Delaware Franchise Tax: Amounts, Deadlines, and How to Pay

What is the Delaware franchise tax?

The Delaware franchise tax is an annual fee every Delaware business entity pays to remain in good standing with the state. Despite the name, it is not a tax on franchises and it is not based on your profits. It is a flat state maintenance fee for the privilege of being a Delaware LLC or corporation. You owe it even if your company had no revenue and no activity during the year.

How much you pay depends entirely on your entity type. LLCs and limited partnerships pay a simple flat amount. Corporations pay a variable amount based on their share structure. Mixing up the two is the most common Delaware franchise tax mistake, so this guide treats them separately. If you are still deciding which entity to form, our Delaware LLC overview and Delaware C-Corp guide walk through the trade-offs before you commit to a structure.

How much is the Delaware LLC franchise tax?

Every Delaware LLC pays a flat $300 franchise tax each year. There is no calculation, no tiers, and no relationship to income. A dormant LLC that never opened a bank account owes the same $300 as an LLC doing seven figures in revenue. The tax is due by June 1, and the obligation begins the year after your LLC is formed. An LLC formed in 2026 makes its first $300 payment by June 1, 2027.

Delaware LLCs do not file an annual report. That requirement is only for corporations. For an LLC, paying the $300 is the entire annual state obligation in Delaware. Note that the franchise tax is separate from your registered agent renewal, which runs about $99 per year — both are part of the ongoing cost we break down on the Delaware LLC cost page.

How is the Delaware corporation franchise tax calculated?

Delaware corporations pay a variable franchise tax plus a $50 annual report fee, both due by March 1. Corporations can calculate the tax two ways and pay whichever is lower:

• Authorized Shares Method. Based on the number of shares your certificate authorizes. It starts at $175 for 5,000 shares or fewer and rises from there. This method often produces a very large number for startups that authorized 10 million shares.
• Assumed Par Value Capital Method. Based on your issued shares and total gross assets. It has a $400 minimum but is usually far lower for venture-backed startups, which is why most of them use it.

The maximum franchise tax for a standard corporation is $200,000. If a startup gets a shocking five- or six-figure franchise tax notice, it almost always means they were billed on the Authorized Shares Method and should recalculate using Assumed Par Value.

How does the Authorized Shares Method actually work?

The Authorized Shares Method scales with the number of shares your certificate of incorporation authorizes — not the number you actually issued. The brackets are simple: corporations with 5,000 authorized shares or fewer pay the $175 minimum; 5,001 to 10,000 shares pay $250; and each additional 10,000 shares (or part thereof) adds $85. That last tier is where startup founders get blindsided.

Here is a worked example. A founder forms a corporation and, on a template, authorizes 10,000,000 shares with a tiny par value. Under the Authorized Shares Method that is the first 10,000 shares ($250) plus 9,990,000 more shares, which is 999 additional blocks of 10,000 × $85 = $84,915, for a total around $85,165. That eye-watering figure is exactly what prints on the official Delaware notice — and it is almost never the real number, because the corporation can switch to the Assumed Par Value Method instead. The lesson: never pay the notice at face value. If you are weighing an LLC versus a corporation partly to avoid this complexity, the flat Delaware LLC $300 is far simpler to budget.

How does the Assumed Par Value Capital Method work?

The Assumed Par Value Capital Method looks at your issued shares and your total gross assets (usually the figure from your federal Form 1120 balance sheet), then charges roughly $400 per $1 million of assumed par value capital, with a $400 minimum. Because most early-stage startups have modest assets and have issued only a fraction of their authorized shares, this method usually collapses a scary notice down to a few hundred dollars.

Take the same startup from the Authorized Shares example: 10,000,000 authorized shares, but only 8,000,000 issued and $500,000 in gross assets. The math works out to an assumed par value below $1 million, so the corporation pays close to the $400 minimum rather than $85,000 — a difference of more than $84,000 from simply choosing the correct method. The catch is that the Assumed Par Value Method requires accurate issued-share and asset figures, so you need clean books and a finalized Form 1120 balance sheet before March 1. Our Delaware C-Corp walkthrough covers how those numbers feed the calculation.

