Yes, Philadelphia will let you reduce her wage tax for the 1.5% paid to Wilmington. The issue is that the DE tax is probably in the area of 5% and your PA tax is 3% leaving an excess 2% that Philadelphia won't give credit for. That's the issue in the Zilka case I mentioned. If Ms. Zilka wins then that could translate into a 2% raise for your wife as Philly will have to credit the excess DE tax against the wage tax.