Live in Delaware, Work in North Carolina: Which State Taxes Your Paycheck?
Answer
Both states tax the same wages, and a credit undoes the overlap. North Carolina withholds as your work state and you file a North Carolina nonresident return; Delaware taxes residents on all income, so you also file at home and claim the credit for tax paid to North Carolina. File North Carolina first.
Last verified
Without an agreement between Delaware and North Carolina, the overlap is handled after the fact rather than prevented. That is why the filing order matters: the North Carolina figure is an input to the Delaware return, so completing Delaware first means doing it twice.
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 · North CarolinaForm D-400 with Schedule PN
File the North Carolina nonresident return FIRST — you need the North Carolina 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 North Carolina. The credit is capped at what Delaware would have charged on that same income, so if North Carolina taxes it at a higher rate the difference is not refunded.
The two states, side by side
| Delaware | North Carolina | |
|---|---|---|
| Taxes wages | Yes — graduated | Yes — flat |
| Reciprocity partners | None | None |
| Convenience rule | Yes — general rule | No |
| Nonresident return | Form PIT-NON | Form D-400 with Schedule PN |
| Credit for other-state tax | Schedule I (Form PIT-RES) | Form D-400TC |
| Nonresident safe harbour | None published | None published |
| Local income tax | Yes | No |
| Revenue department | Delaware Division of Revenue | North Carolina Department of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in North Carolina 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 → North CarolinaHome state only
- 1099 contractor: Delaware → North CarolinaHome state, plus the client state if you work there
- Moved mid-year: Delaware → North CarolinaTwo part-year returns
Other Delaware pairs
Questions people actually ask
I live in Delaware and work in North Carolina. Which state takes the tax out of my paycheck?
Both states tax the same wages, and a credit undoes the overlap. North Carolina withholds as your work state and you file a North Carolina nonresident return; Delaware taxes residents on all income, so you also file at home and claim the credit for tax paid to North Carolina. File North Carolina first.
Which state should my employer be withholding for?
North Carolina. The wages are sourced to North Carolina, so North Carolina 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 North Carolina on the same income, claimed on Schedule I (Form PIT-RES). The credit is capped at the Delaware tax on that income, so if North Carolina taxes it more heavily the excess is not refunded by either state.
How current is this?
The Delaware and North Carolina rules on this page were last checked against Delaware Division of Revenue and North Carolina Department of Revenue 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
- North Carolina Department of Revenue — individual income taxaccessed 2026-08-07