State Sen. Eric Buckson, R-Dover, is the lead sponsor of a bill to increase the pension exclusion for military pensioners over three years.
If signed into law, the exemption for military pensions from state income tax for military pensioners of all ages would be $25,000 in taxable years on or after January 1, 2026. A fiscal note puts the cost of the reduction in tax revenue at about $2.5 million over two years.
The amount of pension and 401K income taxable for federal purposes is also taxable in Delaware. However, those 60 years or older are entitled to a pension exclusion of up to $12,500 or the amount of the pension and eligible retirement income, whichever is less. Delaware does not tax Social Security payments.
“I applaud the work the General Assembly has done over recent years regarding military pension exemptions for our veterans,” Buckson said in a statement. “I thank everyone who has joined in this effort and, particularly, Senator (Spiros) Mantzavinos for his work on 2022’s Senate Bill 188.”
Currently, a dozen states partially exempt military retirement pay from state income taxes.
“We should do all we can to help those who have given so much to this nation,” said Buckson. “Veterans deserve the absolute best and this is just one way we can give back and say thanks.”
Eric Buckson is a Senate Veterans Affairs Committee member. He has been a senator since 2022.
Delaware is a popular destination for military retirees, thanks to the lack of a sales tax, low property taxes, and access to the base exchange in Dover.
