Delaware or Pennsylvania (Wilmington, Claymont, New Castle: real estate, houses, unemployed)

[vph1252]

I work in Philadelphia and trying to determine if I should buy a home in Delaware. Houses are less expensive as are taxes. But PA has lower income tax rate. Any suggestions?

[Ghost Town]

Let's say you have 100K salary and 300K house. I believe all taxes combined will be higher in PA compared to DE. And what if you stay unemployed for a while? Those high PA property taxes will be draining your savings much faster than DE property taxes. And also I heard Philadelphia has pretty high city extra tax. DE looks much better from this standpoint.

[nuts2uiam]

Figure in the commuting time and charges and look at the benefits for retirement in both states.

[Pocopsonite]

A lot depends on your income. Delaware's income tax is based on a sliding scale -- the more you make, the higher the percentage you'll pay in income tax.

Here's the table: https://www.tax-brackets.org/delawaretaxtable

And here's a calculator, because it's not calculated by simply applying the tax rate to your total income: https://smartasset.com/taxes/delawar...tor#qFs6AaDY4Z

As you presumably know, PA has a flat rate of 3.07%. If you work in Philly, you'll always have to pay the city wage tax; it is lower if you don't live in the city. Delaware & PA have a reciprocal agreement for state income tax, but I don't know how the Philly wage tax is handled.

Many people with school-age children factor in the quality of the schools when deciding between the two states. Not many New Castle County public schools are highly rated. If you are considering Delaware, you may want to factor in the cost of private schools.

Across the state line, in Chester and Delaware Counties, there are several that are well-ranked even nationally. Each school district has its own tax rate for school tax, so there's no way to make a blanket generalization about property tax. (School tax is the bulk of property tax in PA.)

When we moved here, I worked in Philly, my husband worked in Wilmington, and we bought a house in Chester County after analyzing the tax situation. At that point, Delaware's tax rates were higher than they are now. For us, even with higher property taxes, we saved overall by living in PA. Now I'm not sure the numbers would work out the same, but it's moot because we're retired.

If you're near retirement age, consider that PA does not tax ANY retirement income. Delaware excludes a very small amount and taxes the rest. For us now, the difference more than makes up for PA's higher real estate taxes.

Good luck with your decision. I'm sure you'll be happy no matter what. Because having said all that, although I love where we live, I'm still a Delawarean at heart.

[longneckone]

Originally Posted by nuts2uiam

Figure in the commuting time and charges and look at the benefits for retirement in both states.

Having commuted Phila to Claymont many years ago I would strongly consider this. After becoming accustomed to life in Slower/Lower I could not go back to that.

[Mary2014]

Originally Posted by Pocopsonite

Delaware & PA have a reciprocal agreement for state income tax

Unless this is a very recent change, this statement is incorrect. Delaware does not have a reciprocal agreement with PA - which means more paperwork for you when filing your taxes. Your PA employer will not withhold DE taxes. They will withhold PA taxes. You must pay DE taxes and file for a refund from PA.

[Pocopsonite]

I stand corrected. My husband always worked in DE and I thought we did not file DE tax returns. But I must be mistaken. He retired 12 years ago; I should check before I rely on memories from ancient history!