Retiring in Delaware

Every figure below is sourced to Delaware’s own publications and dated. Estimates only, and not tax advice.

Retirement tax by state

What your state actually takes from a 401(k) withdrawal, a pension, and Social Security — in dollars, not a yes/no list.

Brokerage account growth

Long-term index-fund growth after expense-ratio drag — and what your state takes from the gains at withdrawal.

Roth vs. Traditional

Decided on the two rates that actually govern it — yours now, and yours at withdrawal, in the state you'll retire in rather than the one you're in.

Contribution limit optimizer

2026 limits, employer match, the 60-63 super catch-up, and whether the Roth catch-up mandate applies to you.

Required minimum distribution

When your RMDs start under SECURE 2.0, how much this year's is, and what missing it costs.

Backdoor Roth pro-rata

What a backdoor Roth conversion would actually cost you in tax — the pro-rata rule most calculators only describe.

Self-directed IRA real estate (UDFI)

The tax a leveraged rental owes inside a self-directed IRA — computed at trust rates, not the rate you'd assume.

Delaware at a glance

401(k) and IRA withdrawals
Partly excluded
From age 60.
Social Security
Not taxed
Top marginal rate
6.6%
The top of 7 graduated brackets.
Tax year
2025
Brackets are legislated and change on a fixed calendar, so the year matters.
  • Delaware exempts Social Security and Railroad Retirement entirely, then gates everything else on turning 60 -- the exclusion jumps from $2,000 to $12,500 on that birthday.
  • The exclusion is per taxpayer, so a married couple both over 60 can reach $25,000, but neither spouse can use the other's unused room.
  • An early distribution (1099-R box 7 code 1, or one that drew a federal early-withdrawal penalty) is disqualified from the pension exclusion outright, which is the most common way a Delaware retiree loses it.
  • Military retirees under 60 get the full $12,500 rather than the $2,000 everyone else under 60 gets; at 60 and over there is no military-specific advantage left.

Local income tax applies in parts of Delaware

WILMINGTON IS THE ONLY DELAWARE MUNICIPALITY THAT LEVIES A PERSONAL INCOME TAX, and it is a real 1.25% on top of the state rate for anyone who lives OR works in the city. It is an EARNED INCOME tax: it reaches salaries, wages, commissions, bonuses, and net profits from a business or profession, and it does NOT reach interest, dividends, capital gains, pensions or Social Security -- so a Wilmington retiree living on investment and pension income pays none of it while a Wilmington wage-earner pays it on every dollar. It applies to non-residents who work in the city as well as to residents, with no exemption threshold and no standard deduction of its own. Employers withhold it. No other Delaware city, town or county levies an income tax; Delaware's other local revenue is property-tax based. The 1.25% rate has been stable for many years but is set by city ordinance rather than state statute, so it can change without a state-level signal.