Taxes plagued every middle-class person since the government created them. While designed to be beneficial to the economy, many people suffer a lot in high-taxing states and economies. Hence, this is where the beauty of Delaware comes in. 

Not only Delaware is home to many pristine beaches, amazing state parks, and museums, but one thing that Delaware is known for is its tax-friendly laws. So in this guide, we round up the tax benefits that you will get if you decide to live here in Delaware. Because once you know these tax benefits, you will surely be compelled to move in here!

1. No Sales Tax

Let’s start with the most important and most obvious. Delaware is famous for being one of the only five states that don’t have sales tax. Hence, if you buy your groceries and essential needs here, you are buying it for the price itself without giving anything to Uncle Sam. In other words, you save a lot of money here in the long run and your income is safe from slipping away due to taxes!

2. Low-Income Taxes

Delaware is also known for its lower income tax rates compared to other states. Depending on your income bracket, it usually ranges from 2-6 percent only, whereas in other states like New York and Washington DC, income tax rates reach as high as 8.95%! Hence, Delaware's income tax rates remain one of the lowest in the country and allow residents to keep more of their hard-earned cash for other fulfilling purposes.

3. Tax Exempt Retirement Income

Now, let’s shift gears to retirees. If you are aged 60 and above, your social security benefits are not taxed in Delaware. Furthermore, when you have a huge inheritance for your children, there is no inheritance tax in Delaware, so your heirs can keep everything you will leave for them. And lastly, the first $12,500 of your retirement income is tax-exempt every single year. No wonder the American Association of Retired Persons (AARP) chooses Delaware as the most tax-friendly state for retirees!

4. Low Property Taxes

For real estate investors out there, this will excite you. As of 2021, Delaware is still among the cheapest states in the country when it comes to property taxes. This is especially true in the southern areas of the states, where property values haven’t been reassessed since the early 1970s. However, all three counties in Delaware are currently undergoing reassessment projects and we’re not entirely sure how it’s going to play out in the end. But, we feel confident the First State will still feature some of the lowest property taxes in the country when all is said and done.

In regards to personal property taxes, some states in the mid-Atlantic and around the country impose these taxes – Delaware does not! So you can purchase that boat and not have to shell out extra dollars in personal property taxes every year!

5. The Corporate World’s Tax Shelter

Let’s move now to corporations and businesses. Delaware has long been known as a Tax Shelter, meaning that the First State is more tax-friendly to corporations and start-ups by having them save money and reduce tax payments, hence the term Tax Shelters. 

For example, most states require annual franchise taxes based on earned income. But in Delaware, the franchise tax is an annual flat fee for limited partnerships and limited liability companies. Moreover, a Delaware corporation can base its headquarters in any U.S. state, where they are then exempt from state corporate income tax in many cases. This is the main reason why two-thirds of the Fortune 500 companies are incorporated here!

Final Thoughts

When it comes to taxes, nothing beats the policies of Delaware. It is friendly to average families, real estate investors, corporations and start-up businesses, and most of all to retirees. If you don’t want taxes to plague your life, Delaware is the place for you. Contact us now at Loft Realty if you want to get away from expensive taxes and live here in Delaware with your wealth intact!