Taxes in Delaware? Any city taxes? (Wilmington, New Castle: sales, real estate, rental)

[Debaroo]

Hi..I was wondering just what is taxed in DE. Isn't there a city tax that is about 10% in Wilmington? How does Delaware make any money with no state taxes?

[FindingZen]

From my observation, the income tax rate is very high and inclusive. You'd have to be a 13-year old working part-time on weekends to avoid it. I'm sure there is a property tax as well although I don't know where it ranks compared to other states. I'd be surprised if Wilmington had any sort of wage tax.

[Gone-2-Beach]

Originally Posted by Tone509

From my observation, the income tax rate is very high and inclusive. You'd have to be a 13-year old working part-time on weekends to avoid it. I'm sure there is a property tax as well although I don't know where it ranks compared to other states. I'd be surprised if Wilmington had any sort of wage tax.

The Delaware income tax is not as high as you think. 25 states have higher tax rates, placing Delaware right in the middle.

Delaware income tax is in six brackets ranging from 2.2% to 5.95%. This compares favorably with New York (4.0 to 6.85%) and New Jersey (1.4 to 8.97%). Pennsylvania has a flat 3.07%.

You can see the exact tax rates of all states here:
Individual Income Tax Rates-2007 (http://www.taxadmin.org/fta/rate/ind_inc.html - broken link)

Social Security benefits are not taxed in Delaware. Nor is the first $12,000 in pension benefits.

Real Estate taxes in Delaware are far below these other three states. Once a person reaches age 62, their school tax is discounted 50% up to $500. The $250,000 house that I am looking at comes with an annual tax bill around $1,200. Currently, in New York, the $440,000 house in which I live has a tax bill around $9,100.

There is no sales tax in Delaware. Hope this helps.

Charley

[Debaroo]

Originally Posted by CMTAD

The Delaware income tax is not as high as you think. 25 states have higher tax rates, placing Delaware right in the middle.

Delaware income tax is in six brackets ranging from 2.2% to 5.95%. This compares favorably with New York (4.0 to 6.85%) and New Jersey (1.4 to 8.97%). Pennsylvania has a flat 3.07%.

You can see the exact tax rates of all states here:
Individual Income Tax Rates-2007 (http://www.taxadmin.org/fta/rate/ind_inc.html - broken link)

Social Security benefits are not taxed in Delaware. Nor is the first $12,000 in pension benefits.

Real Estate taxes in Delaware are far below these other three states. Once a person reaches age 62, their school tax is discounted 50% up to $500. The $250,000 house that I am looking at comes with an annual tax bill around $1,200. Currently, in New York, the $440,000 house in which I live has a tax bill around $9,100.

There is no sales tax in Delaware. Hope this helps.

Charley

Thanks all so much!!! What is the DE average for school taxes?

[FindingZen]

I stand corrected. Looking at the link you provided, I see that there are states that not only have much higher rates but also lower income floors for which one would have to start paying. Thanks for clarifying my semi-educated guess.

Originally Posted by CMTAD

The Delaware income tax is not as high as you think. 25 states have higher tax rates, placing Delaware right in the middle.

Delaware income tax is in six brackets ranging from 2.2% to 5.95%. This compares favorably with New York (4.0 to 6.85%) and New Jersey (1.4 to 8.97%). Pennsylvania has a flat 3.07%.

You can see the exact tax rates of all states here:
Individual Income Tax Rates-2007 (http://www.taxadmin.org/fta/rate/ind_inc.html - broken link)

Social Security benefits are not taxed in Delaware. Nor is the first $12,000 in pension benefits.

Real Estate taxes in Delaware are far below these other three states. Once a person reaches age 62, their school tax is discounted 50% up to $500. The $250,000 house that I am looking at comes with an annual tax bill around $1,200. Currently, in New York, the $440,000 house in which I live has a tax bill around $9,100.

There is no sales tax in Delaware. Hope this helps.

