Updated October 5, 2026. Quick answer: Yes, with a pension exclusion. For a filer 60 or older the exclusion is up to $12,500, and the instructions add “Each taxpayer may receive ONLY ONE pension exclusion”. Delaware’s top rate is 6.6% on taxable income over $60,000.
State retirement-income forms, line by line: Delaware PIT-RES pension exclusion.
How Delaware treats annuity income
| Item | What the documents say |
|---|---|
| Treatment | Taxed on a graduated schedule; a pension exclusion applies |
| Rates | 2.2% over $2,000, then 3.9%, 4.8%, 5.2% and 5.55%, up to “6.6% of taxable income in excess of $60,000.” |
| Age 60 or older | The exclusion is the lesser of $12,500 or the amount of the pension plus eligible retirement income |
| Under 60 | $2,000 for a non-military pension |
| What counts | Pensions from employers, the United States or the State, and income from “qualified retirement plans” |
| Purchased annuities | The documents read do not address annuities bought outside a retirement plan |
A $24,000 example
A filer 60 or older with $24,000 of pension payments from an employer can exclude $12,500, leaving $11,500, computed as $24,000 minus $12,500. At the 6.6% top rate that is at most $759, computed as ($24,000 minus $12,500) x 6.6%; lower brackets make the actual figure smaller.
A filer under 60 can exclude $2,000, leaving $22,000, which is at most $1,452 at the same top rate, computed as ($24,000 minus $2,000) x 6.6%.
What changes in 2026
The latest documents read print no 2026 change to the way annuity income is taxed.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal side in Topic no. 410, Pensions and Annuities and Publication 575, Pension and Annuity Income.
Related: whether Delaware taxes pensions, how Delaware taxes retirement income, state tax on 401(k) and IRA withdrawals, how a surrendered annuity is taxed, and pension and annuity decisions.
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Answer againSources
- PIT-RES Resident Individual Income Tax Instructions 2025 (Delaware Division of Revenue): https://revenuefiles.delaware.gov/2025/PITForms_Instructions/Instructions/PIT-RES_Instructions_2025-01.pdf
- 30 Del. C. section 1106, Modifications to taxable income (Delaware Code Online): https://delcode.delaware.gov/title30/c011/sc02/index.html
- 30 Del. C. section 1102, Rate of tax (Delaware Code Online): https://delcode.delaware.gov/title30/c011/sc01/index.html
Sources: the primary documents linked above, read on October 5, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.