Income Tax

Frequently Asked Questions

Q: What is the City of Delaware Income Tax rate and what type of income is taxable?
A: The income tax rate is 1.55 percent.  Generally, gross income (including income which is deferred) and business net profits are taxable. A list of taxable and nontaxable income is available from the Income Tax Office.

Q: Do I need to file a Declaration of Estimated Tax?
A: Every person who anticipates receiving taxable income or who engages in any business, profession, or activity subject to Delaware income tax, which is expected to be $60 or more after excluding Delaware withholding and/or other credits, must file a Declaration of Estimated Tax.

Q: I am not a resident of the city but I work there. If my employer withholds my tax, do I need to file a return?
A: No, filing is only mandatory for Delaware City residents and nonresidents whose income is not withheld upon correctly.

Q: What is the due date of the City return?
A: For individuals, the City of Delaware tax return is due on April 15 of each year. Business (fiscal year) returns are due on the 15^th day of the fourth month following the end of the fiscal year.

Q: Can I deduct my business losses from my W-2 wages on my tax return?
A: No, losses from self-employment, partnership interests, rental property and other like businesses may not be used to offset W-2 income. Only related losses may be carried forward three (3) years to offset future related income.

Mandatory Filing:
All Delaware residents are required to file annual city income tax returns, even if no tax is due. This includes anyone temporarily living away from home such as college students, teachers, etc.
Non-resident taxpayers who have income derived within the City of Delaware and for whom the tax is not withheld by their employer must file a Delaware City income tax return.

Partial Year Residents:
If you lived in the City of Delaware for any part of the year, you are required to file a tax return. Income, deductions and credits may be allocated on a pro-rata basis or by employer verification (i.e. payroll check stubs or letter detailing income earned during Delaware residency.

Extension Request:
All taxpayers unable to file a completed return by the due date must file an extension request. Copies of federal extension forms are accepted. Payment of any tax balance due must accompany the extension request and be received by the original due date of the return.

Credits:
A partial credit is allowed for taxes due and paid to another city. The credit is the lesser of .50 of the tax paid to the other city, or .007 of the income taxed by the other city and Delaware. W-2s or copies of the other city's tax return and proof of payment must support credit claimed.