Does Delaware follow the federal no-tax-on-tips and overtime deductions?
DOES NOT CONFORM
Delaware does not follow the federal deductions for state income tax. You can still claim the tips and overtime deductions on your federal return (Schedule 1-A) — they simply do not reduce your Delaware state tax. Do not assume your state return treats this income the way your federal return does.
Verified against the official state source below — last verified October 26, 2026
| Deduction | Delaware position |
|---|---|
| Federal tips deduction (IRC §224) | Does not conform |
| Federal overtime deduction (IRC §225) | Does not conform |
What the state itself says
"deductions for no tax on tips, overtime, and car loan interest … will not flow through to the Delaware Personal Income Tax."
- Official source
- Delaware Division of Revenue, "2025-2026 Tax Season Updates"
- Tax years covered
- 2025 guidance.
Delaware is otherwise rolling-conformity and follows federal AGI/itemized definitions; the Division explains these deductions are not federally defined as itemized deductions and do not enter AGI. HB 255 decoupled Delaware only from three business provisions; 2026 bills to create a Delaware tips/overtime benefit did not become law. (Sourcing note: quote read from the official page as indexed; the site rejected direct opens in the research session.)
Your federal deduction is separate
Whatever your state does, the federal deductions run on their own rules: check your W-2 codes with the W-2 Code Checker, estimate with the Tips Calculator and Overtime Calculator, and see the glossary for any term. All state positions: the state-by-state index.
State position verified October 26, 2026 from the official source above. State guidance changes; confirm on the source before filing. This page is general information, not tax advice.