Delaware allows eligible taxpayers to exclude a portion of qualifying pension and retirement income from Delaware taxable income. The maximum exclusion depends on the taxpayer's age as of December 31, 2025, and the type of retirement income received.
Exclusion Amounts
Individuals Under Age 60 (as of December 31, 2025):
- Military Pension: Up to $12,500, or the amount of the qualifying military pension, whichever is less.
- Non-Military Pension: Up to $2,000, or the amount of the qualifying non-military pension, whichever is less.
Individuals Age 60 or Older (as of December 31, 2025):
- Up to $12,500 per individual for the combined total of qualifying pension and eligible retirement income.
If both spouses qualify, each spouse computes a separate pension exclusion based on his or her own qualifying pension and eligible retirement income. As a result, the combined exclusion claimed on a joint return may exceed $12,500, provided each spouse separately qualifies.
Eligibility and Limitations
- Qualifying pension and eligible retirement income may be eligible for the Delaware pension exclusion, subject to the limitations in the Delaware tax instructions.
- Early distributions from an IRA, pension, or other retirement plan generally do not qualify for the pension exclusion.
- Distributions generally reported as early distributions (such as those reported with Distribution Code 1 in Box 7 of Form 1099-R) are not eligible for the pension exclusion.
- Distributions subject to the federal additional tax on early distributions generally do not qualify for the Delaware pension exclusion.
- Each taxpayer is allowed one pension exclusion, regardless of the number of qualifying pensions or retirement distributions received.
- If both spouses receive qualifying pension or eligible retirement income, each spouse may claim a separate exclusion if otherwise eligible.
Calculation Method
- Enter the total qualifying pension and eligible retirement income in the Federal column.
- Enter the Delaware portion of the qualifying pension and eligible retirement income in the Delaware column, as applicable.
- Resident taxpayers generally claim the allowable exclusion directly, subject to the applicable age-based limitations.
- Part-year residents and nonresidents determine the allowable Delaware pension exclusion using the Delaware Pension Exclusion Worksheet, which allocates the exclusion based on the ratio of Delaware qualifying pension and eligible retirement income to total qualifying pension and eligible retirement income.
Source:
PIT-NON Instructions 2025 (Non-Resident)
PIT-RES Instructions 2025 (Resident)
Disclaimer: Always verify details with the official Delaware Division of Revenue forms and instructions. Tax rules may vary by filing status, age, and income. For complex situations, consult a CPA or tax professional.