While we help all kinds of people find or sell homes, we’re meeting lots of folks who are especially interested in moving to Delaware to escape much higher taxes in neighboring states. We answer many of their questions in a special Buyer’s Guide that details, in simple terms, how our tax structure relates to mortgages, retirement income and everyday expenses.
We invite you to download the guide for a comprehensive look, but want to spotlight some unique factors that contribute to the relatively low cost of an active adult Delaware lifestyle.
Show Me the Money When the Job is in My Rear View Mirror
One major benefit for retirees who live in Delaware is the fact that you get to keep a lot more of what you’ve earned and put aside over the years.
Social Security, Railroad Retirement and Military Benefits
As explained on page 9 of the guide, you won’t pay state taxes on your Social Security benefits or Railroad Retirement benefits. If you’re receiving military pay benefits as a retired U.S. service member over the age of 60, your first $12,500 annually is exempt from state taxes. If you’re receiving military disability pay, the guide also details significant exemptions based on your length of service. And if you’re receiving VA disability benefits they’re exempt from both federal and state taxes.
Help Me Hold onto More Money if I’m Still Working
If you’re still working, you’ll also pay lower taxes than in nearby states, with your personal income tax ranging from 2.2 percent to 6.6 percent, depending on your income bracket. Your standard deduction if you’re single and don’t itemize is $3,250, and if you’re married, filing jointly and not itemizing, it’s $6,500. If you or your financial planner want to drill down further into varying scenarios, visit the Delaware Division of Revenue website for more details.
Also note: There’s no sales tax in Delaware! This is a big deal for a lot of people most of the time but especially right now as the whole country deals with significant inflation due to supply chain issues and lingering challenges from the Covid pandemic. So when you need $10,000 worth of new appliances to redo your kitchen here, that’s precisely what you’ll pay before installation and other costs. Meanwhile, in New Jersey, you’re going to pay an extra $635 based on the current 6.625 percentage tax rate for these items.
You’ll get an equally pleasing result every time you shop for clothing and other types of goods at our many outlet stores, shopping malls and downtown districts all across the state.
Property Taxes – Yes, This is For Real!
If you’re house-hunting after living in New Jersey, New York or the neighborhoods within commuting distance of Washington, D.C., you might think there’s a misprint when you look at the annual taxes for your Delaware home.
While the buyer and seller do split a 4% “transfer tax” at the time of sale (which is deductible if it’s going to be a rental or investment property), Delaware’s state and county taxes are extraordinarily low.
For example, this home for sale in Nassau Grove, a Lewes community, on a 4,080 square foot home for $699,000 are just $1,718 annually – and that includes county, city and school taxes.
Meanwhile owners of a newer 1,872 square foot home in the amenity-rich Peninsula Lakes community just a few miles inland will pay just $1,490 annually for a home currently on the market for $650,000.
Head north to Kent County, which is a great place for affordable homes within close proximity to all sorts of recreational activities, or to New Castle with numerous cultural attractions, and you’ll see the same extraordinary value.
At Nobles Pond, another community with trails, a pool and club house, you’ll pay just $1,950 in annual taxes for a lovely ranch style home priced at $515,000.
And in the Steeple Glen Community in Newark taxes on your townhome selling for $344,900 will be $2,954 annually.
Those New Wheels for that Retirement-Gift-to-Yourself Might Also Cost a Lot Less
Delaware is filled with lovely suburban communities and small towns, but in most cases you’re going to need a car to get around. If you buy one in Delaware you won’t pay a sales tax but you will pay a documentation fee of 4.25 percent of the sales price. Compare that to the 6 percent you’ll pay for a new car in Maryland or 6.25 percent you’ll pay in New Jersey, and you’ll see more advantages to driving your new vehicle to your new home. Learn more at the Delaware Division of Motor Vehicles website.