When it comes to managing taxes for your clothing business, Delaware offers a unique advantage: no state sales tax. But while you don’t have to worry about sales tax on your transactions, there are still important rules and considerations to keep in mind, especially around gross receipts tax and other regulatory requirements. 

In this guide, we’ll break down everything you need to know about “Is Clothing Taxable in Delaware?”, from exemptions to specific rules for discounted and used clothing. 

Is Clothing Taxable in Delaware?

No, clothing is not taxable in Delaware. Delaware is one of the few U.S. states that does not impose a state or local sales tax on goods or services, including clothing. This means consumers pay only the listed price when purchasing clothing, without any additional sales tax or fees. ​

Delaware Sales Tax Rate on Clothing

Delaware has a 0% sales tax rate on clothing. There are no state or local sales taxes applied to clothing purchases. This tax-free environment extends to all types of clothing, regardless of price or purpose. ​

For businesses, while there’s no sales tax to collect, they must comply with the state’s gross receipts tax requirements. This involves registering with the Delaware Division of Revenue and accurately reporting total revenue. It’s also essential for businesses to understand that certain items, such as accessories or specialized protective gear, may have different tax considerations under the gross receipts tax framework.

What are Delaware’s Exemptions and Special Cases for Clothing?

Delaware stands out from most other states because it does not impose a state sales tax on any retail goods, including clothing. This means that all clothing purchases in Delaware are generally fully tax-exempt, with no need for special exemptions or thresholds.

Since no sales tax system exists, there are no exceptions such as dollar value limits or classifications between regular and specialized clothing (e.g., uniforms, safety gear, or sports equipment). Everything from everyday wear to protective clothing is sold tax-free.

Additionally, because Delaware does not have a state sales tax, it also does not hold tax holidays, as there’s no need to lift a tax that doesn’t exist temporarily.

Tax on Clothing in Delaware: Local vs. State

Delaware not only avoids a state sales tax, it also does not allow local governments (cities or counties) to impose their own sales taxes. This means that there are no additional local taxes on clothing or any other consumer goods. Whether you’re shopping in Wilmington, Dover, or any other part of the state, the price you see is the price you pay, and no hidden state or local taxes are added at checkout.

This tax-free environment makes Delaware a popular destination for out-of-state shoppers looking to save on large purchases, including clothing and footwear.

Sales Tax Registration Requirements for Clothing Sellers in Delaware

Delaware is unique in the United States because it does not impose a state or local sales tax. This means that businesses, including clothing sellers, do not need to register for sales tax collection in the state.

Whether you’re operating a brick-and-mortar clothing store in Delaware or running an online apparel business shipping from within the state, you are not required to collect or remit sales tax on sales made within Delaware. 

As a result, there is no formal sales tax registration process for clothing sellers with the Delaware Division of Revenue.

However, businesses may still need to register for a Delaware business license and comply with gross receipts tax requirements, which apply to most sellers in the state, including retailers. The business license can be obtained through the Delaware One Stop Business Portal.

Sales Tax Filing Requirements for Clothing Businesses

Since there is no clothing sales tax in Delaware, clothing businesses in the state are not required to file state sales tax returns.

However, Delaware clothing sales tax businesses must pay attention to the gross receipts tax, which is a tax on the business’s total receipts and is separate from sales tax. Clothing retailers may fall under specific categories and rates based on their classification. Gross receipts tax returns are typically filed monthly or quarterly, depending on the business’s revenue volume.

Key points:

  • Filing frequency: Monthly or quarterly, based on gross receipts.
  • Due dates: Returns are generally due by the 20th of the month following the reporting period.
  • Penalties: Late filings or payments can result in penalties and interest charges.

Implications for Remote Sellers and E-commerce Clothing Sales in Delaware

Delaware does not impose a state or local sales tax and this applies equally to in-state and out-of-state sellers, including e-commerce clothing retailers. As a result, economic nexus laws do not apply in Delaware, and remote sellers are not required to collect or remit sales tax on sales made to Delaware customers.

This tax-friendly environment simplifies business operations for online clothing sellers, as they are not obligated to register for sales tax collection or report sales tax to Delaware authorities, regardless of their sales volume or physical nexus status.

However, Delaware-based e-commerce businesses must still:

  • Register for a Delaware business license through the Division of Revenue.
  • Comply with gross receipts tax requirements, which apply to total revenue generated from in-state business activity (even for remote or online sales fulfilled from within Delaware).

Sales Tax Compliance Challenges for Clothing Businesses in Delaware

Due to the absence of sales tax or an audit statue of limitations, clothing businesses in Delaware don’t have to constantly wonder about “is clothing taxable in Delaware?” and can enjoy significant advantages like:

  • No tax holidays to track.
  • No varying local tax rates to manage.
  • No need to determine product taxability for clothing, which is often partially or conditionally taxed in other states.

That said, clothing businesses in Delaware still face other tax and regulatory challenges, including:

  • Gross Receipts Tax Compliance: Businesses must accurately track total receipts and file monthly or quarterly returns depending on revenue.
  • Multi-state Sales: Clothing businesses based in Delaware but selling to customers in other states may still have to collect and remit sales tax in those states if they exceed economic nexus thresholds (e.g., $100,000 in sales or 200 transactions annually).
  • E-commerce Platform Reporting: Businesses using platforms like Shopify, Amazon, or Etsy must understand where they are responsible for tax collection outside Delaware.

Even in a no-sales-tax state, multi-jurisdictional selling and proper tax categorization for revenue tracking remain key compliance priorities to avoid a sales tax audit.

How Automation Helps Manage Delaware Sales Tax

Although Delaware does not impose a state or local sales tax, businesses operating in the state must still manage gross receipts tax compliance, which can be complex. 

This is where Commenda, a sales tax platform, comes in. As an advanced sales tax automation solution, Commenda streamlines the process of calculating, filing, and managing Delaware’s gross receipts tax and any other jurisdictional tax obligations.

Here’s how Commenda helps businesses:

  • Accurate Calculations: Automatically calculates the gross receipts tax based on your business’s total revenue, ensuring that all amounts are accurately reported.
  • Seamless Filing: Commenda generates precise tax reports and supports the timely filing of tax returns, ensuring you meet the state’s filing deadlines without the risk of penalties.
  • Error Reduction: By automating data entry and tax calculation, Commenda helps reduce the risk of errors that can arise from manual processes.
  • Time Savings: Automation allows businesses to focus on growth rather than spending valuable time on manual tax management, freeing up resources to focus on core operations.

Book a demo now and get started today!

FAQs

Q. Are clothing accessories taxable in Delaware?

Delaware does not impose a sales tax, so clothing accessories are not taxable in the state.

Q. Is there a threshold for taxable clothing sales in Delaware?

There is no sales tax on clothing in Delaware, so there is no threshold for taxable clothing sales in the state.

Q. How do Delaware sales tax rules apply to children’s clothing?

Since there is no Delaware state clothing sales tax, children’s clothing is not taxable.

Q. Are there specific rules for clothing sold at a discount in Delaware?

Discounted clothing is not subject to sales tax in Delaware, as the state does not have a sales tax.

Q. Does Delaware exempt clothing purchased for resale from sales tax?

Delaware sales tax clothing does not charge sales tax, but clothing purchased for resale is still subject to the state’s gross receipts tax rather than sales tax.

Q. How do Delaware sales tax exemptions apply to used clothing?

There are no sales taxes under Delaware sales tax on clothing, so used clothing is also not taxable.