Delaware franchise tax is the annual tax every Delaware LLC and corporation pays to keep the company in good standing. For a Delaware LLC the tax is a flat $400 due by June 1. For a Delaware corporation, the tax and annual report are due by March 1, and the amount depends on the calculation method used. Missing the deadline brings a $200 penalty plus 1.5% interest per month, according to the Division of Corporations.
Amounts and deadlines are set by the Delaware Division of Corporations and can change. Confirm the current figures on the state's website before you file.
What the franchise tax is
The franchise tax is a state tax for the privilege of being incorporated or formed in Delaware. It is not a tax on income and is separate from federal income tax. It applies even if the company earned no revenue, and even if the owners live outside the United States.
Delaware LLC annual tax
LLCs, limited partnerships and general partnerships pay a flat annual tax of $400. It is due by June 1 for the previous year. There is no annual report for a Delaware LLC. The tax is paid online through the Division of Corporations, and you need the entity's file number.
Delaware corporation franchise tax
Corporations file an annual report and pay franchise tax by March 1. Tax can be calculated in two ways:
- Authorized shares method: the tax depends on the number of authorized shares. It starts with a low minimum for small share counts and rises as authorized shares increase. This method can produce a high bill for companies with many authorized shares.
- Assumed par value capital method: the tax is based on the company's assets and issued shares. It usually gives a much lower amount for companies with many authorized shares and few assets, and has its own minimum tax.
The state's online system calculates the amount using the authorized shares method first, which is why startups with a large share count sometimes receive a bill that looks very high. Recalculating with the assumed par value method before paying often reduces it. A separate annual report filing fee also applies to corporations.
Penalties for late payment
The Division of Corporations lists a $200 penalty plus 1.5% interest per month on the tax and the penalty for late payment. Delaware can also treat the company as not in good standing, which can block new filings, and eventually void the entity's charter if taxes remain unpaid for a long time. The company can be revived by paying back taxes, penalties and interest.
How to pay
- Find your entity's file number in your formation documents.
- Go to the Delaware Division of Corporations franchise tax portal.
- Enter the file number, review the amount and pay by card, ACH or other methods offered.
- Save the receipt for your records.
Your registered agent often sends a reminder, but the responsibility to pay is the company's. If you need to switch agents, see registered agent change.
Delaware tax vs. other state taxes
If your Delaware company does business in another state, it may also have to register there and pay that state's annual fees or franchise taxes. Our franchise tax filing and annual report filing services cover these state obligations. If you decide to close the company, see our guide on how to dissolve an LLC, since unpaid annual taxes must be settled first.
Frequently Asked Questions
When is Delaware franchise tax due for an LLC?
June 1 each year. The amount is a flat $400.
Do I have to pay if my Delaware LLC has no income?
Yes. The annual tax applies whether or not the company earned revenue.
When is it due for a Delaware corporation?
March 1, together with the annual report.
What happens if I do not pay?
A penalty and monthly interest accrue, the company loses good standing and, after a long period of non-payment, its charter can become void.
Is Delaware franchise tax the same as federal income tax?
No. It is a state tax for being formed in Delaware. Federal income tax and any tax filings are separate.
Need a hand with state filings? See our franchise tax filing service.
