Is my retirement income taxable to Delaware?

Delaware allows for some of your pension income to be excluded from your total taxable income.

How much is the exclusion?

• If you were under the age of 60 by the end of the tax year and received a non-military pension, you can exclude up to $2,000 or the amount of pension received, whichever is less.
• If you were retired U.S. military and under the age of 60 by the end of the tax year, your exclusion equals $12,500 or the amount of your military 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:

1. 1. Amount of Pension.
   2. Amount of eligible retirement income.
   3. Total (Add lines 1 and 2).
   4. Enter amount from line 3 or $12,500, whichever is less.

Each taxpayer can only receive one exclusion even if they receive more than one pension or retirement distribution. Spouses who each receive a pension are each permitted one exclusion each. 

Early Distributions Not Qualifying for the Exclusion

Early distributions from an IRA or Pension may not qualify for the Pension Exclusion. If you had an early distribution due to emergency reasons or a separation from employment, your distribution does not qualify for the pension exclusion.

• If the distribution code listed in Box 7 of your 1099-R is a 1, that amount DOES NOT qualify for the pension exclusion.
• If you were assessed an early withdrawal penalty on Line 58 of Federal 1040, that amount DOES NOT qualify for the pension exclusion.
• Disability pension income that is disbursed before the minimum retirement age of 60 DOES NOT qualify for the exclusion. 

Program Entry

1. State Section
2. Subtractions from Income
3. Pension Income Exclusion

See also Is my military pension/retirement income taxable to Delaware?