Updated September 4, 2026. Quick answer: Partially, and it depends on age. Delaware exempts up to $2,000 of pension income under age 60, rising to $12,500 combined with other eligible retirement income at 60 and older, for public, private and federal pensions alike. Military retirees under 60 get a separate, larger $12,500 carve-out.
Confidence note: high. This page is scoped to pension, IRA and 401(k) taxation specifically. For the state’s full retirement-tax picture (Social Security, tax rates, estate and probate), see how Delaware taxes retirement income generally.
Pending, not current law: Bills to raise the general exclusion to $25,000 (SB201, HB108) have both stalled in committee with no floor votes; current law remains $2,000/$12,500.
How pensions and retirement-account withdrawals are taxed
| Public (state/local government) pensions | Partially exempt: up to $2,000 under age 60, or up to $12,500 combined with other eligible retirement income at 60 or older. |
|---|---|
| Private (employer) pensions | Identical treatment to public pensions; the statute does not distinguish by employer type. |
| Federal government pensions (FERS/CSRS) | Identical treatment to public and private pensions: “the United States” is named in the same statutory clause as “this State.” |
| Military retirement pay | Under age 60, military retirees get a separate, larger exclusion of up to $12,500 (versus the general $2,000), effective for tax years beginning January 1, 2022. |
| IRA and 401(k)/403(b) distributions | IRA and 401(k) distributions are confirmed by name as “eligible retirement income” within the same combined age-based caps described above. |
| General retirement-income exclusion | An additional standard deduction of $2,500 per condition (age 65+, blindness), capped at $5,000 per individual, separate from the pension exclusion. Social Security and Railroad Retirement income is separately fully excluded. |
Coordinate this with your overall retirement plan
An adviser can help weigh how much of a pension or IRA withdrawal to take this year, whether a Roth conversion makes sense before or after a move, and how state tax interacts with the rest of your plan, but that does not replace the numbers in your own return.
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Social Security
Social Security is never taxed by Delaware. Social Security has its own rules in every state; see the full breakdown in how Delaware taxes retirement income generally.
Statute and sources
Governing citation: 30 Del. C. sec. 1106(b)(3) (pension exclusion), sec. 1108(b) (age-65 standard-deduction add-on).
Read September 4, 2026.
Related: how Delaware taxes retirement income generally · does Delaware tax Roth conversions? · Roth conversion taxes, all 51 jurisdictions.
General information drawn from each state’s own published statutes and revenue-department guidance, not legal, tax or financial advice. Figures and exemption amounts are current as of the date in the quick answer, are set by state law, and can change by future legislation; any pending bill named on this page is not yet law. This page cannot see your own return, which governs. We are not a law firm, a tax adviser, or a fiduciary, and this is not personalized advice.