A Delaware startup with 10 million authorized shares can receive a franchise tax bill for $85,165 or one for $800, on identical facts. The difference is which calculation method it uses.
Delaware sends the first number by default. Knowing that the second exists, and how to get to it, is most of what a founder needs from this tax. That spread is a corporation problem; a Delaware LLC pays one flat number and never runs the calculation at all.
TL;DR
- Entity type decides everything: LLCs pay a flat tax, corporations calculate one, and the two regimes share almost nothing.
- LLCs, LPs and partnerships: a flat annual tax, now $400 following House Bill 400, due 1 June with no annual report.
- Corporations get two methods, and the gap is the point: floors of $175 and $400, a $200,000 ceiling, and a default calculation that can read $85,165 where the alternative reads $800.
- Deadlines and fees by filer: 1 March for domestic corporations, 1 June for LLCs, 30 June and a $250 fee for foreign corporations. Liabilities over $5,000 move to quarterly instalments.
- Filing is online only: you need your seven-digit file number, officer details and closed books, because the cheaper method needs a gross assets figure.
- What it costs to get wrong: $200 plus 1.5% a month, a further $200 for each year missed, and eventually a voided charter. Dormancy is no exemption, including for a company run from abroad.
First, Which Entity Do You Have?
LLCs and corporations fall under completely separate Delaware rules. Reading the wrong set is the fastest way to a wrong number.
Delaware franchise tax is a charge for the privilege of being incorporated in Delaware. It is not a tax on income, revenue or profit, which is why a company that has never traded or opened a bank account still owes it every year the entity exists.
| LLC, LP or general partnership | Corporation | |
|---|---|---|
| What you pay | A flat annual tax | Franchise tax, calculated two possible ways |
| Annual report | None required | Required |
| Deadline | 1 June | 1 March (domestic), 30 June (foreign) |
| Does size change it | No | Yes, substantially |
That split is why generic Delaware franchise tax advice frequently will not match your situation. An LLC owner has no calculation to do at all, and a corporation owner has the most consequential calculation of their filing year.
Check your formation document if you are unsure which you hold. A certificate of incorporation means a corporation; a certificate of formation means an LLC.
Delaware LLCs, LPs and Partnerships Pay a Flat Tax
No report and no calculation apply. You pay a flat annual tax by 1 June and that is the whole obligation.
The amount changed recently. Delaware House Bill 400 raised the annual tax for LLCs and LPs from $300 to $400, effective August 2026 and applying to the 2026 tax year.
| Entity | Previous annual tax | Under HB 400 |
|---|---|---|
| LLC and LP | $300 | $400 |
| Registered series | $75 per series | $100 per series |
| LLP and LLLP | $200 per partner | $300 per partner |
Timing is worth getting straight. The 2026 tax year is the first at the higher rate, so the payment due on 1 June 2027 is the one that reflects it.
Plenty of published guidance still quotes $300, and Delaware's own pages currently disagree with each other: the Division's tax FAQ still shows $300 while its payment instructions show $400.
Check the payment instructions page before you budget, since that is the one you file against.
The Flat Tax Applies Whether You Trade or Not
The flat tax does not scale with revenue, assets or activity. A dormant Delaware LLC with no bank account owes the same as a trading one.
That flatness is what Delaware offers alternative entities: no report and no calculation, in exchange for a fixed amount every year the entity exists.
Two situations catch LLC owners out:
- An LLC formed and then abandoned keeps accruing the tax until it is formally cancelled
- An LLC also registered in another state carries that state's obligations on top of Delaware's
Cancelling properly is the only way to stop the clock. Letting an unwanted Delaware LLC lapse leaves the tax accruing with penalty and interest attached, and the balance has to be cleared before the entity can be cancelled.
Delaware Corporations Calculate It Two Ways
Corporations file an annual report and pay franchise tax by 1 March. The tax is calculated under one of two methods, and you may use whichever produces the lower result.
Each method carries its own floor: $175 under the authorized shares method, $400 under assumed par value capital. Neither produces more than $200,000. Corporations meeting Delaware's Large Corporate Filer definition, which turns on being listed on a national exchange with substantial reported revenues or assets, face a $250,000 ceiling instead.
Exempt corporations sit outside the calculation entirely. A non-stock or non-profit corporation recognized as exempt files the annual report and pays a $25 fee, with no franchise tax attached.
| Corporation type | Franchise tax | Annual report fee |
|---|---|---|
| Stock corporation | Calculated, $175 minimum | $50 |
| Exempt non-stock | None | $25 |
| Non-exempt non-stock | $175 flat, no alternative method | $50 |
Non-exempt non-stock corporations pay a flat $175 with no alternative method available, because there are no shares to run either calculation against.
The Authorized Shares Method: Delaware's Default, and the Expensive One
This one counts shares and ignores everything else about the company. It is also the calculation Delaware applies by default when it sends your notice.
| Authorized shares | Tax |
|---|---|
| 5,000 or fewer | $175 |
| 5,001 to 10,000 | $250 |
| Each additional 10,000 or part | Add $85 |
Run that on a typical startup cap table and the number climbs fast. A corporation with 10,000,000 authorized shares reaches $250 at the 10,000 mark, then adds 999 further increments at $85 each, for a total of $85,165.
Nothing about that figure reflects whether the company has revenue, assets or employees. It is a function of the number on the certificate of incorporation.
The Assumed Par Value Capital Method: Where the $800 Comes From
The alternative brings the company's actual size into the calculation, which is why it usually produces a far smaller number for an early-stage business.
Delaware's formula works like this:
- Divide total gross assets by total issued shares to get an assumed par value
- For each share class, take the higher of that assumed par value or the class's actual stated par value
- Multiply by the authorized shares in that class, then add the classes together
- Apply $400 per $1,000,000 of that figure, or part of a million
That per-class step matters for anything beyond a single class of common stock. Where a class carries a stated par value higher than the computed assumed figure, its actual par value is used instead.
A multi-class company applying one blended figure across every class will understate what it owes. Delaware publishes a worksheet for this.
The minimum under this method is $400 rather than $175. The higher floor comes with a far lower ceiling for asset-light companies, which is where most early-stage corporations land.
Why One Method Says $85,165 and the Other Says $800
These two measure different things: one counts the shares on your certificate, the other counts what the company actually holds. Take the same corporation, with 10,000,000 authorized shares, 8,000,000 issued, and $1,000,000 in gross assets.
| Authorized Shares Method | Assumed Par Value Capital Method | |
|---|---|---|
| Inputs used | Authorized shares only | Gross assets and issued shares |
| Startup: 10m authorized, 8m issued, $1m assets | $250 at 10,000 shares plus 999 increments at $85 = $85,165 | Assumed par $0.125, capital $1,250,000, two portions of a million = $800 |
| Small corporation: 5,000 authorized, low assets | $175, the statutory floor | $400, this method's own floor |
| Which one wins | Small share count | Large share count relative to assets |
Delaware does not choose for you. The notice you receive uses the authorized shares figure, and switching to the lower method means recalculating and reporting the gross assets and issued share numbers yourself.
The gap is not always that dramatic. A company incorporated with a small share count sits at the floor already, and the alternative method would cost it more, so the row that applies to you depends on your share count relative to your assets.
This is what makes a first Delaware notice alarming. Delaware accepts either figure, and sends only the higher one.
Deadlines, Fees and What Each Filing Costs
The filing fee sits on top of the tax, and it varies by entity and by whether the corporation is domestic or foreign.
| Filer | Deadline | Filing fee | Tax |
|---|---|---|---|
| Domestic corporation | 1 March | $50 ($25 if exempt) | $175 minimum, $200,000 maximum |
| Foreign corporation | 30 June | $250 | Not applicable |
| LLC, LP, general partnership | 1 June | None | $400 flat |
1 March, 1 June and 30 June are three different filings. Foreign corporations, meaning those incorporated elsewhere but registered to do business in Delaware, file an annual report and pay the fee without the share-based franchise tax. Their deadline is four months later than a domestic corporation's.
Quarterly Estimates Above $5,000
A corporation whose franchise tax liability reaches $5,000 or more moves onto quarterly payments instead of a single annual one.
- 40% due 1 June
- 20% due 1 September
- 20% due 1 December
- The balance with the annual report by 1 March
On a $20,000 liability that is $8,000 in June, $4,000 in September, $4,000 in December and the remainder at the March filing.
Crossing that threshold is a consequence of the method you use. A company on the authorized shares number can land in quarterly estimates while the same company on assumed par value capital stays well under.
How the Filing Actually Works
Delaware requires annual reports and franchise tax to be filed electronically through the Division of Corporations. There is no paper route for a standard corporate filing.
Have these ready before you start:
- Your seven-digit Delaware file number, which appears on your incorporation documents and on the state's notice
- Officer and director details, including a physical address for each
- Gross assets and issued shares as at your fiscal year end, if you are using the assumed par value method
That third item is what forces the timing. Gross assets come from the same figure reported for US federal tax purposes, so a corporation whose books are not closed cannot complete the lower calculation and may default to the higher one purely for want of a number.
Registered agents commonly offer to file on your behalf. The obligation stays with the company either way, and an agent filing a report does not make the figures in it theirs to get right.
Penalties and Losing Good Standing
Late payment costs $200 plus 1.5% interest per month on the tax and penalty, and the interest compounds monthly on a growing balance.
| Situation | Cost | Knock-on |
|---|---|---|
| Domestic corporation pays late | $200 plus 1.5% monthly interest | Interest compounds on tax and penalty together |
| Foreign corporation files late | Separate $250 penalty | Applies to the annual report itself |
| Each additional year missed | Its own $200 penalty | Stacks on the prior years' balances |
| Left in arrears long enough | Charter voided | Revival required before the entity can act |
Foreign corporations face a separate $250 penalty where the annual report arrives after the deadline.
The consequence that matters: a corporation that does not file and pay loses its good standing, and Delaware will not issue a certificate of good standing for an entity in arrears.
That certificate is what a bank or an investor asks for. Restoring standing takes days to weeks depending on how many years are outstanding, which is what collides with a closing date.
