Delaware taxes capital gains at 6.6%. Combined with federal taxes, your effective rate on a home sale could reach 25.4%.
DE State Rate
6.6%
Top marginal rate
Federal Rate
15%
Most common long-term bracket
Combined Effective
25.4%
On $150K taxable gain (example)
After the $250K/$500K exclusion, here's what a typical seller might owe.
If Delaware is where your primary residence is located and you've lived there at least 2 of the last 5 years, you can exclude up to $250K (single) or $500K (married filing jointly) of your capital gain from both federal and state taxes.
Investment and rental properties in Delaware don't qualify for the exclusion. You'll owe 6.6% state tax plus federal tax on the full gain, plus 25% depreciation recapture on any depreciation claimed.
In Delaware, homes sold in February sell for 6% more than those sold in October (-7%). Timing your sale right can offset a significant portion of your tax bill.
Capital gains tax rates on home sales in Delaware and nearby states.
| State | Rate | Tax on $150K Gain | Notes |
|---|---|---|---|
| 3.07% | $4,605 | Flat tax rate | |
| 5.75% | $8,625 | Top rate; local surcharge possible | |
DelawareYou | 6.6% | $9,900 | Top marginal rate |
| 10.75% | $16,125 | Top marginal rate |
Selling in Pennsylvania instead of Delaware would save $5,295 in state tax on a $150K gain.
Delaware taxes capital gains as ordinary income with a top marginal rate of 6.6%. While this rate is moderate by Northeast standards, Delaware has the significant advantage of no sales tax and relatively low property taxes, making the overall tax burden manageable.
Delaware does not impose a real estate transfer tax on sellers (the buyer pays 2.5%), which is a notable benefit compared to neighboring states. However, the capital gains tax still applies to any gain above the federal exclusion.
The state's small size means most sellers are within commuting distance of Philadelphia, Baltimore, or Washington DC, which influences both property values and the buyer pool. Beach communities like Rehoboth and Lewes see significant seasonal pricing variation.
Delaware's tax-free shopping reputation extends to its friendly treatment of retirees, with no tax on Social Security income and generous pension exclusions. For older sellers downsizing, this can create favorable overall tax outcomes even with the 6.6% capital gains rate.
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