Delaware Taxes for Retirees: Is Delaware Tax-Friendly? (2024)

You may be surprised to learn how popular Delaware is with older adults.Besides the financial benefits, such as low
taxes and a relatively low cost of living, Delaware also has amazing beaches and easy access to cities like Philadelphia, New York City, and Washington DC.

Is Delaware Tax-Friendly for Retirees?

Delaware is one of the most tax-friendly states for retirees, partly because it’s one of only five states with no sales tax. But also because Delaware has no tax on Social Security or Railroad Retirement benefits, no inheritance tax, low property taxes, and retirees age 60 and older may exclude up to $12,500 of retirement income from a qualified retirement plan.

These tax benefits make Delaware an attractive option for retirees looking to minimize their tax burden and make the most of their retirement income.

Is Pennsylvania or Delaware Better for Retirees?

Delaware and Pennsylvania both offer advantages for retirees. Delaware is known for its friendly tax policies, coastal location, and access to metropolitan areas. On the other hand, Pennsylvania does not tax distributions from pensions, IRAs, 401ks, or Social Security, and it offers a flat income tax rate of 3.07%.

Both states have unique benefits, and deciding between the two will depend on factors like income sources, lifestyle preferences, and proximity to family and amenities.

What are the Pros and Cons of Retiring in Delaware?

In addition to Delaware’s tax-friendliness toward retirees, the First State also has affordable housing options compared to nearby states like New Jersey and Maryland. Retiring in Delaware also provides you with easy access to the Atlantic Ocean beaches as well as cities like Manhattan and D.C.

However, expenses like healthcare and groceries can be higher than the national average, which you may not have to worry about if you move into a retirement community.

Should You Consider Moving to a Retirement Community in Delaware?

Besides the Delaware retirement tax benefits listed above, what other reasons are there to retire in Delaware? For one, the state has 28 miles of beaches, as well as a vibrant restaurant scene and art scene. Plus, due to its popularity among the retirement set, Delaware is home to some of the most beautiful, amenities-filled retirement communities in the country.

If you’d like to see the costs of retiring in a Delaware retirement community, choose one of our communities below to download a free information and pricing kit: