Delaware Franchise Tax: 400 dollars for your LLC, every year on June 1

Form a company in Delaware and you pay a tax there simply for the company existing, regardless of revenue or profit. For the LLC it is a flat amount; for the corporation it follows its own formula. This guide covers the amounts, the deadlines, the corporation calculation and what happens if you don't pay.

Delaware is the best-known state of incorporation in the US, and it charges for that role. Form a company there and you pay a tax that has nothing to do with your business: not a tax on profit, not a tax on revenue, but an annual levy for having your company on the register. For the LLC it is called the Annual Tax, for the corporation the Franchise Tax, and in everyday use people call both the franchise tax.

The tax is small, but it must be paid on time, and missing it has consequences that go far beyond a penalty. This guide explains what Delaware asks of LLCs and corporations every year, how a corporation calculates its tax and what happens if the payment doesn't arrive. Why people choose Delaware as their state of incorporation, what it suits and what it doesn't, is covered on our page on forming a company in Delaware. This guide is part of our overview of your US company's tax obligations.

1A tax on existing, not on profit

The franchise tax is the price of the privilege of having a company under Delaware law. It arises for every year in which the company is active on the register of the Division of Corporations, and a single day between January 1 and December 31 is enough. An LLC formed in December therefore owes the full tax for that year; for the LLC there is expressly no proration.

Whether the company makes a profit, a loss or nothing at all makes no difference. Nor does it matter whether it does any business in Delaware. Most Delaware companies owned by Europeans have only their Registered Agent there and operate in another state. They pay the tax too, because it is tied to formation, not to activity.

That sets the Delaware franchise tax apart from the Texas tax of the same name. The Texas franchise tax is a tax on the margin of every company formed in Texas or doing business there. A Delaware LLC with an office in Austin therefore pays both: the flat tax in Delaware and, above a revenue threshold, the Texas tax on its margin.

2The LLC: 400 dollars on June 1

For the LLC the math is simple. Every LLC formed in Delaware and every foreign LLC registered to do business there pays an Annual Tax of $400. The same applies to limited partnerships and to general partnerships with a filed statement. Each registered series of a series LLC adds $100. The law published as 85 Del. Laws chapter 273 raised the LLC amount from 300 to 400 dollars, effective January 1, 2026.

The tax is due on June 1 of the year following the tax year. Delaware does not require an annual report from an LLC: no form, no details on members or revenue, just the payment. At least 60 days before June 1, the Secretary of State sends a tax statement to the LLC's Registered Agent. By then at the latest, your agent should pass it on to you.

You pay online through the Division of Corporations website, available daily from 8 a.m. to 23:45 Eastern Time. Amounts over $5,000, which can add up with many series or several companies, must be paid by ACH debit. If you pay by credit card, click submit only once; the Division itself warns about duplicate charges.

3If you don't pay: penalty, good standing and cancellation

Miss June 1 and the first thing that happens is you pay more. The law adds $200 to the tax ($50 for a registered series), and interest of 1.5 percent per month or part of a month runs on tax and penalty until everything is paid. One year late turns 400 dollars into roughly 700 dollars.

The other consequences weigh more. An LLC that doesn't pay the tax loses its good standing in Delaware. A foreign LLC loses its registration. As long as that lasts, the LLC cannot bring a lawsuit in the Delaware courts. Often you only notice when a business partner or an agency asks to see a Certificate of Good Standing.

If the tax stays unpaid for three years, the LLC's certificate of formation is canceled on the third anniversary of the due date. Delaware publishes the list of companies canceled this way every year. That isn't the end of the LLC: with a certificate of revival and payment of all taxes, penalties and interest, it can be revived, with effect as if it had never been canceled. It is cheaper and easier to have June 1 in your calendar. If you no longer need a company, dissolve it properly rather than letting it lapse; when the certificate of formation is canceled, the Annual Tax becomes due.

4The corporation: annual report and franchise tax on March 1

Corporations follow a different rhythm. Every active corporation formed in Delaware files an annual report for the prior year by March 1 and pays the franchise tax with it. Report and payment are online only. The report costs $50, or $25 for tax-exempt corporations. Delaware requires every domestic report to state the nature of the business, meaning how the company earns its revenue.

A corporation's franchise tax is at least $175 under the Authorized Shares Method or at least $400 under the Assumed Par Value Capital Method. The maximum is $200,000; only corporations classified as a Large Corporate Filer pay $250,000. Corporations owing $5,000 or more pay in installments: 40 percent on June 1, 20 percent each on September 1 and December 1, and the rest on March 1.

Miss March 1 and, like the LLC, you pay a $200 penalty plus 1.5 percent interest per month on tax and penalty. A corporation formed under another state's law and only registered in Delaware, by contrast, files its annual report by June 30 and pays $250; if it is late, Delaware adds another $250.

