I am able to prepare a Delaware state income tax return in TurboTax Desktop Deluxe. The Delaware Pension Exclusion appears to operate correctly for an IRA pension distribution.
Are you filing as a taxpayer who is under 60 years of age or over 60 years of age?
Was the IRA distribution an early withdrawal subject the to the additional 10% tax? Please clarify.
Pension and Retirement Exclusion
Distributions received from pension and retirement plans may qualify for an exclusion from Delaware taxable income.
If you were under 60 on December 31, 2025, you can exclude up to $2,000 of a distribution you receive from an employer paid pension plan (this does not include distributions from other plans, such as a deferred compensation or 401k plan). Your federal Form 1099-R should display code 7 (or for code 4, see below) to be eligible for the pension exclusion. Early distributions are not eligible for the exclusion (unless a Form 1099-R was issued with a code 4 (death) in box 7).
If you were under 60 on December 31, 2025, and you receive a military pension, you can exclude $12,500 or the amount of that pension, whichever is less.
If you were at least age 60 on December 31, 2025, you can exclude the lesser of $12,500 or the total of the following:
- The amount of your pension (retirement)
- Your Eligible retirement income
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