Below is a list of income that Delaware will allow you to subtract from your return:
Adjustments to Interest Received on U.S. Obligations
Interest received on U.S. obligations is exempt from Delaware taxes. This entry is located under the additions to income (state section) and allows you to enter a negative amount.
Pension Income Exclusion
Amounts you received as pensions from employers may qualify for an exclusion from Delaware taxable income.
You may NOT claim this exclusion if:
- The distribution was an early distribution from an IRA or pension due to emergency reasons or a separation notice.
- The 1099-R distribution code in Box 7 is listed as "1".
- You were assessed an early withdrawal penalty on 1040 Schedule 1 line 18.
Each spouse may claim only one exclusion.
- If you were under age 60, your exclusion amount would be equal to $2,000 or the amount of your pension, whichever is less.
- If you are retired U.S. military personnel, your exclusion amount is $12,500 or the amount of your pension, whichever is less.
- If you were age 60 or older at the end of the tax year, you must use the following to determine your exclusion amount:
- Amount of Pension.
- Amount of eligible retirement income.
- Total (Add lines 1 and 2).
- Enter amount from line 3 or $12,500, whichever is less.
Delaware State Tax Refund, Fiduciary, and Delaware NOL Carryovers:
State refunds from Delaware may be excluded if they are included in the federal adjusted gross income.
Any net subtractions from fiduciary adjustments obtained from income shown on a K-1 from a trust or estate should be included on the line applicable to this subtraction.
Taxpayers who were prevented in previous years from carrying back federal net operating losses to their Delaware returns (because of Delaware’s $30,000 limit on net operating loss carrybacks) are permitted to carry these additional losses forward on their Delaware return in years following the loss year.
Social Security and Railroad Benefits:
Social Security and Railroad benefits ARE NOT taxable in Delaware and SHOULD NOT be included in your Delaware taxable income.
Higher Education - Distributions received from qualified retirement plans, deferred arrangements (such as 401(k) plans) and government deferred compensation plans may be excluded from Delaware adjusted gross income to the extent they are used in the same tax year to pay for books, tuition, or fees at an institution of higher education attended by the taxpayer or by his or her dependents who have NOT attained the age of 26 by December 31, 2023, as long as such amounts have been included in federal adjusted gross income.
529 and ABLE Contributions to State Sponsored Tuition Programs:
529 Contributions to a Delaware-sponsored tuition program may be excluded from Delaware adjusted gross income up to a limit. For single, married filing separately or head of household filer whose federal adjusted gross income is less than $100,000 the maximum exclusion is $1,000. For married filing jointly filers, whose federal adjusted gross income is less than $200,000 the maximum exclusion is $2,000.
Contributions made to a qualified ABLE program up to a maximum of $5,000 for individual filers and $10,000 for joint filers may be excluded from Delaware adjusted gross income.
Persons 60 or Over or Disabled:
The law provides for exclusions from Delaware gross income to persons meeting certain qualifications to single, married filing separate and head of household - $2,000 and for Married filing jointly - $4,000 if you can answer yes to all the following criteria:
- Were you (and spouse if MFJ) at least 60 years old or totally and permanently disabled on 12/31/2023?
- Did your earned income (i.e., wages, tips, farm, or business income) total less than $2,500?
- Is line 10 $10,000 ($20,000 if MFJ) or less?
**NOTE - If you are filing a joint return and only one spouse qualifies for this exclusion, you should consider filing separate state returns.
- State Section
- Subtractions to Income
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