Updated October 16, 2026. Quick answer: Delaware’s documents read do not mention inherited IRAs: the pension exclusion for a non-military pension is $2,000 under age 60, and at 60 or older it is capped at $12,500, and the one decedent reference is to employer pensions, which “(including pensions of a deceased taxpayer) may qualify for an exclusion”.
Delaware at a glance
| Item | What the documents say |
|---|---|
| How the state taxes retirement-account income | Taxed as income, with a pension exclusion that depends on age |
| Do the state’s documents address beneficiaries? | Not addressed for IRAs: the one decedent reference is to employer pensions |
| Retirement exclusion or credit | $2,000 under age 60; $12,500 at 60 or older for pension plus eligible retirement income, which includes IRAs |
| Rate in the documents read | 6.6% of taxable income over $60,000 (30 Del. C. 1102) |
| State inheritance or estate tax | Not mentioned in the documents read |
| Changed for 2026? | The documents read state no change for 2026 |
What the Delaware documents say
The PIT-RES instructions count IRA income in the exclusion for filers 60 or older through “qualified retirement plans (IRC Sec. 4974), such as IRA, 401(k), Keogh” in the definition of eligible retirement income.
Under 60, a non-military pension gets an exclusion that “equals $2,000 or the amount of your pension, whichever is less”. At 60 or older the worksheet says “Enter Line 3 or $12,500, whichever is less”.
The instructions’ reference to a deceased taxpayer is about employer pensions: pensions “(including pensions of a deceased taxpayer) may qualify for an exclusion”. Delaware prints its top rate in the statute as “6.6% of taxable income in excess of $60,000”.
The federal 10-year rule and your Delaware tax year
IRS Publication 590-B says a beneficiary may be required to take the entire account balance by the “end of the 10th year following the year of the owner’s death”, with exceptions for certain beneficiaries. Because the balance generally has to come out within that window, the timing of each withdrawal decides which tax year it lands in. See the 10-year rule and annual RMDs, lump sum versus spreading withdrawals and inherited IRA rules.
Withholding and other state taxes
Whether a state withholds from a withdrawal is a separate rule: see state withholding on retirement withdrawals. For Delaware’s own death taxes, see Delaware inheritance tax.
What the documents do not say
- The documents read do not mention inherited IRAs; the decedent wording is about employer pensions.
- They do not say whether an IRA beneficiary’s age or the decedent’s age governs the $12,500 limit.
- They say nothing about a deduction or credit for estate tax or income in respect of a decedent.
Common mistakes
- Assuming Delaware’s rule for your own retirement income also covers an account you inherited: read whether its documents address beneficiaries, and confirm the point with a Delaware preparer.
Related: state tax on inherited IRA withdrawals, state by state, whether Delaware taxes 401(k) and IRA withdrawals, Delaware retirement taxes, Delaware inheritance tax, inherited IRA rules, spouse versus non-spouse beneficiary rules, and state withholding on retirement withdrawals.
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Answer againSources
- Delaware Individual Income Tax Return Resident Instructions 2025 (Form PIT-RES): https://revenuefiles.delaware.gov/2025/PITForms_Instructions/Instructions/PIT-RES_Instructions_2025-01.pdf
- Delaware Code Title 30, Chapter 11, Subchapter II, s.1106 Modifications: https://delcode.delaware.gov/title30/c011/sc02/index.html
- Delaware Code Title 30, Chapter 11, Subchapter I, s.1102 Tax imposed: https://delcode.delaware.gov/title30/c011/sc01/index.html
- IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs): https://www.irs.gov/pub/irs-pdf/p590b.pdf
Sources: the primary documents linked above, read on October 16, 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.