Delaware’s biggest financial draw is zero sales tax — on anything, ever. Combined with no property tax on vehicles, relatively low property taxes (0.57% effective rate), and moderate income tax rates, the overall tax burden is lighter than neighboring states like New Jersey, Pennsylvania, and Maryland. The state is small (you can drive end-to-end in 90 minutes), and the economy is concentrated in financial services (banking laws made Delaware the corporate incorporation capital of the U.S.), healthcare, and government. Wilmington and Newark benefit from proximity to Philadelphia, while southern Delaware offers beach-town living at lower costs. The state is particularly attractive to retirees due to generous retirement income exclusions.
Delaware at a Glance
| Metric | Value | National Rank |
|---|---|---|
| Population (2024) | 1.02 million | 45th |
| Median household income | $75,340 | 22nd |
| Median home price | $360,000 | Above average |
| Cost of living index | 108 | Slightly above average |
| State income tax | 2.2-6.6% | Above average |
| Sales tax | 0% | Only 5 states at 0% |
| Property tax (effective rate) | 0.57% | 10th lowest |
Income and Housing
| Area | Median Household Income | Median Home Price | Median Rent (2BR) |
|---|---|---|---|
| Wilmington/New Castle County | $80,200 | $340,000 | $1,450 |
| Dover/Kent County | $62,400 | $285,000 | $1,200 |
| Rehoboth/Sussex County | $64,800 | $410,000 | $1,500 |
| State Average | $75,340 | $360,000 | $1,350 |
Taxes in Delaware
| Tax Type | Rate |
|---|---|
| Income tax | 2.2% to 6.6% (graduated) |
| Sales tax | 0% |
| Property tax (avg effective) | 0.57% |
| Social Security tax | No state tax on SS |
| $65+ pension/retirement exclusion | Up to $12,500 excluded |
Total Tax Burden
| Gross Income | Federal | DE Income Tax | FICA | Property ($360K) | Total Rate |
|---|---|---|---|---|---|
| $75,000 | $8,115 | $3,480 | $5,738 | $2,052 | 25.8% |
| $100,000 | $13,615 | $5,130 | $7,650 | $2,052 | 28.4% |
Delaware Pros and Cons
| Financial Pros | Financial Cons |
|---|---|
| No sales tax (save $1,000-$2,500/year) | Above-average income tax (6.6% top rate) |
| Low property taxes (0.57%) | Limited job market (small state) |
| Corporate-friendly (many HQs) | Housing costs rising in beach areas |
| No tax on Social Security | Higher car insurance rates |
| Close to Philadelphia, DC, and NYC | Small-state limitations |
Related: Cost of Living by State | State Income Tax Rates | Property Tax by State | States with No Income Tax