Delaware is a small state with a veteran-friendly tax structure that stands out in the Mid-Atlantic region. Military retirement pay is partially exempt from state income tax, and veterans with a 100% permanent disability rating can eliminate the school portion of their property tax bill entirely — which is typically the largest component of a Delaware homeowner’s annual property tax. A bipartisan bill introduced in January 2026 proposes increasing the retirement pay exemption significantly over the coming years, signaling continued legislative momentum in support of the state’s veteran community.
Delaware is home to approximately 66,000 veterans and hosts Dover Air Force Base, a major Air Mobility Command installation and the home of the Air Force Mortuary Affairs Operations Center. The Delaware National Guard’s 166th Airlift Wing operates from New Castle Airport.
USMilitary.org is an independent educational resource, not affiliated with the Delaware Office of Veterans Services, the VA, or any government agency. For official benefit information, visit veteransaffairs.delaware.gov.
- Up to $12,500 of military retirement pay and SBP payments is excluded from Delaware income tax — Senate Bill 219 (introduced January 2026) proposes phasing this up to $25,000 by 2029
- Veterans with a permanent 100% disability rating who have been Delaware residents for at least three years may receive a 100% credit on school district property taxes — typically the largest portion of the annual tax bill
- Delaware National Guard members may receive reimbursement of up to 100% of costs for one associate degree and/or one bachelor’s degree
- Children of service members killed on active duty or of POW/MIA members are eligible for up to four years of free college in Delaware
- Veterans, disabled veterans, and their unremarried surviving spouses receive 5-point preference in state employment hiring and promotions
- State park passes are available at 50% discount for active duty, National Guard, Reserve, and veteran residents
- Income Tax Benefits
- Property Tax Benefits
- Education Benefits
- Employment Benefits
- Delaware Veterans Home
- Recreation and Parks
- Vehicle and DMV Benefits
- Hunting and Fishing
- Surviving Spouse Benefits
- How to Access Delaware Veteran Benefits
- Frequently Asked Questions
Income Tax Benefits
Military Retirement Pay — Up to $12,500 Excluded
Delaware residents are eligible to exclude up to $12,500 of military retirement pay from state income tax. Survivor Benefit Plan (SBP) payments also qualify for this exclusion. Delaware has a graduated income tax rate system with a top rate of 6.6% for income over $60,000, so the exclusion saves eligible retirees up to $825 per year at the top bracket.
Pending legislation: Senate Bill 219, introduced by Senator Eric Buckson with bipartisan support in January 2026, proposes phasing the military pension exclusion up to $25,000 for all military retirees regardless of age by tax year 2029. The bill passed a prior iteration in 2024. Veterans and advocates should monitor its progress through the Delaware General Assembly.
Military Disability Retirement Pay — Exempt
Military disability retirement pay received as a pension, annuity, or similar allowance for personal injury or sickness resulting from active service is excluded from Delaware taxable income. This includes disability compensation, disability pension payments, and similar allowances.
VA Disability Compensation and DIC — Exempt
VA disability compensation and Dependency and Indemnity Compensation (DIC) are federally tax-exempt and carry no Delaware state tax liability at any rating level.
Survivor Benefit Plans — Partial Exclusion
Delaware residents receiving military survivor benefit plan payments who are age 60 or older are eligible for the pension exclusion of up to $12,500. For residents under age 60, the exclusion is limited to $2,000. An additional $2,000 may be excluded by survivors who have a permanent disability, earned income of less than $2,500, and adjusted gross income of $10,000 or less.
Property Tax Benefits
Disabled Veterans School Tax Credit — Up to 100%
Delaware’s most significant property tax benefit for veterans is the Disabled Veterans School Tax Credit. Permanently disabled veterans may receive a tax credit of up to 100% of their non-vocational school district property tax — which is typically the largest component of a Delaware homeowner’s annual tax bill. To qualify:
- Permanent disability rating (100%) from the VA
- Delaware resident for at least three years immediately prior to application
- Credit applies only to the primary residence
School taxes in Delaware are levied separately by school district and can represent 60% or more of a homeowner’s total property tax burden. A 100% credit on this portion translates to significant annual savings depending on home value and district rates. Contact your county government or the Delaware Department of Education for current school tax rates by district.
