WITHHOLDING: FAQS
Q. What are Delaware's withholding requirements?
A. Please visit Delaware's Employer's Guide for withholding regulations and employer's duties.
Q. What is Delaware's Personal Income Tax Rate?
A. Please check the Income Tax Rate Chart.
Q. When are Delaware Withholding Taxes due?
A. Please check the Withholding Due Dates calendar.
Q. Are employers required to withhold income tax for workmen's compensation and/or disability or sick leave?
A. Section 1151 of Title 30 of the Delaware Code Annotated requires State withholding if the wages or other remuneration is subject to Federal withholding. The easy rule is "If you withhold Federal tax, then you must withhold State tax."
Q. Is Deferred Compensation subject to income tax in Delaware?
A. The recommended withholding for payments of deferred compensation is 5%. If your company makes deferred compensation payments to Delaware residents, you should be registered as a withholding agent. A Combined Registration Application must be completed and mailed to the Division of Revenue, and appropriate withholding coupons will be mailed to you.
Q. Is there a form for the employee to file for withholding exemptions?
A. Delaware accepts Federal Form W-4 for an employee to claim personal exemptions. In the event that an employee needs additional State withholding, Forms W-4NR and SD/W-4A are available for non-residents and residents respectively to help them calculate the additional tax to be withheld.
Q. We are an out-of-state business and have employees who live in Delaware. Does Delaware have reciprocity with other states?
A. Delaware does not have reciprocity with any state. Withholding is only required in the "duty assigned state", e.g. your state. Delaware provides a credit against the state liability for taxes paid by its residents to other states. If your state has a lower marginal tax rate than Delaware, your employee(s) may need to have additional tax withheld to meet his/her Delaware liability. Use Form SD/W-4A to calculate the additional tax to be withheld.
Q. If I am a filing Delaware withholding for the first time, what is my filing method?
A. All withholding agents having no prior record of withholding will file on a monthly basis until the next "lookback period".
