Delaware Subtractions

Interest on State and Local Obligations other than Delaware

Interest you received from any obligations of States other than Delaware or their political subdivisions is taxable and must be added on Line 30.

Examples of interest that is taxable:

• Interest received on Pennsylvania Turnpike Bonds.

• Mutual fund dividends not included on Line 29 that are attributable to interest on state or local obligations (minus those attributable to the State of Delaware and its authorities and political subdivisions – provided the mutual fund reports that amount to you in writing).

Fiduciary Adjustments, Oil Percentage Depletion Fiduciary Adjustments

Net additions from fiduciary adjustments derived from income received from an estate or trust as shown on Federal Form K-1, Beneficiary’s Share of Federal Income and Deductions, should be included on Line 31. Oil Percentage Depletion The law provides for the disallowance of any percentage depletion deduction allowable under federal law, to the extent it is in excess of cost depletion. Add the excess to the amount of fiduciary adjustments and enter the total on Line 31

U.S. Obligations

Interest received on obligations of the United States included on your federal tax return is exempt from Delaware tax and should be entered on Line 34. Failure to identify the payor on Federal Schedule B will result in the disallowance of the deduction.

Pension Exclusion

Amounts received as pensions from employers (including pensions of a deceased taxpayer) may qualify for an exclusion from Delaware taxable income, subject to the limitations described below.

Delaware State Tax Refund

Delaware state tax refunds may be excluded if they were included in federal adjusted gross income. Fiduciary Adjustment Net subtractions from fiduciary adjustments derived from income received from an estate or trust, as shown on your Federal Form K-1, Beneficiary’s Share of Income and Deductions, should be included on Line 36.

Work Opportunity Credit

The law allows a deduction for the portion of wages paid but disallowed as a deduction for federal tax purposes by reason of claiming the work opportunity credit on the federal return. That portion of the deduction for wages, which is disallowed for federal purposes, should be entered on Line 36. In order to claim this modification, you must attach Federal Form 5884

Delaware Net Operating Loss Carryovers

Taxpayers who were prevented in previous years from carrying back federal net operating losses to their Delaware returns (because of Delaware’s $30,000 limit on net operating loss carrybacks) are permitted to carry these additional losses forward on their Delaware return in years following the loss year

Social Security/Railroad Retirement Benefits

Social Security and Railroad Retirement benefits are not taxable in Delaware and, therefore, should not be included in taxable income. Enter on Line 37 the total of any taxable payments included on Line 29.

Higher Education Distributions received from qualified retirement plans (IRC Sec. 4974, including IRAs), cash or deferred arrangements (such as 401(k) plans) and government deferred compensation plans (IRC Sec. 457) may be excluded from Delaware adjusted gross income to the extent they are used in the same tax year to pay for books, tuition or fees at an institution of higher education attended by the taxpayer or by his or her dependents who have NOT attained the age of 26 by December 31, 2019, as long as such amounts have been included in federal adjusted gross income. Please include a copy of all 1098T forms with your return to support your deduction.

Certain Lump Sum Distributions Enter on Line 37 the amount, if any, of lump sum distributions included in federal adjusted gross income for which you used Form 329 to calculate the tax on Line 7.