Delaware franchise tax is the annual tax every Delaware corporation pays to keep its charter, due with the annual report by 1 March. As of October 2026 the minimum is $175 under the authorized shares method and $400 under the assumed par value capital method, with a $200,000 cap, while Delaware LLCs pay a flat $400 annual tax by 1 June.
I've taken every figure here from the Delaware Division of Corporations' own pages, read in October 2026: the annual report and tax page, the calculation guide and the LLC tax instructions. The insight that saves startup founders the most is the one about the two methods, because the default bill can look alarming and often isn't what you owe.
Who pays what, and when
| Entity | What's due (as of October 2026) | Deadline |
|---|---|---|
| Delaware corporation | Annual report fee of $50, plus franchise tax of $175 to $200,000 | 1 March |
| Exempt domestic corporation | Annual report fee of $25, no tax | 1 March |
| Foreign corporation registered in Delaware | Annual report fee of $250 | 30 June |
| Delaware LLC, LP or GP | Flat annual tax of $400, no annual report | 1 June |
Notices are sent to every Delaware registered agent in December each year, and Delaware requires domestic corporations to file annual reports electronically.
The two ways to calculate it
Delaware lets corporations use whichever method gives the lower tax. The Division's guidance is direct: use the method that results in the lesser tax.
Authorized shares method
- 5,000 shares or fewer: $175, the minimum.
- 5,001 to 10,000 shares: $250.
- Each additional 10,000 shares, or part of 10,000: add $85.
- The Division's examples: 10,005 shares authorized pays $335, and 100,000 shares pays $1,015.
Assumed par value capital method
- Divide total gross assets by total issued shares, to 6 decimal places. That's your assumed par.
- Multiply the assumed par by the number of authorized shares with a par value below it.
- Multiply authorized shares with a par value above the assumed par by their own par value.
- Add those two results to get your assumed par value capital.
- Round up to the next million if it's over one million, divide by one million and multiply by $400.
- The minimum under this method is $400.
Total gross assets are the total assets reported on the company's federal Form 1120, Schedule L, for the fiscal year ending in the year of the report. You must report all issued shares, including treasury shares, to use this method.
Why startup bills look so big
Here's what catches founders out. Venture-backed startups often authorize millions of shares at formation. Under the authorized shares method, each extra 10,000 shares adds $85, so millions of authorized shares produce a very large number. Delaware's assessment starts from authorized shares, so that's the figure many founders see first.
A young company with few assets and a low par value usually comes out far lower under the assumed par value capital method. The fix isn't a negotiation with the state. It's filing the annual report with your issued shares and gross assets so the tax is worked out the second way. The Division offers a franchise tax calculator to estimate both.
Large bills and estimated payments
Corporations owing $5,000 or more make estimated payments through the year: 40% due 1 June, 20% due 1 September, 20% due 1 December, and the remainder due 1 March. If your corporation's tax is at that level, diary the June payment, because it's an advance on the tax you'll report the following March.
Delaware LLCs: the flat $400
LLCs, limited partnerships and general partnerships formed or registered in Delaware don't file an annual franchise tax report. Instead they pay a flat $400 tax on or before 1 June each year. There's no proration, so an LLC formed late in the year still owes the full year's tax if it was active on the Division's records at any point between 1 January and 31 December.
| Late payment | Penalty (as of October 2026) |
|---|---|
| Delaware LLC, LP or GP tax | $200, plus interest of 1.5% a month on tax and penalty |
| Foreign corporation annual report | $250 |
Watch for scam letters
The Division warns about deceptive mailings. One company, Corporate Records Service, sent letters urging Delaware corporations to pay $125 to complete corporate meeting minutes. The Division recommends treating any letter or email that doesn't come directly from the State or your Delaware registered agent with suspicion. If you're not sure who your agent is, my registered agent guide explains the role.
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Steps to file on time
- Find your notice from your registered agent, sent each December.
- Gather issued shares, including treasury shares, and total gross assets from Schedule L.
- Run both calculation methods using the Division's calculator.
- File the annual report online with the figures that give the lower tax.
- Pay by 1 March for corporations, or 1 June for LLCs.
- Keep the confirmation, since you'll need good standing for banks and investors.
Is Delaware right for a small business?
For a small business that operates in one other state, forming in Delaware usually means paying Delaware's annual tax and registering in your home state as well. That's why forming at home is usually simpler if you don't plan to raise venture funding. My guide to starting an LLC covers choosing a state, and S corp vs LLC covers the tax choice.
My verdict
Delaware franchise tax is manageable once you know the two methods. Corporations: file by 1 March, and if the bill looks huge, recalculate under the assumed par value capital method before paying anything. LLCs: it's a flat $400 by 1 June, with a $200 penalty if you're late. And ignore any letter that doesn't come from the State or your registered agent.
Frequently asked questions
When is Delaware franchise tax due?
Corporations file the annual report and pay by 1 March. Delaware LLCs, LPs and GPs pay their annual tax by 1 June.
What is the minimum Delaware franchise tax?
As of October 2026, $175 under the authorized shares method and $400 under the assumed par value capital method.
How much do Delaware LLCs pay?
A flat $400 annual tax, due by 1 June, with no annual report to file.
Why is my Delaware franchise tax bill so high?
It's usually calculated on authorized shares. Recalculating with the assumed par value capital method often gives a much lower tax.
What is the penalty for paying Delaware LLC tax late?
$200, plus interest of 1.5% a month on the tax and penalty.
What is the maximum Delaware franchise tax?
$200,000 under either method, as of October 2026.
