Delaware Sales Tax Guide 2024: Compliance, Rates, and Regulations for Businesses

‍Sales tax at a glance in Delaware

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No statewide sales tax in Delaware

Unlike most states, Delaware does not have a broad-based statewide sales tax. The Delaware legislature has consistently rejected proposals to implement a general retail sales tax collected on purchases made within the state.

Without a sales tax, Delaware consumers pay only the listed shelf or menu price when shopping at stores, restaurants, car dealerships, and other retailers. 

No additional taxes are added at checkout. This makes shopping in tax-free Delaware extremely attractive compared to neighboring states like Maryland, New Jersey, and Pennsylvania which have high sales tax rates.

For Delaware companies, not having to collect sales tax provides compliance and administrative advantages. Point-of-sale systems, bookkeeping, and recordkeeping are simplified without the burden of tracking taxable transactions and remitting collected tax to the state. This gives Delaware retailers a competitive edge over retailers in sales tax states.

Out-of-state sales tax collection requirements

While Delaware has no in-state sales tax, the rules are more complex for Delaware sellers shipping products to customers in other states:

• Delaware companies do not collect sales tax on items sold to Delaware addresses, whether selling online, in-store, via phone orders, etc.
• For orders shipped to addresses in states with sales tax, the Delaware seller may be required to collect and remit those state and local sales taxes based on that jurisdiction's economic nexus laws and thresholds.

Under the Supreme Court's South Dakota v. Wayfair ruling, many states require out-of-state retailers to collect applicable destination sales taxes if they exceed certain economic thresholds in that state, such as $100,000+ in annual sales or 200+ transactions.

Delaware ecommerce companies making substantial out-of-state sales may need to register in those states, collect the correct combined sales tax rate at checkout based on the customer's address, file regular sales tax returns, and remit the tax proceeds.

Benefits of zero sales tax in Delaware

Delaware's lack of a statewide sales tax provides advantages including:

• Financial savings for Delaware consumers on everyday in-state purchases.
• Reduced compliance costs and administrative burdens for Delaware-based businesses.
• A competitive edge for Delaware stores and ecommerce companies to attract shoppers from neighboring sales tax states.

Proposals to enact a Delaware sales tax have repeatedly failed thanks to these benefits. Delaware remains one of only five true no sales tax states.