Some Retirees Are Choosing Delaware Over Florida: How the Retirement Math Adds Up
For many people looking for a tax-friendly retirement, no-income-tax states like Florida usually top the list. But recent data indicate an interesting trend: More and more older adults are choosing a small Mid-Atlantic state where the retirement math is more interesting than some might expect.
We’re talking about Delaware.
According to U.S. Census Bureau data, Delaware’s population of residents age 65 and older has increased by 23% since 2020. That’s the fastest growth rate in the nation for the 65-and-older population, according to Census estimates.
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Part of the draw might be that newcomers to beach communities like Lewes, Rehoboth Beach and Milton can enjoy a coastal lifestyle without moving far from family and friends elsewhere in the Northeast and Mid-Atlantic.
Interestingly, though Delaware isn’t a zero-income-tax state like retirement powerhouses Florida or Texas, taxes factor into the equation for some retirees running the numbers. Here’s more to know.
Why Delaware is becoming a retirement destination
Delaware is becoming increasingly popular with older adults.
- Seniors now make up nearly 22% of the state’s population, according to USAFacts, compared with roughly 18% nationwide.
- In Sussex County, older adults make up nearly a third of residents, pushing the median age to just over 53 years, according to U.S. Census estimates.
New residents are also arriving with financial resources. The latest available IRS migration data show that households moving into southern Delaware from higher-cost states have average annual incomes over $136,000.
So what makes Delaware appealing as a retirement destination? The answer lines up in several ways with what many retirees say they want in a place to live.
- A 2025 survey from the Transamerica Center for Retirement Studies found that an affordable cost of living was the top consideration, cited by 65% of retirees, followed closely by proximity to family and friends at 61%.
- Access to excellent health care and hospitals ranked third, cited by 49%, while 28% pointed to leisure and recreational activities.
Delaware’s healthcare infrastructure is geared toward an aging population. For example, in Sussex County, Beebe Healthcare operates a 210-bed medical center in Lewes, while ChristianaCare has reportedly expanded primary care and senior-focused services in Rehoboth Beach and Milford.
Additionally, retirees from neighboring Mid-Atlantic states may choose Delaware for its proximity to children, grandchildren, and longtime friends without giving up a coastal lifestyle.
There’s also plenty to do beyond the beaches.
Southern Delaware offers miles of hiking and biking trails, including those at Cape Henlopen State Park and the Junction & Breakwater Trail linking Rehoboth Beach and Lewes, along with boating, fishing, and golf. Other areas are bustling with restaurants, boutiques, and galleries, plus live music, festivals, and other events throughout the year.
Those amenties help explain the First State’s appeal. But for some retirees from higher-cost states, the retirement math also includes taxes.
How Delaware taxes retirement income
Delaware levies a progressive state income tax with rates ranging from 2.2% to 6.6%. However, retirees rarely pay Delaware income tax on their full income. That’s because:
Delaware exempts Social Security benefits from state tax. (The state also doesn’t tax Railroad Retirement benefits.)
Delaware offers retirement income exclusions. Residents age 60 and older can exclude up to $12,500 of eligible pension and retirement income from state taxable income. Qualifying sources include distributions from IRAs and 401(k)s, as well as dividends, capital gains, interest, and net rental income.
For a married couple where both spouses are at least 60, each spouse can generally claim up to a $12,500 exclusion for eligible retirement income, for a combined potential exclusion of $25,000.
For some retirees, those exclusions could result in a lower state tax bill than they would face on the same retirement income in other states.
Note: We’re talking about state tax liability. You still may have federal taxes on retirement income to consider.
Sales and property tax tradeoffs
However, income taxes are only part of the tax equation. Delaware offers zero sales tax and relatively low property taxes.
- No sales tax: Delaware has no state or local sales tax, which can reduce the cost of everyday purchases and larger expenses. (Florida, by comparison, has a 6% statewide sales tax, plus local surtaxes in many counties.)
- Low property taxes: Delaware’s effective property tax rate is about 0.54%, compared with 0.78% in Florida, according to 2026 Tax Foundation data. The actual difference depends on the home’s value, location, and applicable exemptions.
But…that doesn’t necessarily make Delaware the cheaper place to own a home.
Sussex County’s growth (nearly 40,000 residents in the past six years) has reportedly increased housing demand and pushed prices higher. That can be good news for people who already own homes there, but it can be a different story for retirees just arriving.
Someone moving to Delaware for retirement from a high property-tax state might see lower property taxes while paying more for the house itself.
Delaware vs Florida cost of living
(Image credit: Getty Images)
While Florida draws attention for having no state income tax, the full financial picture can change once other costs enter the calculation.
The following table shows how various costs might add up.
Average Annual Costs in Florida and Delaware
|
Annual Expense Category |
Delaware |
Florida |
Financial Impact |
|
State Income Tax |
Varies by income |
$0 |
Florida has no individual income tax. Delaware doesn’t tax Social Security and allows residents age 60+ to exclude up to $12,500 each in eligible retirement income. |
|
Property Tax |
~$2,700 |
~$3,900 |
Based on 2026 effective rates of 0.54% in Delaware and 0.78% in Florida, applied to a $500,000 home. |
|
Homeowners Insurance |
~$1,900 |
~$3,400 |
Based on 2026 estimates for a policy with $500,000 in dwelling coverage. Florida’s average is about $1,500 more per year than in Delaware. |
|
Retail Sales Tax |
$0 |
~$1,400 |
Delaware has no state or local sales tax. Florida’s average combined state and local rate is 7.02%; at $20,000 in taxable annual purchases, that amounts to about $1,404 a year. |
|
Total income-tax-independent costs |
~$4,600 |
~$8,700 |
Before accounting for each household’s individual income-tax liability, the illustrative difference is about $4,100 a year. |
Note: This comparison, for educational purposes only, assumes a $500,000 primary residence, $500,000 in homeowners insurance dwelling coverage, and $20,000 in annual taxable purchases. Property-tax estimates use 2026 statewide effective rates; insurance estimates use 2026 published rates; and Florida sales tax uses the 2026 average combined state and local rate.
State income taxes are excluded because they vary by income, deductions, and exemptions. Actual costs vary by location, coverage, exemptions, and spending.
Is retiring in Delaware a good idea? Bottom line
For some retirees, the appeal of a retirement state isn’t always about finding the lowest income-tax rate. It’s about what happens when you add up all the smaller pieces of the budget.
Before choosing a retirement destination, consider the sometimes seemingly “hidden” costs that follow you into retirement — including how retirement income is taxed, what you’ll pay to own a home, and how much you plan to spend each year.
The state you might assume to be cheapest due to having no income tax might not necessarily be the one that leaves you with the most money to spend.
