You may be surprised to learn how popular Delaware is with older adults.Besides the financial benefits, such as low
taxes and a relatively low cost of living, Delaware also has amazing beaches and easy access to cities like Philadelphia, New York City, and Washington DC.
Is Delaware Tax-Friendly for Retirees?
Delaware is one of the most tax-friendly states for retirees, partly because it’s one of only five states with no sales tax. But also because Delaware has no tax on Social Security or Railroad Retirement benefits, no inheritance tax, low property taxes, and retirees age 60 and older may exclude up to $12,500 of retirement income from a qualified retirement plan.
These tax benefits make Delaware an attractive option for retirees looking to minimize their tax burden and make the most of their retirement income.
Is Pennsylvania or Delaware Better for Retirees?
Delaware and Pennsylvania both offer advantages for retirees. Delaware is known for its friendly tax policies, coastal location, and access to metropolitan areas. On the other hand, Pennsylvania does not tax distributions from pensions, IRAs, 401ks, or Social Security, and it offers a flat income tax rate of 3.07%.
Both states have unique benefits, and deciding between the two will depend on factors like income sources, lifestyle preferences, and proximity to family and amenities.
What are the Pros and Cons of Retiring in Delaware?
In addition to Delaware’s tax-friendliness toward retirees, the First State also has affordable housing options compared to nearby states like New Jersey and Maryland. Retiring in Delaware also provides you with easy access to the Atlantic Ocean beaches as well as cities like Manhattan and D.C.
However, expenses like healthcare and groceries can be higher than the national average, which you may not have to worry about if you move into a retirement community.
Should You Consider Moving to a Retirement Community in Delaware?
Besides the Delaware retirement tax benefits listed above, what other reasons are there to retire in Delaware? For one, the state has 28 miles of beaches, as well as a vibrant restaurant scene and art scene. Plus, due to its popularity among the retirement set, Delaware is home to some of the most beautiful, amenities-filled retirement communities in the country.
If you’d like to see the costs of retiring in a Delaware retirement community, choose one of our communities below to download a free information and pricing kit:
FAQs
Delaware is one of the most tax-friendly states for retirees, partly because it's one of only five states with no sales tax.
Is Delaware a good tax state for retirees? ›
Delaware is tax-friendly toward retirees. Social Security income is not taxed. Withdrawals from retirement accounts are partially taxed. Wages are taxed at normal rates, and your marginal state tax rate is 4.80%.
Is Delaware tax free for seniors? ›
Delaware Tax Advantages for Retirees
Social Security benefits are also not taxed, which makes Delaware the ideal state for many retirees. Enjoy the benefits from years of work without having to pay for it. In addition, up to $12,500 of retirement income is tax exempt for those who are 60 years of age or older.
What are the tax advantages of living in Delaware? ›
No State Taxes
Delaware also does not have any personal property tax. There is sometimes a county-level real estate property tax, but that tax is very low compared to other states. Corporations can own their own office spaces and reduce the amount of property tax compared to other states.
What is the most tax-friendly state for retirees? ›
Some states do not tax Social Security or income, which could appeal to retirees. Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming stand out for their tax-friendly policies and other amenities that retirees may enjoy.
At what age do seniors stop paying property taxes in Delaware? ›
Applicant must be at least 65 years of age prior to July 1 of the fiscal year for which the exemption is sought. Applicant must own the property.
What are the tax advantages for seniors in Delaware? ›
But also because Delaware has no tax on Social Security or Railroad Retirement benefits, no inheritance tax, low property taxes, and retirees age 60 and older may exclude up to $12,500 of retirement income from a qualified retirement plan.
Do seniors have to pay property taxes in Delaware? ›
Property Tax Exemption
You must: be an owner or part owner of the property; be at least 65 years old before the beginning of the tax year on July 1; make a maximum income of $19,000 for married couples, or $15,000 for single persons, excluding social security and railroad retirement tier 1; and.
What are the pros and cons of retiring in Delaware? ›
Retiring in Delaware — Pros and Cons
- Pro: Retiree Benefits. ...
- Con: Higher Than Average Healthcare Costs. ...
- Pro: Natural Beauty. ...
- Con: Not the Safest State in New England. ...
- Pro: Rich History. ...
- Con: More Expensive Than States in the Middle/South of the Country. ...
- Pro: Close Proximity to Major Cities.
Those who are disabled or over 65 may be eligible, depending upon income levels. Exemptions for non-profit organizations and for agricultural property are also available, provided conditions are met. The exemption application provides more complete information on eligibility requirements.
Delaware Tax Rates, Collections, and Burdens
Delaware does not have any state or local sales taxes. Delaware's tax system ranks 21st overall on our 2024 State Business Tax Climate Index. Each state's tax code is a multifaceted system with many moving parts, and Delaware is no exception.
At what age is Social Security no longer taxed? ›
Social Security income can be taxable no matter how old you are. It all depends on whether your total combined income exceeds a certain level set for your filing status. You may have heard that Social Security income is not taxed after age 70; this is false.
Why are property taxes so low in Delaware? ›
Why are Delaware's property taxes are so low? The state bases them on assessments from decades ago — for Sussex County, this was in 1974. So if you're buying a new home in Coastal Delaware, you can expect to pay much, much less in taxes than if you bought in most other states.
Is it better to retire in Delaware or Pennsylvania? ›
State Income Tax
It only takes $60,000 of taxable income for single or married filing jointly taxpayers to reach the 6.6% tax rate in Delaware. So for a married couple filing jointly with taxable interest, dividends and capital gains of $150,000, the tax liability in Pennsylvania is $4,605 versus $6,035 in Delaware.
What state has no tax on retirement income? ›
Which states won't tax my 401(k), Social Security benefits, and military retirement pay? If your retirement income stems from a 401(k), Social Security, or military retirement, three states do not tax that income: Illinois, Mississippi, and Pennsylvania.
What is the #1 retirement state? ›
1. Iowa. Iowa ranks as the number one state to retire to. It offers an affordable cost of living and home prices and a strong economy, making it an attractive place to make retirement savings last longer.
Is it better to retire in PA or Delaware? ›
It only takes $60,000 of taxable income for single or married filing jointly taxpayers to reach the 6.6% tax rate in Delaware. So for a married couple filing jointly with taxable interest, dividends and capital gains of $150,000, the tax liability in Pennsylvania is $4,605 versus $6,035 in Delaware.
Why do retirees move to Delaware? ›
Delaware may be one of the smallest states, but its beautiful Atlantic Ocean coastline, favorable tax policies, and wellness amenities have made it a popular choice for retirees.
How much is your pension taxed in Delaware? ›
Delaware tax on retirement benefits: Delaware does not tax Social Security benefits or Railroad Retirement benefits. Retirees age 60 and older may exclude up to $12,500 of pension or retirement income from a qualified retirement plan in Delaware.
taxes and a relatively low cost of living, Delaware also has amazing beaches and easy access to cities like Philadelphia, New York City, and Washington DC.
