Active-duty pay
Taxed
Active-duty pay taxable.
State Guide · DE
Delaware — Military Tax Treatment
Delaware taxes active duty and Guard pay and only partially exempts retirement. The pension exclusion grows at 60 — younger military retirees get the smaller tier.
Tax treatment at a glance
Guard & Reserve drill pay
Taxed
Guard and Reserve drill pay is taxable Delaware income.
Military retirement pay
Partially Exempt
Exclusion: up to $12,500 for retirees under 60, larger exclusion for 60+.
The numbers · verified for tax year 2025
Top marginal rate
6.60%
Retirement-pay exemption
Up to $25,000 · age 60+
For tax years beginning on or after Jan 1, 2025 (HB108), a military pension may be excluded up to $25,000 for retirees under age 60; retirees 60+ exclude up to $25,000 of pension/eligible retirement income under the general exclusion (both raised from $12,500).
Standard deduction
For 2025 the standard deduction is $5,700 single / $11,400 married filing jointly (doubled by HB89). The top rate is 6.60% on income of $60,000+.
VA disability compensation
Always tax-free
Federally tax-free under 38 USC § 5301. No state taxes VA disability compensation as income — Delaware included.
Survivor Benefit Plan (SBP)
Follows retirement
SBP annuities may qualify for the pension exclusion — verify with Delaware DoR.
Federal rules that override state law
SCRA — Servicemembers Civil Relief Act
Active-duty servicemembers pay state income tax only to their state of legal domicile — not the state where they are stationed. If you are from Texas and stationed in Delaware, Delaware cannot tax your military pay. This applies during all active duty periods and during Guard/Reserve mobilizations on federal (Title 10) orders.
MSRRA — Military Spouses Residency Relief Act
Military spouses can maintain their home-state domicile even when living in a different state due to their servicemember's orders. A spouse who is a Texas resident following their servicemember to Delaware can keep Texas as their tax domicile and avoid Delaware state income tax on their wages.
Guard & Reserve — the SCRA gap
SCRA pay protections apply during federal (Title 10) activation orders. During routine drill weekends and state-only activations, Guard and Reserve members are state residents serving in their home state — SCRA does not protect their drill pay from state income tax. Whether Delaware exempts that pay is the state-specific question answered above.
Filing watch-outs
- 01DE Form 700 for pension exclusion
- 02The exclusion applies to all pension income — other pension income reduces your available cap dollar-for-dollar
Veteran-specific tax benefits
Disabled veteran property tax credit.
Official authority
https://revenue.delaware.gov/ ↗State tax law changes annually. Verify current rules with the Delaware Department of Revenue before making any tax decision.
Delaware military tax — common questions
Does Delaware tax military retirement pay in 2026?
Delaware partially taxes military retirement pay. Exclusion: up to $12,500 for retirees under 60, larger exclusion for 60+.
Does Delaware tax active-duty military pay?
Delaware taxes active-duty military pay for state residents. Active-duty pay taxable. Under the SCRA, Delaware can only tax the military pay of service members who are legally domiciled in Delaware — not those merely stationed there.
Does Delaware tax National Guard and Reserve drill pay?
Delaware taxes Guard and Reserve drill pay. Guard and Reserve drill pay is taxable Delaware income.
Is VA disability compensation taxed in Delaware?
No. VA disability compensation is federally tax-free under 38 U.S.C. § 5301, and no state — including Delaware — taxes it as income.
If I'm stationed in Delaware but claim another state, can Delaware tax my military pay?
No. Under the Servicemembers Civil Relief Act (SCRA), active-duty pay is taxable only by your state of legal domicile, not the state where you are stationed. If your domicile is elsewhere, Delaware cannot tax your active-duty military pay. Military spouses get the same protection under the MSRRA.
Related tools
Other state guides