Income Tax Business Filing FAQs

A resident employer or an employer having employees working within the City must withhold Wilmington income tax (1.5%) from all salaries, wages, commissions, bonuses, or other compensation paid to employees before any deductions. This is applicable for a business whose primary office is outside of the city limits, as well as those in the City.

A Corporation or Partnership may carry forward the loss and can offset it against its future income for up to five years. Net operating losses cannot be used to offset wages.

The determination of “Taxable Income” for the local tax generally follows IRS rules.

• If the owner is a resident and the business is located inside of Wilmington city limits, then all income is subject to tax, regardless of where the work was performed.
• If the owner is a non-resident and the business is located inside of Wilmington city limits, then only the income earned from the business is taxable.
• The only income earned on work performed inside of Wilmington city limits is taxable.