Delaware franchise tax requirements apply to every corporation formed in Delaware, whether or not it has an office, employees or revenue in the state. Domestic corporations file an annual report and pay franchise tax by March 1. LLCs, limited partnerships and general partnerships pay a flat annual tax by June 1, and that tax rose from $300 to $400 for the 2026 tax year. The franchise tax is a charge for the privilege of being a Delaware entity. It has nothing to do with franchising, and it is separate from income tax.
For a funded startup, the corporate tax can be anywhere from $400 to an alarming five-figure bill, depending on which calculation method gets used. That gap is where most of the work, and most of the client panic, sits.
| Entity type | What's owed | Due date | Annual report? |
|---|---|---|---|
| Domestic corporation (C corp, S corp, public benefit corp) | Franchise tax ($175 to $200,000) plus $50 report fee | March 1 | Yes |
| Large corporate filer | Franchise tax up to $250,000 plus $50 report fee | March 1 | Yes |
| Exempt domestic corporation (e.g. nonprofit) | No tax, $25 report fee | March 1 | Yes |
| LLC, LP, general partnership | $400 flat tax (tax year 2026 onward) | June 1 | No |
| Foreign corporation registered in Delaware | Annual report fee | June 30 | Yes |
The S corporation election is a federal tax status, so it makes no difference to Delaware: an S corp formed in Delaware pays franchise tax exactly like a C corp. The tax starts with the year of incorporation and continues until the company formally dissolves, so a dormant shell still owes it every year. If you're still deciding on structure, our business entity selection guide compares the options, and LLC vs C corp covers the tax trade-offs.
Delaware allows two methods and you pay whichever is lower. The Division of Corporations' calculation page sets out both; the statutory rates are in Title 8, Chapter 5 of the Delaware Code.
Based only on how many shares the charter authorizes, issued or not.
| Authorized shares | Tax |
|---|---|
| 5,000 or fewer | $175 (minimum) |
| 5,001 to 10,000 | $250 |
| Each additional 10,000 shares or portion | add $85 |
| Maximum | $200,000 |
The Division's own examples: 10,005 authorized shares cost $335, and 100,000 cost $1,015.
Based on gross assets and issued shares. The steps:
Gross assets means total assets from the Schedule L balance sheet of the federal return, for the fiscal year ending in the calendar year of the report. That ties the Delaware filing to the Form 1120 due date and the balance sheet your preparer signs off on.
A Delaware C corp authorizes 10,000,000 shares at $0.00001 par. Founders and early investors hold 8,000,000 issued shares. Total gross assets on Schedule L: $2,000,000.
| Authorized Shares Method | Assumed Par Value Capital Method | |
|---|---|---|
| Calculation | $250 for the first 10,000 shares, then 999 × $85 | $2,000,000 ÷ 8,000,000 = $0.25 assumed par; $0.25 × 10,000,000 = $2,500,000 |
| Rounded base | n/a | 3 × $1,000,000 |
| Tax | $85,165 | $1,200 |
The two results differ by more than $83,000 for the same company in the same year. If gross assets were $500,000 instead, assumed par value capital would be $625,000 and the tax would hit the $400 minimum.
The Division's notice and the online system default to the Authorized Shares Method. If the company doesn't enter issued shares and gross assets, the invoice reflects the much higher number. The fix is to file the annual report with those two figures so the system recalculates. Getting the startup accounting setup right early, including a balance sheet that matches the cap table, makes it a two-minute filing.
Domestic corporations file the annual report and pay the tax together online through the Division's Pay Taxes / File Annual Report portal. You'll need:
The report fee is $50 for non-exempt corporations and $25 for exempt ones. Payments over $5,000 must go by ACH debit; smaller amounts can be paid by card.
| Who | Deadline | Details |
|---|---|---|
| Corporations owing less than $5,000 | March 1 | Full tax plus report |
| Corporations owing $5,000 or more | June 1 (40%), September 1 (20%), December 1 (20%), March 1 (balance) | Quarterly estimates for the current year |
| LLCs, LPs, GPs | June 1 | $400 for tax year 2026, paid by June 1, 2027 |
| Foreign corporations | June 30 | Annual report |
Here's how the estimate schedule plays out. A corporation that expects 2026 franchise tax of $20,000 pays $8,000 by June 1, 2026, $4,000 by September 1 and $4,000 by December 1, then files the 2026 annual report and pays the remaining $4,000 by March 1, 2027. If the actual tax comes in higher, the balance is larger; underpaying the installments exposes the company to interest from each installment date. Companies that land under $5,000 skip the estimates entirely and pay once with the report.