Education Benefits
Delaware National Guard Tuition Reimbursement — Up to 100%
Members of the Delaware National Guard may receive reimbursement of up to 100% of the costs for one associate degree and/or one bachelor’s degree from Delaware state institutions. The program covers tuition and required fees. Contact the Delaware National Guard Education Services Office for current program details and application requirements.
Free College for Children of Killed-in-Action and POW/MIA Members
Children of military members killed while on active duty, or who died from disease, wounds, injuries, or disabilities arising from performance of duty, as well as children of POW/MIA members, are eligible for up to four years of free college education in Delaware. Requirements:
- Child must be between ages 16 and 24 at the time of application
- Delaware resident for at least three years prior to applying
- Applies to state colleges and universities
Employment Benefits
State Employment Preference — 5 Points
Veterans, disabled veterans, and their unremarried surviving spouses receive 5-point preference in Delaware state employment competitive examinations, hiring decisions, and promotional opportunities. Eligible veterans also receive higher retention standing in the event of layoffs. The preference applies to veterans who served honorably and meet standard eligibility criteria.
Delaware Veterans Home
The Delaware Veterans Home in Milford provides residential skilled nursing and assisted living care for eligible Delaware veterans. The facility offers both long-term and short-term care. Eligibility is based on veteran status, Delaware residency, and need for the level of care provided. Contact the Delaware Veterans Home directly for current admission criteria and availability.
Recreation and Parks
State Park Pass — 50% Discount
Delaware residents serving in the U.S. Armed Forces or National Guard, as well as veterans, receive a 50% discount on annual Delaware state park passes. This applies to all Delaware state park day use fees covered by the annual pass. Identification showing proof of military status or veteran status is required at time of purchase.
Vehicle and DMV Benefits
Delaware offers veteran-designated license plates for veterans and disabled veterans. Specific plates — including Gold Star Family and POW/MIA designations — are available with appropriate documentation. Contact the Delaware Division of Motor Vehicles for current plate options, associated fees (if any), and required documentation.
Hunting and Fishing
Delaware veterans with qualifying service-connected disabilities are eligible for exemptions from hunting, trapping, and fishing license requirements. Contact the Delaware Division of Fish and Wildlife for current eligibility criteria and the application process for license exemptions.
Surviving Spouse Benefits
Unremarried surviving spouses of eligible veterans share in several of Delaware’s veteran benefits programs, including state employment preference and the school tax credit (with appropriate documentation). Surviving spouses receiving SBP payments who are age 60 or older qualify for the pension exclusion under the same terms as the veteran.
How to Access Delaware Veteran Benefits
The Delaware Office of Veterans Services maintains Veterans Service Officers who provide free assistance to veterans, retired service members, and their families in accessing both state and federal benefits.
- Delaware Office of Veterans Services: veteransaffairs.delaware.gov
- Property tax credit: Apply through your county government or county assessor
- National Guard tuition: Contact the Delaware National Guard Education Services Office
- State park discount: Present military ID or discharge documentation when purchasing pass
- Hunting/fishing exemptions: Apply through the Delaware Division of Fish and Wildlife
This article is provided by USMilitary.org, an independent educational resource. We are not affiliated with the Delaware Office of Veterans Services, the VA, or any government agency. Benefits are subject to change — verify current program details at veteransaffairs.delaware.gov.
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Frequently Asked Questions
Up to $12,500 of military retirement pay is excluded from Delaware income tax. Survivor Benefit Plan payments also qualify. Proposed legislation (SB 219, introduced January 2026) would phase this amount up to $25,000 by 2029 — monitor the Delaware General Assembly for updates on that bill’s progress.
You must have a permanent 100% VA disability rating and have been a Delaware resident for at least three years. The credit applies only to your primary residence. Apply through your county government — the credit covers up to 100% of the non-vocational school district property tax on your home, which is typically the largest portion of your annual property tax bill.
If you were killed on active duty, died from service-related causes, or are listed as POW/MIA, your children between ages 16 and 24 who are Delaware residents for at least three years may receive up to four years of free college at state institutions. Contact the Delaware Higher Education Office for application details.
Being stationed at Dover AFB does not automatically establish Delaware residency for state benefit purposes. However, active duty members who establish Delaware as their official state of legal residence may access Delaware veteran benefits. Many active duty members at Dover maintain residency in another state — this is a personal financial decision worth evaluating with a financial counselor at the installation’s Airman and Family Readiness Center.