Startups · Delaware franchise tax
Your Delaware franchise tax is usually far less than the $85,000 on your notice.
Delaware’s notice figures the tax by the authorized shares method, which counts only your authorized shares. The law charges the lower of that method and the assumed par value capital method, which starts from your gross assets. Delaware uses the second method only if your annual report lists your issued shares and gross assets.
Updated · Sources
Delaware corporations, tax year 2026
- $85,165
- is the authorized shares method’s tax on 10,000,000 shares, however few you have issued.
- $400
- is the tax on each $1,000,000 of assumed par value capital, or part of one. It is also that method’s minimum.
- March 1
- is the deadline each year, so March 1, 2027 for tax year 2026. Missing it adds a $200 penalty, plus 1.5% interest for each month or part of a month until paid.
The corporate rates are fixed in the statute and are not indexed for inflation. Delaware LLCs and LPs pay a flat annual tax instead.
What goes on the Delaware annual report?
Every Delaware corporation files an annual corporate report, the annual franchise tax report, even an S corp or a company with no revenue. Unless exempt, a corporation also pays the franchise tax and a $50 filing fee.
Your registered agent and main office
The report names your registered agent in Delaware, which receives the tax notice each December. It also gives your principal place of business, which generally cannot be a registered agent’s address.
Your business and its directors
The report must state the nature of your business. It also lists each director’s name and address, and the officer or director who signs it.
Each class of stock
The report gives the number of authorized shares and the par value of each class. If your stock has no par value, the authorized shares method always gives the lower tax.
Issued shares and gross assets
Gross assets are the total assets on your year-end balance sheet, as reported on Form 1120 Schedule L. Nothing is taken off for debts. Issued shares include treasury shares and unvested restricted stock, but not options, SAFEs or convertible notes until they are exercised or converted.
You file the report and pay the tax online
You file the annual report and pay the franchise tax online, in the Division of Corporations’ eCorp system. There is no paper form. Payments over $5,000 must go by ACH debit.
Exempt corporations, such as nonprofits, owe no franchise tax and file the report for a $25 fee. A foreign corporation, one formed in another state and registered in Delaware, owes none either. It files its own annual report by June 30, for a $250 fee.
The lower calculation method cuts a seed startup’s tax to $1,200.
Authorized shares method
$85,165
This method takes no account of assets.
Assumed par value capital method
$1,200
Dividing $2,000,000 of assets by 8,000,000 issued shares gives an assumed par of $0.25. At that par, the 10,000,000 authorized shares come to $2,500,000 of assumed par value capital.
With $800,000 in assets
$400
The assumed par falls to $0.10, so the capital is exactly $1,000,000. That is taxed at the $400 minimum.
At Delaware’s rates for 2026, the authorized shares method charges $250 for the first 10,000 shares. Each further block of 10,000 adds $85, and 10,000,000 shares have 999 such blocks. The $2,500,000 of assumed par value capital rounds up to $3,000,000, taxed at $400 per $1,000,000. With this share count, each $800,000 of gross assets, or part of it, adds $400.
The Delaware LLC tax is flat, and due three months later.
Delaware LLCs, LPs and general partnerships pay what the state calls an alternative entity tax. It is the same whatever the company’s size, assets or income.
| Corporation | LLC, LP or GP | |
|---|---|---|
| Tax for 2026 | $175 to $200,000 The lower of two methods. Large corporate filers pay a flat $250,000. | $400 Up from $300 for 2025 |
| Due | March 1, 2027 | June 1, 2027 |
| Annual report | Required | None |
| Formed mid-year | Tax is prorated | Full year’s tax |
| Left unpaid | Charter void after 1 year | Canceled after 3 years |
A general partnership owes the tax only if it has filed a statement of partnership existence. Delaware LLCs, LPs and GPs pay their annual tax online, in the same eCorp system as corporations.
Paying the notice as billed is the costliest Delaware franchise tax filing mistake.
You already paid the full notice
File a $50 amended annual report with your issued shares and gross assets, then petition Delaware for a refund. The deadline is March 1 of the second year after the tax year, so March 1, 2027 for tax year 2025.
Last year’s tax sets this year’s quarterly payments
After you pay the $85,165 notice for 2025, Delaware expects $68,132 in estimated payments for 2026, starting June 1, 2026. That is 80% of the 2025 tax. Filing the 2026 report on the lower method turns the excess into a credit, which Delaware refunds on request.
Closing down without dissolving
A corporation that stops operating still owes the tax every year until it formally dissolves, merges or converts. It cannot dissolve until every franchise tax is paid and a final report is filed.