5Two methods: why the first bill is often a shock

Many founders get a fright on their first March 1. Delaware initially assesses the franchise tax on authorized shares, using the Authorized Shares Method, which looks only at the number of shares the certificate of incorporation authorizes. Up to 5,000 shares it is $175, up to 10,000 shares $250, and each additional 10,000 shares or part thereof adds $85. A corporation with 10,005 authorized shares pays $335; one with 100,000 shares pays $1,015.

Investor-ready corporations often authorize ten million shares or more. Under the same rule that means a franchise tax of $85,165. The number is calculated correctly, but for a young company with a small balance sheet it is almost never what it actually owes. Delaware expressly allows you to use whichever method produces the lower tax.

The second method, the Assumed Par Value Capital Method, works from total assets. You divide the company's total gross assets, as shown on Form 1120 Schedule L, by the number of issued shares to get the assumed par value. For shares with a par value below that, you multiply the assumed par value by the number of authorized shares; for shares with a higher par value, you use their own par value. The total is the assumed par value capital. The tax is $400 per million or part of a million, or the corresponding fraction of $400 below one million, but at least $400.

An example under these rules: a corporation with ten million authorized and issued shares at a par value of 0.0001 dollars has total assets of $50,000. The assumed par value is 0.005 dollars, the assumed par value capital $50,000. Mathematically that comes to $20, so the minimum tax of $400 applies, instead of $85,165 under the first method. For the second method to apply, you must report the issued shares and total assets in the annual report. The Division also offers a calculator on its website.

6What the franchise tax does not replace

The franchise tax is a tax on the company's existence. It does not replace any of the taxes owed on the business itself. A corporation that actually does business in Delaware also files a corporate income tax return there and pays 8.7 percent on the share of its federal income apportioned to Delaware, due by April 15 for calendar-year filers. Corporations whose Delaware activity is limited to holding and managing intangible assets may be exempt. If you sell goods or services in Delaware, you also pay the gross receipts tax there on gross revenue, at rates between 0.0945 and 1.9914 percent depending on the industry, with exclusions that usually start at $100,000 a month.

For an LLC, Delaware follows its federal tax classification: if it is a partnership or a disregarded entity for federal purposes, Delaware treats it the same way for its own taxes. The federal obligations apply regardless, from Form 1065 for a multi-member LLC to Form 5472 for an LLC with a foreign owner.

And if the company operates in another state, that state's taxes come on top. Texas levies its franchise tax on every company doing business there, at 0.375 percent of margin for retail and wholesale and 0.75 percent for everyone else. Up to revenue of $2,650,000, no tax is due for report years 2026 and 2027, but the company still files a Public Information Report or Ownership Information Report every year by May 15. How Delaware works together with a location in Texas is covered on our page on company formation in Texas.

7Mail that doesn't come from the state

Around March 1 and June 1, many Delaware companies receive letters and emails that look like tax notices but aren't. The Division of Corporations itself warns about these deceptive solicitations: letters demanding fees for an annual report, a certificate or a registration, styled and worded like a government agency, but sent by a private company. Delaware advises treating any mail with suspicion that doesn't come directly from the state or from your own Registered Agent.

The simplest rule: pay your LLC's annual tax and file your corporation's annual report only through the Division of Corporations website, or through your Registered Agent. If you have received one of these letters, or already paid one, you can contact the Consumer Protection Unit of the Delaware Attorney General; the Division lists a dedicated phone number for this. If you get a genuine letter from the IRS, our guide to mail from the IRS shows you how to read it.

8The Delaware calendar at a glance

For a calendar-year Delaware company, the calendar is short. A corporation has March 1 for its annual report and franchise tax and, if it owes $5,000 or more, estimated payments on June 1, September 1 and December 1. LLCs, LPs and GPs have June 1 for the annual tax. A foreign corporation merely registered in Delaware has June 30.

On top of that come the federal deadlines, those of the state where the company actually operates, and event-based deadlines such as the BE-13 within 45 days of formation. The full calendar, including the Registered Agent and other states' annual reports, is in our guide to annual obligations. Whether Delaware is the right state of formation for your plans at all, or whether your own location is the better choice, is covered on our page on recommended states.

In short

• Every LLC, LP and GP formed or registered in Delaware pays an annual tax of $400, due June 1 for the previous year; there is no annual report for them. A law effective January 1, 2026 raised the amount from $300 to $400.
• A Delaware corporation files its annual report by March 1 and pays the franchise tax: at least $175 under the authorized shares method or $400 under the assumed par value capital method, and at most $200,000.
• Pay late and you owe a $200 penalty plus 1.5 percent interest per month; the LLC loses its good standing, and after three years without payment its certificate of formation is cancelled.
• The franchise tax doesn't replace any other tax: if you do business in Delaware itself, you pay corporate income tax or gross receipts tax there, and if you operate in Texas, you also pay the Texas franchise tax.

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