Does Delaware have a state income tax?


Quick Answer

Delaware has a state income tax with a top rate of 6.6 percent, as of 2015. It is a progressive system that has six different tax brackets, as reported by the Tax Foundation.

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Full Answer

Individuals who earn less than $2,000 per year do not have to pay any income tax. After that point, people earning income must pay tax. The six brackets range between 2.2 percent of income at the lowest bracket to 6.6 percent at the highest bracket. Some cities also have local income taxes, which increase the tax burden of state residents.

Compared to other state income tax rates, Delaware ranks at number 17. Delaware residents pay lower tax rates than neighboring New Jersey residents do, where the top tax rate is 8.97 percent. However, the top rate is higher than Maryland, where income over $250,001 is taxed at 5.75 percent.

Although Delaware's income tax bracket system is progressive, the overall tax situation in the state is regressive. The lowest 20 percent of income groups paid 5.7 percent of their total family income in taxes in 2013, whereas the top 1 percent of tax payers only paid 4.2 percent, according to the Delaware Chapter of Americans for Democratic Action. This is due to other taxes such as property taxes.

Delaware also has a corporate income tax. This is charged as a flat rate of 8.7 percent, as noted by the Tax Foundation.

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