Does Delaware Tax Profit From Selling Your Home? (2026)

Updated October 8, 2026. Quick answer: Generally no, if you qualify for the federal exclusion. Delaware taxable income of a resident “shall be the federal adjusted gross income as defined in the laws” of the United States, so a gain excluded under the federal exclusion stays out. Gain above it is taxed at graduated rates, the top one being “6.6% of taxable income in excess of $60,000”.

Delaware tax on home sale profit at a glance

What the Delaware documents say

Title 30, section 1105 of the Delaware Code says the taxable income of a resident individual “shall be the federal adjusted gross income as defined in the laws” of the United States, with Delaware’s own modifications. Under the federal statute, “Gross income shall not include gain from the sale or exchange” of a principal residence that meets the ownership and use tests, so an excluded gain never enters federal adjusted gross income. That is reasoning from two documents. None of the Delaware pages read names section 121 itself.

The 2025 PIT-RES instructions start the same way, at “Line 1 Federal Adjusted Gross Income”. Section 1102 sets the rates for taxable years after 2013: “6.6% of taxable income in excess of $60,000” is the top bracket, and the lower brackets run from 2.2% up to 5.55%.

What the federal exclusion requires

Most state answers start here. The statute says “Gross income shall not include gain from the sale or exchange” of property that, during the five years before the sale, you owned and used as your principal residence for periods adding up to two years or more. The limit is “shall not exceed $250,000”, or $500,000 for a husband and wife who make a joint return and meet the statute’s conditions. See CMG’s home sale taxes page and exclusion calculator.

A worked example at a $400,000 gain

An illustration, not a return: a married couple in Delaware sells their main home with a gain of $400,000 and meets the federal ownership and use tests. The gain is below the $500,000 joint exclusion, so it is not in federal adjusted gross income and, on the documents read, $0 is taxed by Delaware. As a second illustration, computed below, suppose the gain were $600,000. The amount above the exclusion would then be $100,000, which is taxed at the graduated rates; this page computes no tax because the bracket depends on the rest of the return.

What is collected at the sale

Delaware’s realty transfer tax is “a realty transfer tax at the rate of 3 percent” of the value of the property, or 2 1/2 percent where the municipality or county has enacted the full 1 1/2 percent local tax. The statute says “Said tax is to be apportioned equally between grantor and grantee.” The seller’s share is therefore half.

Separately, “Every nonresident individual who sells or exchanges Delaware real estate” must file with the Recorder a declaration of estimated income tax “applying the highest marginal rate under” section 1102, or an alternative form. The statute adds that the estimated tax “shall be remitted with the deed to the Recorder before the deed shall be recorded” and “shall be withheld from the net proceeds of the sale”. That rule is for nonresident sellers; the pages read show no income tax withholding on a resident’s sale.

What changes in 2026

Delaware: Title 30, section 1102 applies the same schedule to all taxable years after December 31, 2013, so the income tax rates are unchanged for 2026 on the documents read.

What the documents do not say

• The pages read do not mention section 121, so conformity is reasoned from the federal starting point. Local taxes such as a city wage tax were not read. The rate schedule is the statute’s; the Division’s withholding table found is labelled for 2025. The Delaware transfer tax exemptions list was not read line by line for a principal residence.

Common mistakes

• Treating the nonresident estimated tax declaration as a rule for Delaware residents; the statute covers nonresident individuals, defined as anyone who is not a Delaware resident for the entire tax year, so a part-year resident is included.
• Forgetting that the realty transfer tax is split between buyer and seller, so the seller’s share is half of the statutory rate.
• Assuming the answer for one state applies to another, or that the state answer changes the federal tax on the sale.

Related: home sale taxes, state tax on home sale profit, how Delaware taxes capital gains, Delaware retirement taxes, and home sale exclusion calculator.

Sources

• Title 30, Chapter 11, Subchapter II (Resident Individuals), 1105 Taxable income: https://delcode.delaware.gov/title30/c011/sc02/index.html
• Title 30, Chapter 11, Subchapter I, 1102 Imposition and rate of tax: https://delcode.delaware.gov/title30/c011/sc01/index.html
• Title 30, Chapter 11, Subchapter III, 1126 Withholding of income tax on sale or exchange of real estate by nonresident individuals: https://delcode.delaware.gov/title30/c011/sc03/index.html
• Delaware Individual Resident Income Tax Return: Instructions for Form (PIT-RES): https://revenuefiles.delaware.gov/2025/PITForms_Instructions/Instructions/PIT-RES_Instructions_2025-01.pdf
• Title 30, Chapter 54, Subchapter I (Realty Transfer Tax), 5402 Rate of tax: https://delcode.delaware.gov/title30/c054/sc01/index.html
• Title 30, Chapter 11, Subchapter I, 1102 Imposition and rate of tax: https://delcode.delaware.gov/title30/c011/sc01/index.html
• Employer’s Guide (Withholding Regulations and Employer’s Duties): https://revenue.delaware.gov/employers-guide-withholding-regulations-employers-duties/
• 26 U.S.C. 121, Exclusion of gain from sale of principal residence (U.S. Code, GovInfo): https://www.govinfo.gov/content/pkg/USCODE-2023-title26/html/USCODE-2023-title26-subtitleA-chap1-subchapB-partIII-sec121.htm

Sources: the primary documents linked above, read on October 8, 2026. General information, not tax advice. Your own facts decide the outcome, and a tax professional or the state agency itself is the right place to confirm anything consequential.