Updated October 16, 2026. Quick answer: Delaware lets a taxpayer under age 60 exclude up to $2,000 of pension income (up to $12,500 for a US military pension), and a taxpayer 60 or older exclude up to $12,500 of pension and eligible retirement income combined; the instructions list “government deferred compensation plans (IRC Sec. 457)” as eligible retirement income and do not name 403(b) plans.
State retirement-income forms, line by line: Delaware PIT-RES pension exclusion.
Delaware at a glance
| Item | What the documents say |
|---|---|
| How the state treats 403(b) and 457(b) withdrawals | Section 457 government plans are listed as eligible retirement income; 403(b) is not named |
| Do the state’s documents name these plans? | The documents read name neither 403(b) nor 457(b) plans |
| Retirement exclusion or credit | Pension exclusion of up to $2,000 under age 60 or up to $12,500 at 60 or older |
| Public-employee pension rule | No separate public-employee exclusion; pensions from the United States, the State and its subdivisions share the same cap |
| Rate in the documents read | Progressive, with a top rate of 6.6% over $60,000 |
| Changed for 2026? | The documents read describe no 2026 change |
What the Delaware documents say
The Form PIT-RES instructions say pension income “may qualify for an exclusion from Delaware taxable income”. The worksheet tells a reader to “Enter Line 3 or $12,500, whichever is less”, and the instructions say “Each taxpayer may receive ONLY ONE pension” exclusion.
The statute’s rate text reads “6.6% of taxable income in excess of $60,000” for the top bracket. The exclusion rests on Title 30, Section 1106 of the Delaware Code, and the rates on Section 1102.
Withholding and federal tax
Whether a state withholds is a separate rule: see state withholding on retirement withdrawals. Federal rules: 403(b) withdrawal rules and 457(b) withdrawal rules. The IRS says pension and annuity payments from a qualified employer plan have “all or some portion of the amounts you receive may be taxable”.
What the documents do not say
- The documents read never print 403(b); whether a 403(b) falls within the qualified retirement plans the instructions define is not stated.
- The instructions say an early distribution from an IRA or pension fund for emergency reasons or following a separation from employment does not qualify for the pension exclusion, including a distribution coded 1 in Box 7 of Form 1099-R or one assessed the federal early withdrawal penalty.
Common mistakes
- Assuming Delaware’s rule for a 401(k) or IRA also covers a 403(b) or 457(b): read whether its documents name the plan.
Related: whether Delaware taxes 401(k) and IRA withdrawals, Delaware retirement taxes, whether Delaware taxes pensions, 403(b) withdrawal rules, 457(b) withdrawal 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 (Resident Individuals), s.1106 Modifications: https://delcode.delaware.gov/title30/c011/sc02/index.html
- Delaware Code Title 30, Chapter 11, Subchapter I, s.1102 Imposition and rate of tax: https://delcode.delaware.gov/title30/c011/sc01/index.html
- IRS Tax Topic 410, Pensions and annuities: https://www.irs.gov/taxtopics/tc410
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.