DE TaxesDE Tax CreditsDE Tax Incentives

Delaware Taxes

Corporate Income Tax

• The tax rate is 8.7% on net income.

Corporation Franchise Tax

• Franchise Tax is not dependent on business location.

Personal Income Taxes

• Tax Rate Range: Low - 2.2%; High - 5.95%

Personal Property Tax

• Delaware does not impose a Personal Property Tax.

Gross Receipt Taxes

• Manufacturers - 0.180% (effective January 1, 2000) on the gross receipts for all goods manufactured in Delaware, regardless of the location of sale. In computing monthly gross receipts, the first $1 million in receipts are not subject to taxation.
• Wholesalers - 0.384% on the gross receipts of all goods physically delivered within Delaware to the purchaser. In computing monthly gross receipts, the first $50,000, in receipts are not taxable. Manufacturers that also wholesale their products are subject to both the manufacturing and wholesale tax on gross receipts.
• Retailers - 0.720% on the aggregate receipts in excess of $50,000 per month.
• Restaurants - 0.624% on aggregate receipts in excess of $50,000 per month.
• Food Processors - 0.192% on gross receipts, in excess of $50,000 per month, from all goods sold within Delaware.
• Petroleum Products Wholesalers - 0.384% on aggregate receipts in excess of $50,000 per month. Wholesalers are also subject to a surtax of 0.24% (.0024) on the sale of petroleum products.
• Petroleum Products Retailers - 0.9% (Hazardous Substances Cleanup Tax) and 0.72% on aggregate receipts in excess of $50,000 per month. (Retailers are exempt from 0.9% and 0.72% tax if the Hazardous Substances Cleanup Tax was paid to their supplier.)
• Occupational/Professional/General Services - 0.384% on aggregate receipts in excess of $50,000 per month.
• For a complete listing of businesses requiring a gross receipt tax, visit the Delaware Economic Development Office.

General Sales Taxes

• Delaware does not impose a state or local sales tax.

Public Utilities Tax

• The public utilities tax is 4.25%.
• 2% for qualified manufacturers and food processors
• Cable television communication services are taxed at 2.125%.

Real Property Taxes

• Delaware does not impose a State-level tax on real or personal property.
• Real estate taxes are paid at the county, municipal and school district levels. Business taxes are generally imposed at the municipal level.
• For local property tax information, visit the New Castle County Department of Finance or call (302) 395-5160.

Corporate Income Tax Credits

Gross Receipts Tax Reductions -- In addition to the corporate income tax credits, qualifying firms will not be subject to gross receipts taxes for the first five years and will then have these gross receipts taxes reduced on a declining scale for a period of ten years beginning with a 90% reduction on the sixth year and ending with a 5% reduction the fifteenth year.

• Targeted Industry Tax Incentives - Corporate income tax credits and gross receipts tax reductions are available to: manufacturers; wholesalers; laboratories or similar facilities used for scientific, agricultural or industrial research, development or testing; computer processing services; engineering services; consumer credit reporting services; aviation services; wholesaler of computer software, telecommunication services, any combination of these activities and the administration, management or support operations including marketing required for any of these activities. Get a copy of the Tax Credit Application.
  
  
• Expansions With Employment - The program requires that a taxpayer in a "targeted industry" invest a minimum of $200,000 in a new or expanded facility and hire a minimum of five new employees. Beginning January 1, 1997, the program provides credits of $400 for each new qualified employee and $400 for each $100,000 investment. During the ten-year life of credits, credits may not exceed 50 percent of the company's pre-credit tax liability in any one year. Unused credits may be carried forward for ten years.
  
  
• Expansions Without Employment - Effective January 1, 1992, any taxpayer engaging in the activities of manufacturing or wholesaling, whose investment in the new or expanded facility equals or exceeds the greater of: (a) $1 million or (b) 15% of the unadjusted basis of the facility, is eligible for corporate income tax credits. The amount of the credit is equal to 75% of the credit described above, subject to the carry-over provisions, and further limited to a maximum lifetime credit of $500,000. In order to qualify for this credit, the employer must maintain employment at the expanded facility equal to 85% of the wages paid during the previous year.
  
