The compensation of every person who is a non-resident of Delaware is subject to withholding to the extent that it is compensation for personal services performed in the State of Delaware, as an employee, in the conduct of business of an employer in the State of Delaware. The compensation of a person who is a resident of Delaware is subject to withholding, provided that the personal services were performed as an employee in the conduct of business of an employer in the State of Delaware. Employers engaged in business outside Delaware, who employ Delaware residents who work in another state, are not required to withhold Delaware income tax on such employees, but may do so according to the approved methods if both the employer and the employee elect to withhold Delaware Income Tax. You must first withhold the tax for the State in which the employee works, then you may withhold taxes for the State of Delaware at the option of the employee.

Employers primarily engaged in business outside of Delaware, who also engage in business in Delaware and employ residents and non-residents to perform personal services in Delaware have the same requirements to withhold and remit Delaware tax as is required of other Delaware employers.

Some states have Reciprocal Agreements whereby each state agrees not to tax the wages of non-residents earned in the respective state. The State of Delaware does not have Reciprocal Agreements with any other state regarding the taxation of non-resident employees.

Deferred Compensation