Delaware Sales Tax 2023 - 2024

Unlike many states, Delaware does not have a sales tax. Instead, it imposes a gross receipts tax on businesses that sell goods or provide services in the state. This tax is based on total sales and cannot be reduced by any cost of goods sold, labor costs, interest expense, discount paid, or delivery costs. In addition to this tax, Delaware imposes excise taxes on alcohol, cigarettes, tobacco, and gasoline. These taxes are passed on to consumers.

While the lack of a sales tax may attract businesses to Delaware, it’s important for entrepreneurs to remain aware of state tax laws and requirements. The key to success is working with a tax professional and keeping up to date on changes to the law. By doing this, businesses can stay in compliance with the law and avoid penalties and liabilities.

The state also has favorable tax treatments for corporations, including a lower corporate tax rate than most other states and no personal property or use taxes. This makes Delaware an attractive place to do business, especially for companies that are based outside of the US.

The state’s income tax ranges from 0 percent to 6.6 percent, which is much lower than most other states. Its property tax is also less expensive than many other states, with a median property tax bill of $1,570 per home. Delaware also does not impose value-added tax (VAT), use taxes, or inheritance taxes.

Who Must Pay Delaware Taxes?

Many people are drawn to Delaware as a place to live or conduct business because of its favorable tax laws. The state does not impose property taxes, and its corporate income tax rate is lower than in most other states. However, individuals and businesses should be aware of the state’s sales tax policies and other important tax information before making a decision to move or set up shop in Delaware.

Despite the lack of a traditional sales tax, Delaware still collects hundreds of millions of dollars annually from taxes and fees. These include a corporation franchise tax and a company gross receipts tax. These taxes generate revenue for the state and may be passed on to consumers.

Businesses that are not subject to the state’s sales tax may have to pay other types of taxes, such as cigarette and gasoline taxes. They also need to pay payroll taxes for employees. These taxes are collected by the Division of Revenue and are paid monthly or quarterly, depending on how much a company owes in withholding.

SaaS businesses should consult with a tax expert to ensure they’re complying with the state’s sales tax laws. Getting accurate rates, nexus thresholds, and product taxability information is critical to ensuring compliance and avoiding potential penalties. Using an automated system to track and report sales tax can help businesses comply with state tax rules.