LLC vs corporation: which franchise tax applies?

Does an LP or series LLC pay the same franchise tax?

Delaware limited partnerships (LPs) and general partnerships follow the same rule as LLCs: a flat $300 franchise tax due June 1, with no annual report. So if you operate a fund or holding structure built on an LP, budget the same $300 per entity per year as you would for an LLC. The only entity type that uses the variable share-based calculation is the corporation.

A Delaware series LLC is taxed as a single entity for franchise tax purposes — the parent LLC pays one $300 franchise tax, not $300 per protected series. That is a meaningful cost advantage for real estate investors and holding operators who would otherwise pay $300 for every separate LLC. The trade-off is that some banks and states treat individual series inconsistently, so a series LLC is not always the right call; the series LLC guide covers when it makes sense. If you own several standalone LLCs instead, remember each one owes its own separate $300 every June 1.

What happens if you pay the Delaware franchise tax late?

Missing the deadline is expensive and disruptive. Delaware adds a $200 penalty immediately and charges 1.5% interest per month on the unpaid balance. More importantly, your entity loses its good standing. While out of good standing you generally cannot obtain a Certificate of Good Standing, which banks, investors, and other states frequently require. Let it lapse for too long and Delaware can declare the entity void or cancelled.

Here is how the numbers stack up over time for a missed LLC payment, so you can see why even a few months of delay matters:

Interest is charged on the unpaid tax balance, so the dollar figures above are illustrative rather than a quote — always confirm the exact amount on the state portal. The real cost is rarely the interest; it is the lost good standing that can stall a bank application or a financing round at the worst possible moment.

What does good standing actually mean and why does it matter?

Good standing simply means your Delaware entity exists, is current on its franchise tax, and has a registered agent on file. When all three are true, Delaware will issue you a Certificate of Good Standing on request. That certificate is the document banks ask for when you open a business account, that payment processors sometimes request, that investors require during due diligence, and that other states demand when you register to do business there (foreign qualification).

The problem is that good standing is binary and quiet. There is no grace period messaging — the day after June 1, an unpaid LLC is simply not in good standing, and you usually only discover it when a bank or investor runs a check and the certificate comes back unavailable. We have seen founders lose a Mercury or Stripe approval window because a $300 payment slipped. Keeping the tax current is the cheapest insurance you can buy for your banking and fundraising path, which is why we fold it into the compliance tracking included with our formation service.

How to pay the Delaware franchise tax step by step

You pay through the Delaware Division of Corporations online portal using your entity’s seven-digit file number. The exact steps differ by entity type:

For a Delaware LLC or LP: (1) Go to the Division of Corporations franchise tax portal. (2) Enter your seven-digit business entity file number — you can find it on your Certificate of Formation or by searching the state’s entity lookup. (3) Confirm the flat $300 amount the system displays. (4) Enter the authorized-signer details. (5) Pay by credit card or ACH and save the confirmation. The whole process takes a few minutes because there is nothing to calculate.

For a Delaware corporation: (1) Open the franchise tax portal and enter your file number. (2) The system pre-fills the Authorized Shares amount — do not stop here if it looks high. (3) Switch to the Assumed Par Value Capital Method by entering your total issued shares and total gross assets. (4) The portal recalculates and shows the lower of the two figures. (5) Complete the annual report fields (officer and director information). (6) Pay the tax plus the $50 report fee. If you would rather not touch the portal at all, your DelawareLLC.co specialist monitors the deadline and can file and pay on your behalf. Learn more about our Delaware LLC service, the full cost of a Delaware LLC, and the registered agent requirement that runs alongside the franchise tax.

What are the most common franchise tax mistakes to avoid?

A handful of errors account for nearly every franchise tax problem we see. First, paying the Authorized Shares notice at face value — startups have wired tens of thousands of dollars they never owed because they did not recalculate with Assumed Par Value. Second, confusing the LLC June 1 deadline with the corporation March 1 deadline, which leads to a missed date and a $200 penalty. Third, assuming a dormant or zero-revenue LLC owes nothing — it still owes the full $300.

