Active-duty and reserve pay
Military pay of Delaware residents is taxed like other wages.
An E-5 with over 6 years of service earns $49,320 a year in basic pay, and an O-3 with over 6 years $92,844. In Delaware, that basic pay is generally part of state taxable income. Housing and food allowances are never taxed by any state.
Military retired pay
A set amount of military retired pay is excluded. The exclusion rises to $25,000 from 2026.
Your state of legal residence decides
Military pay is taxed by your state of legal residence, usually the state you lived in when you joined or one you later adopted by changing your records, not by the state where you are stationed. This comes from the Servicemembers Civil Relief Act. Spouses can choose to use the member's state of legal residence for their own income too.
See your total pay with state tax
Questions
Does Delaware tax military pay?
Delaware taxes military pay like other wages. Military pay of Delaware residents is taxed like other wages.
Does Delaware tax military retirement pay?
A set amount of military retired pay is excluded. The exclusion rises to $25,000 from 2026.
Is BAH taxed in Delaware?
No. BAH and BAS are not taxable income for federal or state tax in any state.
Which state taxes me if I am stationed in Delaware?
Under the Servicemembers Civil Relief Act, your military pay is taxed only by your state of legal residence, not the state where you are stationed. If Delaware is not your legal residence, Delaware does not tax your military pay.