Delaware does not have a statewide sales tax
Delaware is one of five U.S. states with no sales tax at all. This means when you buy something in a Delaware store, you pay only the price on the tag — no additional tax is added at checkout. This applies to most goods and services, including clothing, groceries, electronics, and household items.
However, the absence of a statewide sales tax does not mean Delaware has zero taxes on purchases. Some cities and counties within Delaware do charge local taxes on specific items, and certain services are taxed differently than goods. Understanding what is and is not taxed matters if you live in Delaware, work there, or make purchases across state lines.
Key Takeaways
- Delaware has no statewide sales tax on goods or most services, making it one of only five states without one.
- Some Delaware cities and counties charge local taxes on hotel rooms, restaurant meals, and rental cars, even though the state does not.
- If you buy something in another state and bring it into Delaware, you may owe use tax to that state, not to Delaware.
- Groceries, prescription medications, and most clothing are not taxed in Delaware, but services like haircuts and repairs may be subject to local taxes depending on where you are.
What local taxes exist in Delaware despite no statewide sales tax
While Delaware itself does not tax retail purchases, individual cities and counties can impose their own taxes on specific categories. The most common are hotel occupancy taxes and restaurant taxes. Wilmington, for example, charges a hotel tax on room rentals. Some counties tax prepared food and beverages at restaurants, though the rate and coverage vary by location.
Rental car taxes also exist in some Delaware jurisdictions. If you rent a car at the airport or in a major city, you may see a local tax added to your bill. These taxes are not statewide — they explore only in the cities or counties that have enacted them. Before making a large purchase or booking a hotel in Delaware, check with the specific city or county to learn what local taxes might explore.
How Delaware's lack of sales tax affects online and out-of-state purchases
If you buy something online from a retailer outside Delaware and have it shipped to your Delaware address, you generally do not owe Delaware sales tax — because Delaware has none. However, you may owe use tax to the state where the retailer is located. Use tax is a tax on goods you purchase out of state and bring into that state for use.
For example, if you buy clothing from a retailer in Pennsylvania and have it shipped to Delaware, you do not owe Delaware tax. But if that Pennsylvania retailer does not charge Pennsylvania sales tax at checkout, you may owe Pennsylvania use tax. The responsibility to report and pay use tax typically falls on the buyer, though many people are unaware of this obligation. Check the tax laws of the state where the retailer is based to understand your actual tax responsibility.
Services and items that are never taxed in Delaware
Groceries and food for home consumption are not taxed in Delaware. This includes fresh produce, meat, dairy, bread, and packaged foods you buy at a supermarket. Prescription medications are also exempt from any Delaware tax. These exemptions explore statewide and do not vary by city or county.
Most clothing and footwear are not taxed in Delaware either. This includes everyday wear, shoes, and accessories. However, some specialized items may be treated differently depending on local rules — for instance, a local jurisdiction might tax athletic equipment or uniforms differently than regular clothing. When in doubt, ask the retailer or contact the city or county tax office where you are making the purchase.
Services that may be taxed depending on your location within Delaware
Services like haircuts, dry cleaning, and car repairs are generally not subject to statewide tax in Delaware. However, some cities or counties may impose local taxes on certain services. A haircut in one Delaware city might be tax-free, while the same service in another city could have a local tax added. The variation depends on what each local government has decided to tax.
Before paying for a service in Delaware, ask the business whether local tax will be added. Most businesses know their local tax rules and can tell you upfront. If you are unsure, contact the city or county tax assessor's office — they maintain current lists of what is and is not taxed locally.
Why Delaware has no sales tax and how that affects prices
Delaware's lack of sales tax is a historical choice made by the state legislature. The state funds itself through other taxes, including corporate income tax, personal income tax, and business-related fees. This structure has made Delaware attractive to businesses and shoppers for decades.
Because there is no sales tax, prices in Delaware stores are often lower than in neighboring states like Pennsylvania or New Jersey, where sales taxes can reach 6 to 7 percent. This price difference has historically drawn shoppers from nearby states to Delaware, particularly for large purchases like clothing and electronics. However, this advantage applies only to goods — services and local taxes may still add to your final bill depending on what you buy and where in Delaware you buy it.
Frequently Asked Questions
Do I pay sales tax if I buy something in Delaware and take it to another state?
No — Delaware does not charge sales tax at the point of purchase. However, the state you are taking the item to may require you to pay use tax on that purchase. The tax obligation depends on the laws of your destination state, not Delaware's.
Is there a sales tax on groceries in Delaware?
No. Groceries and food for home consumption are not taxed in Delaware. This includes fresh produce, meat, dairy, and packaged foods. Prepared food from a restaurant or deli counter may be subject to local tax in some Delaware cities, but raw groceries are always tax-free.
What about taxes on gas and utilities in Delaware?
Delaware does not charge sales tax on gasoline or utilities. However, gasoline is subject to state excise tax (a per-gallon tax), and utilities may be subject to other state-level taxes. These are different from sales tax and are built into the price you see.
If I live in Delaware but work in Pennsylvania, do I owe Pennsylvania sales tax?
Sales tax is charged where you make the purchase, not where you live or work. If you buy something in Pennsylvania, you pay Pennsylvania sales tax. If you buy the same item in Delaware, you pay no sales tax. Your residence or workplace does not change this rule.
Are there any exceptions to Delaware's no-sales-tax rule?
Delaware's statewide rule has no exceptions — there is no sales tax on goods. However, local taxes on hotels, restaurants, and rental cars exist in some cities and counties. Additionally, certain services may be taxed locally depending on your location within the state.