Two more catch people off guard. Many founders forget the separate registered agent renewal (about $99) and let the agent lapse, which can also knock the entity out of good standing even if the tax is paid. And some try to stop paying by simply abandoning an LLC — but Delaware keeps assessing the $300 plus penalties until you formally close the entity, so an unused LLC quietly accrues debt. Walking away is the most expensive option; formal cancellation is the cheap one.

How does the franchise tax fit into Year 1 and Year 2 costs?

For a Delaware LLC formed through DelawareLLC.co, Year 1 is a flat $397, all-inclusive — that price already includes the Delaware $110 Certificate of Formation state fee, your registered agent for the first year, an operating agreement, US bank account application help, and compliance tracking. You do not pay franchise tax in Year 1 because the obligation starts the following year.

Year 2 and beyond is where the franchise tax appears: the $300 flat franchise tax due June 1, plus roughly $99 to renew the registered agent. That is about $399 per year to keep a Delaware LLC alive and in good standing — predictable, flat, and not tied to revenue. We show this Year 1 versus Year 2 split transparently on the cost page because hidden Year 2 renewals are the single most common complaint founders have about other formation services. Foreign-owned single-member LLCs should also budget for the federal Form 5472 filing, which is separate from the franchise tax but shares the same compliance calendar.

Who has to deal with the Delaware franchise tax?

Anyone who owns a Delaware entity, full stop — US founders, non-resident founders, single-member LLCs, multi-member LLCs, holding companies, and corporations alike. There is no exemption for being based abroad, for having no US income, or for never having activated the company. A freelancer in Lahore with a one-person Delaware LLC and a developer in Bangalore running a SaaS through one face the same flat $300 each June 1 as a Delaware-based operating business.

This trips up non-resident founders in particular, because they often assume “no US tax” means “no Delaware obligation.” It does not — the franchise tax is a state fee, not income tax. If you formed your LLC specifically to sell into the US, accept Stripe, or open a Mercury account, keeping the franchise tax current is what protects those accounts. Our guide for non-residents covers the full compliance picture, and our sister sites help with the related federal pieces: ein.so for your EIN and itin.so for an ITIN when you need one.

What about the BOI / FinCEN report — is that part of franchise tax?

No, and it is worth separating the two clearly because founders often lump all “compliance” together. Beneficial Ownership Information (BOI) reporting is a federal filing with FinCEN, not a Delaware state matter, and it is completely separate from the $300 franchise tax. The rules have also changed recently: under a March 2025 FinCEN interim final rule, BOI reporting was removed for US domestic reporting companies, and US persons are generally exempt — only certain “foreign reporting companies” were left with an obligation.

Because this area is still evolving, you should confirm the current requirement directly with FinCEN or a qualified advisor before assuming you do or do not need to file. What has not changed is the Delaware franchise tax — that $300 is due every June 1 regardless of where BOI rules land. Treat the franchise tax (state) and any BOI obligation (federal) as two separate calendar items so neither slips.

How does DelawareLLC.co handle the franchise tax for you?

When you form with us, the franchise tax is part of the compliance tracking we include — not an upsell you discover later. Your specialist records your June 1 deadline at formation and reaches out well before it, whether or not you have renewed any other service. If you want us to, we can file and pay the flat $300 on your behalf and send you the confirmation, so the entity never quietly slips out of good standing.

For corporations, we go a step further and run the Assumed Par Value calculation so you are not staring at a $85,000 Authorized Shares notice wondering what is real. We also remind you about the separate ~$99 registered agent renewal so both Year 2 obligations are handled in one pass. Support is over WhatsApp, our filing and EIN work carry a money-back guarantee, and the whole point is that compliance stops being something you have to remember. If you are ready, start with our Delaware LLC service; if you are still comparing structures, the C-Corp guide and series LLC guide show how the franchise tax differs across each.