  
• Replacement Facilities - Effective for facilities placed in service after July 1, 1992, investment in replacement facilities are considered qualified investment for the corporate credits and license gross receipt reductions to the extent that the investment in the replacement facility exceeds the greater of: (1) 150% of the unadjusted cost basis of the facility which is being replaced or (2) 100% of the market value of the facility being replaced.
  
  
• Green Industries - Effective for tax years beginning after December 31, 1991 and before January 1, 2007, any manufacturer may be entitled to claim credits against the Delaware corporate income tax in the amount of $250 ($400 effective 1/1/97. In order to qualify, the manufacturer must reduce the amount of waste released from their manufacturing process by 10% or use at least 25% of recycled materials in their manufacturing process. Any corporation may be entitled to claim credits against the Delaware corporate income tax if the corporation is engaged in the business of the processing and resale of materials removed from the Delaware solid waste stream or engaged in the business of the collection of materials for recycling and the distribution of recycled materials.
  
  
• Brownfield Facility Credit - Any taxpayer that meets the qualification for a facility placed in service after June 30, 1995 and locates the facility on a "brownfield" site may be eligible for a credit against the Delaware corporate income tax. The facility must be placed in service after June 30, 1995 and before January 1, 2007.
  
  A "brownfield" is defined as a vacant or unoccupied site that has been environmentally contaminated by commercial or industrial activity as verified by the Department of Natural Resources and Environmental Control. A "qualified facility" is any business, trade, commerce, profession or vocation carried on or in connection with the "brownfield" site. The amount of the investment in this facility shall include all amounts expended by the taxpayer for environmental investigation and remediation of the "brownfield".)
  
  Any corporate taxpayer hiring new permanent and full time employees at a qualified "brownfield" site is allowed a credit equal to the sum of $650 times the number of qualified employees, plus $650 times each $100,000 (or major fraction thereof) of qualified facility investment.
  
  If the "brownfield" site is located in a targeted area, the credits are increased to $900 times the number of qualified employees plus $900 times each $100,000 unit of investment.

Targeted Area Tax Credits

• Corporate Income Tax Credits -- Firms that qualify for targeted industry credits and locate in a targeted area qualify for corporate income tax credits of $650 for each new employee and $650 for each new $100,000 investment. Targeted areas are defined as: (a) real property that is owned by any level of government or any of their agencies; (b) real property owned by a non-profit organization which is organized and operated solely for the purpose of fostering economic development; (c) real property which has been approved as a Delaware Foreign Trade Zone and (d) 30 targeted Census tracts throughout the State. Visit the State of Delaware’s Web site to view the Targeted Area Tax to determine if your business is located in a targeted census tract.

Public Utility Tax Rebates

• Firms meeting the criteria for targeted industry tax credits are eligible for a rebate of 50% of the public utilities tax imposed on new or increased consumption of gas and electricity for five years.
• Electric consumed in the manufacture of automobiles is exempt from the utility tax.

And many others including:

• No State or local general sales tax.
• No personal property or inventory taxes.
• Real property taxes are among the lowest in the country.
• Corporate income tax credits and reduction of gross receipts taxes for new and expanded businesses.
• Additional tax credits on corporate income and reduction of gross receipt taxes for new and expanding businesses locating in 30 targeted census tracts.
• Property tax relief for new construction and improvements of existing property.
• The exemption of certain investment and holding companies from corporate income tax.
• The adherence of the State tax structure to the federal definition of corporate net income so that companies may take full advantage of any federal tax law change, such as more rapid depreciation of newly purchased assets.
• Two approved foreign trade zones will allow the deferment of import taxes.
• Public Utility Tax rebates of 50% on increased consumption for qualifying industries, and reduced rate for manufacturers and agricultural processors.
• Accelerated experience ratings for new employers.

For more information, visit:
Delaware State Tax Information
Federal Tax Information

Source: www.state.de.us

The information on Delaware Taxes is subject to change. Therefore, the data presented on this Web site may not be accurate or current. Visit the State of Delaware for the more accurate and current information.