Easily manage employment in Delaware

Payroll management in Delaware

Delaware has a business-friendly environment with a strong presence in finance, healthcare, and manufacturing industries. With no state sales tax and a favorable corporate tax structure, the state attracts many businesses. However, employers must navigate payroll regulations, including minimum wage laws, tax requirements, and unemployment insurance contributions.

Payroll breakdown in Delaware

Employers in Delaware must adhere to both federal and state payroll regulations regarding wages, taxes, and benefits. Below is an overview of key payroll components:

Minimum wage and overtime

• Minimum Wage: As of 2024, Delaware’s minimum wage is $13.25 per hour, with scheduled increases reaching $15.00 per hour by 2025.
• Overtime Rules:
• Employees must be paid 1.5 times their regular rate for hours worked beyond 40 hours in a workweek.
• Delaware follows federal overtime laws and does not mandate daily overtime.

State income tax

• Delaware has a progressive income tax system, with rates ranging from 2.2% to 6.6%, depending on income levels.
• Employers must withhold state income tax and remit it to the Delaware Division of Revenue.

Unemployment insurance (UI) tax

• Employers must contribute to Delaware’s Unemployment Insurance (UI) program, managed by the Delaware Department of Labor.
• The wage base for UI tax in Delaware is $14,500.
• UI tax rates vary based on an employer’s experience rating and range from 0.3% to 8.2%.

Workers’ compensation

• Delaware law requires all employers to carry workers’ compensation insurance to cover medical expenses and lost wages for employees injured on the job.

Payroll tax filing and payment deadlines

• Employers must register for a Delaware Withholding Tax Account Number with the Delaware Division of Revenue.
• State withholding tax returns must be filed monthly, quarterly, or annually, depending on employer classification.
• UI tax reports must be submitted quarterly to the Delaware Department of Labor.
• Payroll tax payments can be made electronically through Delaware’s Revenue Online Portal.

Quick facts: Important considerations for employers

• State Minimum Wage Adjustments: Delaware has scheduled minimum wage increases through 2025.
• Final Paycheck Rules:
• If an employee is terminated, employers must provide the final paycheck on the next scheduled payday.
• If an employee resigns, the final paycheck must be provided on the next scheduled payday.
• New Hire Reporting: Employers must report new hires to the Delaware State Directory of New Hires within 20 days.
• Paid Sick Leave: Delaware does not have a statewide paid sick leave law, but employers may provide benefits voluntarily.
• Payroll Recordkeeping: Employers must maintain payroll records for at least three years to comply with state and federal laws.
• Right-to-Work Status: Delaware is not a right-to-work state, meaning employees can be required to join or pay fees to a union if applicable.

Run payroll in Delware with Remote

Managing payroll in Delaware requires careful attention to state-specific regulations, including minimum wage laws, paid family leave, and payroll tax requirements. Employers must stay informed about tax rates, wage laws, and reporting deadlines to ensure smooth payroll processing and avoid penalties.

To see just how easy global payroll can be, book a demo today.