You may want to think twice before buying your car prior to moving unless you like paying more in taxes.
Is it a good idea to buy a new car before you relocate to Delaware from another state? In this week’s Ask The Broker, Kathy explains why you may want to wait and explores some myths and facts about Delaware Taxes.
Should I buy a new car before or after I relocate to Delaware? Hi, this Kathy Sperl-Bell of Active Adults Realty in Delaware, and this question came to me via past clients of mine who, they were out in the neighborhood and they were talking to some new arrivals from New Jersey, and they were very upset. Because they had bought their new car in New Jersey, they had paid the 6.625% New Jersey sales tax, and then they moved here to Delaware and guess what?
When they went to register their vehicle here, was the first time they learned about this one document fee that we have. It’s not a sales tax but, whenever you purchase a new or a used vehicle, there is a one-time fee called a Doc fee, and that is now 4.25% of either the purchase price or the NADA value, whichever is greater. Unfortunately, if they had waited to purchase the car until after they moved here, they would only have paid the 4.25%, ouch. Instead, they had paid 6.625% plus the 4.25.
So, I thought I’d review a few things about taxes. Because a lot of people hear about the low taxes in Delaware and they hear we have no taxes in Delaware right? And, no it just depends what kind of tax we’re talking about. So, we do have a property tax, it just happens to be much lower than in the surrounding states or frankly anywhere in the Northeast.
The school tax is included in the county property tax, which is the primary property tax vehicle. If you happen to purchase a home that also is in a town limit or a city limit, then there’s a small additional property tax. Income tax. Yes, we do have an income tax. It’s a sliding scale from a low of 2.2% to a high of 6.6%, depending on your income bracket. There are standard deductions of $3,250 if single, or $6,500 if married and not itemizing.
However, Delaware does not tax Social Security or Railroad Retirement Benefits. And for those of us that are 60 and older, the first $12,500 of investment, and qualified retirement income per person is exempt. Other taxes. No sales tax, zero. No personal property tax. So when you add it up then look at the bottom line, Delaware’s always gonna be one of the best, lowest tax states in the country, compared to any other place you might want to live.
So, for more detailed Delaware tax information, I always recommend that you visit the Delaware.gov site. And we do our very best to keep our own site up to date with our tax facts, but I always wanna recommend that you check the latest on the Delaware.gov site, check with your accountant, check with your Active Adults Realty agent to make sure that you have all the information you need before you relocate, not after.