Delaware tax rules allow larger military pension subtractions over time

Delaware’s income tax rules let eligible recipients subtract military pension income, using the larger of the military pension limit or the general pension limit. The rules cover pensions from the Army, Navy, Air Force, Marine Corps, Space Force, Coast Guard, NOAA’s commissioned corps, the Public Health Service’s commissioned corps, and the National Guard. For a joint return, each spouse receiving a United States military pension has an individual limit, and the total subtraction cannot exceed twice the applicable limit. The military pension limit is $12,500 for tax years beginning in 2022 through 2026, then $15,000 in 2027, $20,000 in 2028, and $25,000 starting in 2029.

People age 60 or older must meet a Delaware residency period to qualify for the subtraction. This requirement applies to a person age 60 or older who claims the subtraction. Delaware treats a person as legally domiciled in the state if they meet the state’s definition of a resident individual. People domiciled in Delaware before January 1, 2027, must meet a three-year period; those domiciled on or after that date must meet a five-year period.