There's no grace period after March 1. A corporate report filed after March 1 incurs the $200 penalty immediately, and unpaid tax accrues interest at 1.5% per month.
Delaware House Bill 400, signed May 21, 2026, raised the annual tax on LLCs, LPs and general partnerships from $300 to $400, retroactive to January 1, 2026. The Division's franchise tax page now shows the $400 figure. In practice:
The corporate franchise tax rates above were not changed by HB 400. CPA firms that quote fixed annual compliance fees for Delaware LLC clients should update engagement letters and reminder templates now. Real estate investors holding property in multiple Delaware LLCs feel this most; see our guide to the Delaware LLC for real estate investors.
Separate from the tax, every Delaware corporation and LLC must keep a registered agent with a physical Delaware address. The agent receives service of process and state notices, including franchise tax reminders. If the agent resigns (often because its own fee went unpaid) and no replacement is appointed, the entity can lose good standing even when its taxes are current. Check the agent's billing whenever you review a client's Delaware status.
Corporations. The $200 late penalty and 1.5% monthly interest start right away, and the company drops out of good standing. Under Section 510, a corporation that fails to pay franchise tax or file a complete report for one year has its charter declared void. A void company can't get a certificate of good standing, which blocks financings, bank account changes, M&A closings and foreign qualification in other states.
Revival. The corporation files a certificate of revival and pays the back taxes, penalties and interest. If the charter has been void for more than five years, Delaware lets the company pay three times the annual franchise tax for the year of revival in place of the back taxes.
LLCs. The $200 penalty plus 1.5% monthly interest on tax and penalty. An LLC that goes three years without paying has its certificate of formation canceled, and the members lose the liability protection the entity was formed for.
Delaware's franchise tax doesn't replace tax where you operate. A Delaware corporation headquartered in Austin also files the Texas franchise tax as a registered foreign entity, and a company in California pays California's own minimum franchise tax there. Delaware's corporate income tax applies only to income from activity in Delaware. For companies with staff or sales in several states, our multi-state tax compliance guide covers registration and nexus. The Delaware franchise tax itself is deductible as a business expense on the federal return.
For firms with a book of venture-backed clients, Delaware is a February fire drill unless it's systematized. What works:
Yes. The tax is based on authorized shares or assumed par value capital, not on income. A company with no revenue and few assets will usually land at the $400 minimum under the Assumed Par Value Capital Method, plus the $50 report fee.
They pay a flat annual tax, $400 for 2026 onward, due June 1 of the following year. There's no annual report and no share-based calculation. The amount doesn't change with the number of members or the LLC's income.
$175 under the Authorized Shares Method (5,000 or fewer shares) and $400 under the Assumed Par Value Capital Method. You add the $50 annual report fee to either.
The notice is calculated under the Authorized Shares Method by default. Enter your issued shares and total gross assets when you file the annual report and the system will compute the Assumed Par Value Capital figure, which is often a small fraction of the original amount.
Under Section 503(c), it's a corporation with stock listed on a national securities exchange whose SEC-filed financial statements show consolidated revenues or assets of $750 million or more, and at least $250 million of both. The Secretary of State compiles the list each December 1, and the maximum tax for listed companies is $250,000 instead of $200,000.
Madras Accountancy works with US CPA firms on 1120 and 1065 tax prep workflows, including Schedule L balance sheets, Delaware franchise tax calculations and annual report prep for portfolios of startup clients. Contact us to set up your Delaware compliance calendar before the March 1 rush.
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