Your income tax is a separate return
A Delaware C corp also files a federal return on Form 1120, where profit is taxed at 21%. Delaware’s own corporation income tax, at 8.7%, reaches only income from business done in the state. A startup whose only tie to Delaware is its registered office owes none of it.
Some franchise tax letters do not come from Delaware
You pay the tax only to the Delaware Secretary of State, through its Division of Corporations. The Franchise Tax Board is California’s tax agency, so a Delaware tax letter using that name is suspect. To check a letter, call the Division’s Franchise Tax section at (302) 739-3073, option 3.
Valim files your Delaware report on the lower method before March 1.
Valim’s CPAs prepare and file Delaware franchise tax reports for startups, together with their federal returns.
- We figure the tax under both methods every year, because the lower one changes as your assets and shares do.
- We prepare your Form 1120 and check that the total assets on your annual report match its balance sheet.
- Delaware’s report is due six weeks before your Form 1120, so we ask your bookkeeper for the year-end balance sheet early.
- We plan the estimated payments Delaware expects once your tax reaches $5,000.
- If Delaware, the IRS or another state questions a filing we prepared, our team handles the response.
- Business return
- from $495
We quote a flat fee before work starts. We do not bill hourly.
Delaware franchise tax questions.
What is the minimum Delaware franchise tax for a corporation?
The minimum Delaware franchise tax is $175 for a full year, for a corporation with 5,000 or fewer authorized shares. Under the assumed par value capital method, the minimum is $400. Above 20,000 authorized shares, the authorized shares method passes $400, so $400 is the lowest tax possible. A corporation that is not exempt also pays the $50 report fee, so the smallest full-year total is $225. A first partial year is prorated and can cost less.
What happens if I don’t pay Delaware franchise tax?
If you don’t pay Delaware franchise tax by March 1, you owe a $200 penalty plus 1.5% interest a month. Your corporation also loses its good standing, and the state can sue for the debt. After a year without paying or filing, its charter becomes void. Reviving it means paying all back taxes, penalties and interest. A corporation void more than five years can instead pay three times the current year’s tax, plus that year’s tax.
When is Delaware franchise tax due?
Delaware franchise tax is due March 1 each year, with the annual franchise tax report that serves as its return. The tax for 2026 is due March 1, 2027. A corporation whose tax is $5,000 or more also makes estimated payments during the year. It pays 40% by June 1, then 20% by September 1 and 20% by December 1. Delaware LLCs and LPs pay their annual tax by June 1 instead.
How does the assumed par value method work?
The assumed par value method figures the tax from gross assets and issued shares, and applies only if your report lists both. Divide the assets, taken from your Form 1120 balance sheet, by the issued shares to get the assumed par. Multiply it by your authorized shares to get the assumed par value capital. A class whose own par is above the assumed par counts at its own par. The tax is $400 for each $1,000,000 of that capital, or part of one, and never less than $400.
Does a Delaware LLC pay franchise tax?
A Delaware LLC pays a flat annual tax instead of the corporate franchise tax, and files no annual report. The tax rose from $300 to $400 on January 1, 2026, so $400 first applies to tax year 2026, due June 1, 2027. It is never prorated, so an LLC formed in December still owes the full year. Paying late adds a $200 penalty and 1.5% interest a month. After three years unpaid, the LLC’s certificate of formation is canceled.
Sources
- 8 Del. C. §§ 501 to 518, Corporation franchise tax
- 8 Del. C. § 277, Payment of franchise taxes before dissolution, merger, transfer or conversion
- 8 Del. C. § 312, Revival of certificate of incorporation
- 8 Del. C. § 391, Amounts and payment of fees
- 6 Del. C. §§ 18-1107 and 18-1108, Taxation of limited liability companies and registered series; cancellation for failure to pay taxes
- 6 Del. C. §§ 17-1109 and 17-1110, Taxation of limited partnerships; cancellation for failure to pay taxes
- 6 Del. C. §§ 15-1208 and 15-1209, Annual tax of partnership; cancellation for failure to pay taxes
- 85 Del. Laws c. 273 (HB 400, 2026), fees and taxes administered by the Secretary of State
- 30 Del. C. § 1902, Imposition of tax on corporations; exemptions
- Delaware Division of Corporations, How to calculate franchise taxes
- Delaware Division of Corporations, Annual report and tax information
- Delaware Division of Corporations, Annual report and tax instructions
- Delaware Division of Corporations, LLC/LP/GP franchise tax instructions
- Delaware Division of Corporations, Franchise tax FAQs
- IRS, Form 1120 (2025), U.S. Corporation Income Tax Return
Reviewed and updated September 2026. General information, not advice for your situation.