Delaware is known for its favorable tax environment, offering several tax advantages that can benefit residents. Here are some of the key tax advantages of living in Delaware:
No Sales Tax
Delaware is one of the few states in the United States that does not impose a sales tax. This means that residents can enjoy tax-free shopping on most purchases, saving money on everyday items, big-ticket purchases, and even major purchases like vehicles.
Low Property Taxes
Property taxes on a 2,000 square foot home in Delaware will run in the range of $125/month (less than 10% of the tax on an equivalent home in New Jersey). Sussex County Delaware is tied for second among all U.S. counties for the lowest ratio of median annual property tax to home value. This can translate into significant savings for homeowners, especially those with more valuable properties. Additionally, Delaware offers property tax relief programs for eligible individuals, such as senior citizens and veterans.
Lower Personal Income Tax
Delaware does not tax social security benefits, providing a significant tax advantage for retirees who rely on this income source. Plus, up to $12,500 of retirement income is tax-exempt for those who are 60 and older. This means that retirees can keep more of their social security income, helping to stretch their retirement savings further.
No inheritance tax for certain beneficiaries
Delaware does not have an inheritance tax for spouses, children, grandchildren, and other close relatives. This means that inheriting property or assets from a deceased family member can be done without incurring additional taxes.
Business-friendly Tax Environment
Delaware is known for its business-friendly tax environment, making it a popular state for incorporating businesses. The state offers a favorable corporate tax structure, including no corporate income tax for certain types of companies, making it an attractive destination for entrepreneurs and businesses. In fact, as of 2023, 66% of all Fortune 500 Companies were incorporated in Delaware.
Final Thoughts
It's important to note that tax laws and regulations can change over time, and individual circumstances may vary. It's always advisable to consult with a tax professional or financial advisor who is knowledgeable about Delaware's tax laws and can provide personalized advice based on your specific situation.
