Updated October 5, 2026. Quick answer: Yes. Delaware taxes interest and dividends as part of Delaware adjusted gross income, on graduated rates that, for “taxable years beginning after December 31, 2013,” run from 2.2% up to 6.6% above $60,000. Interest on other states’ bonds is added back and U.S. obligation interest is exempt.
How Delaware treats dividends and interest
| Item | What the documents say |
|---|---|
| Treatment | Taxed on the graduated schedule |
| Rates (statute) | 2.2% on taxable income over $2,000 up to $5,000, 3.9% to $10,000, 4.8% to $20,000, 5.2% to $25,000, 5.55% to $60,000; the statute prints “6.6% of taxable income in excess of $60,000.” It prints no rate for the first $2,000 |
| A gap in the sources | The 2025 resident instructions print no rate schedule, so the rates rest on the statute, whose archived copy carries no revision date |
| Other states’ bonds | Interest from other states’ obligations “political subdivisions is taxable and must be added on Line 2.” That includes mutual fund dividends attributable to them |
| Delaware bonds | The instructions print no addition for Delaware obligations, so their interest is not added back |
| U.S. obligations | Interest on obligations of the United States included on the federal return is subtracted on Line 5; interest from Fannie Mae, Freddie Mac, Ginnie Mae and Sallie Mae is not exempt |
| Pension exclusion | “Eligible retirement income includes dividends, capital gains net of capital losses, interest,” so for a filer 60 or over, interest and dividends count toward the $12,500 exclusion |
A $20,000 example
Taxable dividends and interest of $20,000 taxed wholly at the lowest printed rate, 2.2%, would add $440; taxed wholly at the top rate, 6.6%, $1,320. Which rate applies depends on your total taxable income.
What changes in 2026
The latest documents read print no 2026 change to the way dividends and interest are taxed.
Federal rules
The state’s treatment sits on top of the federal one. Qualified dividends and ordinary dividends are sorted out on the Form 1099-DIV, as the site explains in Box 1a and 1b: ordinary versus qualified dividends, and interest is reported as covered in 1099-INT Box 1. The IRS explains the federal side in Topic no. 403, Interest Received and Topic no. 404, Dividends.
Related: whether Delaware taxes capital gains, whether Delaware taxes pensions, how Delaware taxes retirement income, dividends and interest tax by state, and how tax-exempt interest is reported.
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Answer againSources
- 2025 Delaware Personal Income Tax Resident Instructions: https://revenue.delaware.gov/wp-content/uploads/sites/141/2026/01/PIT-RES-Instructions-2025.pdf
- 30 Del. C. section 1102, Imposition and rate of tax: 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.