Delaware Pension Exclusion
Delaware offers a pension exclusion for individuals aged 60 or older, allowing them to exclude up to $12,500 of pension and eligible retirement income from Delaware taxable income. This exclusion applies to retirement income from qualified plans such as IRAs, 401(k)s, Keogh plans, and government deferred compensation plans (IRC Sec. 457).
Eligibility Criteria
- Must be age 60 or older.
- Income must be from eligible retirement sources, including pensions, IRAs, 401(k)s, and similar qualified plans.
- Exclusion is limited to $12,500 per individual.
How to Claim the Exclusion
When filing Form PIT-RES (Resident Income Tax Return) or Form PIT-NON (Nonresident Income Tax Return), taxpayers must report their total pension and eligible retirement income in Column A. The exclusion amount is calculated based on the ratio of Delaware-sourced income to total income.
For nonresidents, enter the full pension amount in the Federal column. In the Delaware column, calculate the ratio of Delaware-sourced pension income to total pension income and multiply it by the $12,500 exclusion limit. Enter the result on Line 23, Column B of Form PIT-NON.
Supporting Documentation
Taxpayers should retain and provide supporting documents such as Form 1099-R to substantiate their pension income and exclusion claim. The Delaware Division of Revenue may request these documents for verification.
Additional Notes
- The exclusion applies only to retirement income and not to other types of income.
- Eligible retirement income includes dividends, capital gains (net of losses), interest, and net rental income from real property.
- For lump-sum distributions from qualified retirement plans, Form PIT-STC may be required.
Source:
Form PIT-RES Instructions
Form PIT-NON Instructions
Form PIT-STC (Lump Sum Distribution)
Disclaimer: Always verify details with official Federal or State Department of Revenue Forms and Instructions.