Getting Back Into Good Standing
Restoring status means clearing the arrears rather than negotiating them. You file every outstanding annual report and pay the tax, penalty and accrued interest for each year missed.
The arrears compound in more than one direction:
- Each missed year carries its own $200 penalty
- Interest accrues monthly at 1.5% on a balance that includes the penalty
- A corporation left in arrears long enough can have its charter voided, which is a heavier process to reverse than paying late
Reinstatement is possible after a charter is voided, through a certificate of revival and payment of everything owed. The timeline depends on Delaware's processing rather than on you.
If You Run a Delaware C-Corp from Outside the US
Delaware incorporation is the default for foreign founders raising US venture capital, and the franchise tax arrives whether or not the company has started trading.
What changes when you are filing from abroad:
- Dormancy is not an exemption. A Delaware corporation that has never traded still files and still pays the minimum.
- The standard startup cap table triggers the scary number. Ten million authorized shares is a normal incorporation choice and produces a five-figure default calculation.
- Gross assets means worldwide assets. The assumed par value calculation uses the corporation's total gross assets as reported for US federal tax purposes, not only what sits in a US bank account.
Registered agent fees are separate from all of this. The agent bills you for maintaining a Delaware address, and that invoice is not the franchise tax even when the two arrive together.
Currency and payment method cause their own friction. Delaware collects in US dollars through its online system, and so a founder without a US bank account or card needs a payment route arranged before the deadline.
Build the deadline into the year, not the quarter. A 1 March date means closing enough of the prior year's books in January to state gross assets, which is a tighter sequence than it first appears from outside the US.
Four Mistakes That Cost Delaware Filers
Each of these is avoidable with one check before you pay.
Paying the Number on the Notice
Delaware's notice shows the authorized shares calculation. For an asset-light company with a normal share count, that figure can be a hundred times what the alternative method produces.
Recalculating is a reporting step rather than an appeal. You enter gross assets and issued shares in the annual report, and the lower figure applies automatically.
You can only use it if both of these are true:
- Your books are closed enough to state gross assets as at the fiscal year end
- You know your issued share count, which is often lower than the authorized count
Neither is difficult. Both take time you will not have on 28 February.
Assuming One Deadline Covers Every Entity You Own
Corporations file by 1 March. LLCs pay by 1 June. Foreign corporations file by 30 June.
Founders holding both a Delaware corporation and a Delaware LLC carry two dates, and the corporate one arrives first. Holding companies and subsidiaries incorporated in different years do not share a calendar either.
Your Share Count Was Chosen From a Template
Authorized share count gets chosen at incorporation, often from a template, and then drives the default calculation every year afterwards. Ten million is a common figure for a venture-backed Delaware C-corp, and it is the one that produces the $85,165 default.
For most companies the fix is simply the other calculation method, which costs nothing and changes no corporate documents. Reducing authorized shares by amending the certificate of incorporation is the heavier option, and it is worth weighing only where:
- The assumed par value method still produces an uncomfortable figure
- The authorized count genuinely exceeds what your cap table and option pool need
- You are not mid-round, since changing authorized shares during a financing complicates the documents
Raise the question at incorporation instead. Picking 10,000,000 authorized shares from a template also picks a default franchise tax calculation.
The $300 LLC Figure Is Now Out of Date
The LLC annual tax moved to $400 under HB 400, and material written before August 2026 predates the change.
Anything quoting $300 for the 2026 tax year is out of date, including some pages that have not caught up yet.
Check the source date: HB 400 took effect in August 2026. Guidance written before then, including material from otherwise reliable publishers, still carries the old figure.
How FinStackk Helps With Delaware Filings
Delaware runs on two fixed dates and one calculation that decides the bill. Our Fin-Tax module tracks federal, state, county and city deadlines in one place, including the 1 March and 1 June dates that catch founders holding more than one entity.
If you incorporated in Delaware from outside the US and your first notice has arrived, book a call and we will work through which calculation method applies.
Delaware publishes current rates on its Division of Corporations site. For the equivalent obligation in another state, see our Texas franchise tax guide.
Frequently Asked Questions
How much is Delaware franchise tax?
For an LLC, LP or general partnership it is a flat $400 a year following House Bill 400, due 1 June, with no annual report required.
A corporation's figure depends on the calculation method. The minimum is $175 under the authorized shares method or $400 under assumed par value capital, and the maximum is $200,000, or $250,000 for a Large Corporate Filer.
Why is my Delaware franchise tax bill so high?
Delaware's notice uses the authorized shares method, which counts only the shares on your certificate of incorporation and ignores the company's size. A startup with 10 million authorized shares reaches $85,165 on that basis.
The assumed par value capital method brings gross assets and issued shares into the calculation and usually produces a much smaller figure for an early-stage company. You may use whichever method gives the lower result.
Do I have to pay Delaware franchise tax if my company is dormant?
Yes. The tax applies to the entity's existence rather than its activity, so a Delaware company with no revenue, no employees and no bank account still files and still pays at least the minimum.
Not paying costs $200 plus 1.5% interest per month and eventually good standing, which is what blocks a certificate when a bank or investor asks for one.