I order something online?

Only if the retailer ships it to a Delaware address. If you order from a Delaware retailer and have it shipped out of state, you owe the sales tax of the destination state, not Delaware's. Delaware has no sales tax to charge.

Can I avoid sales tax by buying in Delaware and bringing it home?

You can make the purchase without paying sales tax, but your home state may require you to pay use tax on items you bring back. Use tax is meant to equal what you would have paid in sales tax. It is rarely enforced for individual shoppers, but it is technically owed in most states.