Charley

[rockky]

RETIREMENT INFORMATION, IRA TOPICS, PENSION EXCLUSIONS, SOCIAL SECURITY BENEFITS
Q. I'm planning to move to Delaware within the next year. I am retired. I am receiving a pension and also withdrawing income from a 401K. My spouse receives social security. What personal income taxes will I be required to pay as a resident of Delaware? I also would like information on real estate property taxes.

A. As a resident of Delaware, the amount of your pension and 401K income that is taxable for federal purposes is also taxable in Delaware. However, person's 60 years of age or older are entitled to a pension exclusion of up to $12,500 or the amount of the pension and eligible retirement income (whichever is less). Eligible retirement income includes dividends, interest, capital gains, net rental income from real property and qualified retirement plans (IRS Sec. 4974), such as IRA, 401 (K), and Keough plans, and government deferred compensation plans (IRS Sec. 457). The combined total of pension and eligible retirement income may not exceed $12,500 per person age 60 or over. If you are under age 60 and receiving a pension, the exclusion amount is limited to $2,000.

Social Security and Railroad Retirement benefits are not taxable in Delaware and should not be included in taxable income.

Also, Delaware has a graduated tax rate ranging from 2.2% to 5.55% for income under $60,000, and 5.95% for income of $60,000 or over.

For information regarding property taxes, you can access the Delaware Development Office web page at State of Delaware - Delaware Economic Development Office (DEDO) and do a search on Real Estate Taxes or you may contact the Property Tax office for the county you plan to live in. You may contact the Property Tax offices at the following phone numbers:

Property Tax - New Castle County (302) 323-2600
Property Tax - Kent County (302) 736-2077
Property Tax - Sussex County (302) 855-7760


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*Since I am under the age of 60, I did indeed pay taxes on my pension income in Delaware.*

I found the above info at the link below. You may find more info there as well.

Delaware.gov -- The Official Website of the First State (http://delaware.gov/EGOV/Portal.nsf/CategoryPages/Resident--Taxes - broken link)

[Gone-2-Beach]

Originally Posted by Tone509

I stand corrected. Looking at the link you provided, I see that there are states that not only have much higher rates but also lower income floors for which one would have to start paying. Thanks for clarifying my semi-educated guess.

You're most welcome.

I actually like the Pennsylvania approach best. It's a flat tax and therefore much easier for planning and budgeting. The formulas that I needed to set up for Delaware were time consuming ... and I sure hope I did it right ... lol.

I also like the Pennsylvania tax rate at 3.07%.

Charley

[FindingZen]

I liked the PA tax rate too when I lived there.

A federal flat tax is another subject... but I'll leave that for the proper forum.

Originally Posted by CMTAD

You're most welcome.

I actually like the Pennsylvania approach best. It's a flat tax and therefore much easier for planning and budgeting. The formulas that I needed to set up for Delaware were time consuming ... and I sure hope I did it right ... lol.

I also like the Pennsylvania tax rate at 3.07%.

Charley

[susanpomerantz]

Taxes here are the lowest IN THE WHOLE COUNTRY. We have an entire population from NY and NJ moving here because property taxes are so low.

[elizamary]

Originally Posted by susanpomerantz

Taxes here are the lowest IN THE WHOLE COUNTRY. We have an entire population from NY and NJ moving here because property taxes are so low.

This is so true. Kent county is growing like a weed. Although, I have to say constuction seems to have come to a halt. Could be because of winter or the housing market slump.

We are satisfied living here. All of my bills dropped tremendously when we moved.
We bought a brand new home half of what I sold my home for.

You will hear complaints about living in DE such as lack of jobs, and some say it is expensive? I dont' see how that is but the way it was explained is because the wages are low.

I am retired so I really dont' know how the job market in De really rates.
But I do know people that work in De and have nice homes so they must be doing okay.
Depends on your skills, education and luck but that could be anywhere.

I know a few people from this board that moved to De within the last year and they are very happy living here.
It is a small wonder for sure.