Delaware state tax basis is the Federal Adjusted Gross Income (AGI). Delaware allows either Joint/Combined filing. Under the combined tax return system, the income of each spouse is taxed separately. For two income families, this system allows each spouse to benefit from the low tax rates at the beginning of the tax rate schedule. Taxpayer can calculate the state taxes based on joint and combined and choose to file return which is advantageous to them.

Interest/Divident Income: Interest and Divident income from U.S. government bonds are exempt from State Taxes.

Rent Income: Same as federal.

Capital Gain: The Capital Gains are treated similar to Federal Taxes for State Taxes.

Unemployment Income: Same as federal.

Social Security Benefits: All social security income is exempt from state taxes.

State Bond Interest: Taxable except Delaware obligations.

Health Savings Accounts: Same as federal.

Disability: The disability income is exclused if an individual is disabled or over 60 years old and their earned income and AGI are below certain thresholds.

Lottery: Delaware winnings are exempt from state taxes.

Federal Income Tax: Not deductible.

Other Taxes: State tax treatment of fiduciary income from estates and trusts. Exempt income from approved employer-provided transportation programs. Exclude certain distributions from retirement plans used for higher education expenses. Deduct amount claimed for federal work opportunity credit.

Check other state tax links below.