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Delaware
Employee Obligations (Which Returns YOU Must File)
Delaware has a Convenience of Employer rule that affects Virginia residents. If your employer is in Delaware and you work remotely from Virginia, Delaware may still tax your paycheck. File a nonresident Delaware return plus your Virginia return and claim the Schedule OSC credit. Consider consulting a CPA.
Employer Obligations (What Your Employer Must Withhold & Remit)
Delaware's Convenience of Employer rule may require withholding Delaware tax even if the Virginia employee works 100% remotely. Register from day 1. The COE rule means employers must withhold Delaware tax even for remote Minnesota employees. Unemployment applies to the first $10,500 of wages. Paid Leave employer contribution is up to 0.4% for employers with 25 or more employees.
City & Local Income Taxes (Extra Filings Beyond the State Return)
Wilmington charges a 1.25% wage tax on nonresidents. It is the only Delaware city with this tax.
Other Paycheck Deductions (Disability, Paid Leave, Unemployment)
Up to 0.4% for Paid Leave (contributions began 2025; benefit payments to workers began January 1, 2026).
Remote Work Tax Risk — Convenience of Employer (COE) Rule
Delaware has a full Convenience of Employer rule that affects Virginia residents. If your employer is based in Delaware and you work remotely from Virginia, Delaware may tax your entire paycheck as if you worked there.
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This is general information, not tax or legal advice. Laws change frequently. Always consult a licensed CPA or tax attorney for your specific situation. All information researched as of March 21, 2026.