Live in Delaware, Work in New Mexico: Which State Taxes Your Paycheck?
Answer
New Mexico withholds and Delaware credits. Without an agreement between them, both states are entitled to tax income earned in New Mexico by a Delaware resident. The mechanism that stops you paying twice is the credit on the Delaware resident return, which is why the New Mexico return has to be completed first.
Last verified
Two states can lawfully tax the same wages: New Mexico because the work happened there, Delaware because you live there. Nothing prevents the overlap in advance — it is unwound afterwards, on the Delaware return, through the credit for taxes paid to another state.
A Delaware resident taxed by another state on the same income claims the credit for taxes paid to other states on Schedule I (Form PIT-RES). The credit is capped at the Delaware tax on that income, so it removes the double tax but never refunds the excess when the other state charges more.
What you file
- 1Nonresident return · New MexicoForm PIT-1 with Schedule PIT-B
File the New Mexico nonresident return FIRST — you need the New Mexico tax figure before you can complete Delaware.
- 2Resident return · DelawareSchedule I (Form PIT-RES)
File a Delaware resident return reporting all income, then claim the credit for tax paid to New Mexico. The credit is capped at what Delaware would have charged on that same income, so if New Mexico taxes it at a higher rate the difference is not refunded.
The two states, side by side
| Delaware | New Mexico | |
|---|---|---|
| Taxes wages | Yes — graduated | Yes — graduated |
| Reciprocity partners | None | None |
| Convenience rule | Yes — general rule | No |
| Nonresident return | Form PIT-NON | Form PIT-1 with Schedule PIT-B |
| Credit for other-state tax | Schedule I (Form PIT-RES) | Form PIT-1 (credit for taxes paid to another state) |
| Nonresident safe harbour | None published | None published |
| Local income tax | Yes | No |
| Revenue department | Delaware Division of Revenue | New Mexico Taxation and Revenue Department |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in New Mexico and working in Delaware gives:Both states — credit offsets the double tax.
Same two states, different situation
The withholding answer turns on how you are paid and where the work happens, not only on which two states are involved.
- Remote worker: Delaware → New MexicoHome state only
- 1099 contractor: Delaware → New MexicoHome state, plus the client state if you work there
- Moved mid-year: Delaware → New MexicoTwo part-year returns
Other Delaware pairs
Questions people actually ask
I live in Delaware and work in New Mexico. Which state takes the tax out of my paycheck?
New Mexico withholds and Delaware credits. Without an agreement between them, both states are entitled to tax income earned in New Mexico by a Delaware resident. The mechanism that stops you paying twice is the credit on the Delaware resident return, which is why the New Mexico return has to be completed first.
Which state should my employer be withholding for?
New Mexico. The wages are sourced to New Mexico, so New Mexico withholding is correct and there is no Delaware withholding to set up.
Will I end up paying tax twice on the same income?
Not twice over, but you will pay the higher of the two rates. Delaware gives residents a credit for tax paid to New Mexico on the same income, claimed on Schedule I (Form PIT-RES). The credit is capped at the Delaware tax on that income, so if New Mexico taxes it more heavily the excess is not refunded by either state.
How current is this?
The Delaware and New Mexico rules on this page were last checked against Delaware Division of Revenue and New Mexico Taxation and Revenue Department on 2026-08-07. We re-check the full grid every December after state legislative sessions close, and re-check the convenience-of-the-employer states quarterly because that is where the rules move fastest.
Sources
Every fact above comes from the revenue department that publishes the rule. We do not cite secondary summaries, and we do not restate a figure we could not find at source.
- Delaware Division of Revenue — individual income taxaccessed 2026-08-07
- New Mexico Taxation and Revenue Department — individual income taxaccessed 2026-08-07