Delaware Subtractions are modifications to federal adjusted gross income (AGI) that reduce income subject to Delaware income tax. Delaware allows certain subtraction modifications for resident, part-year resident, and nonresident taxpayers, subject to the requirements and allocation rules under Delaware law.
Resident Taxpayers (Form PIT-RES)
Schedule A – Line 7: Eligible subtraction modifications may include:
- Interest from U.S. government obligations included in federal AGI
- Delaware state income tax refunds included in federal AGI
- Fiduciary adjustments
- Delaware Net Operating Loss (NOL) carryforwards, when permitted
- Pension and eligible retirement income exclusion
- Taxable Social Security benefits included in federal AGI
- Railroad Retirement benefits included in federal AGI
- Certain qualifying lump-sum distributions
- Work Opportunity Tax Credit wage adjustments
- Other subtraction modifications permitted by Delaware law
Schedule A – Line 8b: Subtraction for qualifying contributions to:
- Delaware College Investment Plan (529 Plan)
- Delaware ABLE Program
(Subject to the applicable annual contribution limitations and eligibility requirements.)
Part-Year Resident Taxpayers
Part-year residents file Form PIT-RES and compute Delaware subtraction modifications according to the Delaware allocation rules. Only the portion of a subtraction modification that is allowable for the Delaware resident period or otherwise permitted under Delaware law may be claimed.
Nonresident Taxpayers (Form PIT-NON)
- Line 29: Report allowable subtraction modifications used in determining Delaware adjusted gross income and Delaware-source income.
- Line 30a (Column B): Delaware-source income after allowable subtraction modifications.
- Line 30b (Column A): Delaware adjusted gross income after allowable subtraction modifications.
- Only the portion of allowable subtraction modifications attributable to Delaware-source income may reduce Delaware taxable income.
Additional Context: Form PIT-SCW
Line 6: Used to determine the allocation of wage income earned in Delaware by computing Delaware workdays.
The completed schedule determines the portion of wages attributable to Delaware for nonresident filing purposes.
Most Common Delaware Subtractions
Common Delaware subtraction modifications include:
- Interest from U.S. government obligations included in federal AGI
- Pension and eligible retirement income exclusion
- Taxable Social Security benefits included in federal AGI
- Railroad Retirement benefits included in federal AGI
- Delaware state income tax refunds included in federal AGI
- Fiduciary adjustment
- Delaware Net Operating Loss (NOL) carryforwards, when permitted
- Work Opportunity Tax Credit wage adjustment
- Certain qualifying higher education distributions
- Certain qualifying lump-sum distributions
- Qualified contributions to the Delaware College Investment Plan (529 Plan)
- Qualified contributions to the Delaware ABLE Program
- Other subtraction modifications specifically authorized under Delaware law
Source:
RESIDENT AND INSTRUCTIONS.pdf
NON-Resident and Instructions.pdf
https://revenuefiles.delaware.gov/2025/PITForms_Instructions/Instructions/PIT-RES_Instructions_2025-01.pdf
Disclaimer: Always verify details with the official Federal or State Department of Revenue Forms and Instructions. For complex tax situations, consult a CPA or tax attorney.