Delaware Franchise Tax Methods (2026)

Is this a calculator or a guide?

This page is an honest guide, not a live calculator. It walks you through exactly how Delaware franchise tax is figured so you can run the numbers on your own entity with full confidence in what each figure means. The worked examples below use real Delaware rates, and you can follow them step by step with your own share count and asset figures.

The single most important point comes first, because it saves most readers from a pointless calculation: if you own a Delaware LLC, there is nothing to calculate. The two methods people search for — Authorized Shares and Assumed Par Value — exist only for corporations. An LLC pays a flat amount, full stop. We explain the corporation methods in depth afterward, with examples, for the founders who actually need them.

How much franchise tax does a Delaware LLC pay?

A Delaware LLC pays a flat $300 per year. There is no formula, no share count, and no par value, because an LLC does not issue shares. Whether your LLC earned nothing or earned millions, the franchise tax is the same $300. This flat, predictable figure is one of the reasons the LLC is the default choice for solo founders and non-resident owners.

The $300 is due June 1 each year, starting the year after you form. An LLC formed in 2026 makes its first $300 payment by June 1, 2027 — there is no franchise tax in the formation year itself. Crucially, an LLC files no annual report with Delaware; the $300 franchise tax is the entire state obligation. Full detail lives on our Delaware franchise tax page.

Miss the June 1 deadline and Delaware adds a $200 penalty plus 1.5% interest per month on the unpaid balance, and your LLC loses good standing until it is cured. Because the amount and the date never change, this is one of the easiest compliance items to automate — we track it for every LLC we form so the date never slips.

Why do LLCs not use the Authorized Shares or Assumed Par Value method?

Both methods are built entirely on concepts that belong to corporations: authorized shares, issued shares, and par value. An LLC has none of these. It has members and membership interests, not stock with a par value, so there is simply nothing for the formulas to operate on. That is the whole reason Delaware gives LLCs a flat fee instead.

So if you read a guide describing how to pick the cheaper of two methods, recognize immediately that it is talking about Delaware corporations, not LLCs. Applying a share-based method to an LLC is a category error. The rest of this guide covers the corporation methods properly, because corporation owners genuinely need to choose between them — and choosing wrong can cost thousands of dollars.

It helps to understand why the structures diverge here. A corporation's ownership is divided into shares, and the franchise tax was historically designed to scale, loosely, with the size of that share structure or the capital behind it — hence two competing share-based formulas. An LLC's ownership is governed by an operating agreement and membership percentages, with no stock certificate and no par value to measure. Delaware therefore chose a single flat charge for LLCs, which is administratively simpler for both the state and the owner. Once you internalize that LLCs have no shares, the entire "which method" question dissolves for LLC owners.

What is the Authorized Shares method for a corporation?

The Authorized Shares method calculates a corporation's franchise tax from the number of shares it is authorized to issue, as stated in its certificate of incorporation — not the number actually issued. The brackets are fixed by Delaware:

• 5,000 shares or fewer: $175 (the minimum).
• 5,001 to 10,000 shares: $250.
• Each additional 10,000 shares (or part): add $85.
• Maximum: $200,000 for most corporations.

The trap is that startups routinely authorize 10,000,000 shares so they can split equity cleanly among founders, employees, and investors. Under the Authorized Shares method, 10 million shares produces a default bill in the tens of thousands of dollars. That is the alarming number founders see on the Delaware notice — and it is almost always the wrong number to actually pay.

What is the Assumed Par Value Capital method?

The Assumed Par Value Capital method ignores authorized shares and instead looks at the corporation's total gross assets and its issued shares. In rough terms, you compute an "assumed par value" per share from your assets and shares, derive an assumed par value capital figure, then apply $400 per $1,000,000 of that capital. The minimum is $400.

The reason this matters: an early-stage company can have millions of authorized shares but only modest gross assets. Because this method is driven by real assets rather than a large authorized count, it usually yields a dramatically smaller bill — frequently the $400 floor. Delaware lets every corporation pay under whichever method is lower, so the Assumed Par Value method is the escape hatch from the scary Authorized Shares default.

Worked example: a typical startup with 10 million shares

Take a common setup: a corporation authorizes 10,000,000 shares, has 8,000,000 issued, holds $500,000 in total gross assets, and carries a par value of $0.0001 per share. Here is how the two methods compare on the same company.

The arithmetic of the Assumed Par Value figure runs as follows. Assumed par value per share is total gross assets divided by issued shares, here $500,000 / 8,000,000 = $0.0625. Assumed par value capital is that figure multiplied by authorized shares: $0.0625 × 10,000,000 = $625,000. Applying $400 per $1,000,000 gives $250 — below the $400 minimum, so the company pays $400. The difference versus the $85,165 authorized-shares default is enormous, which is exactly why no founder should ever just pay the number on the notice.

Walk through the Authorized Shares figure too, so you can see where the alarming number comes from. The first 10,000 shares cost $250. The remaining 9,990,000 shares are counted in blocks of 10,000, which is 999 blocks, each adding $85: 999 × $85 = $84,915. Add the $250 base and you reach roughly $85,165. Nothing about that number reflects the company's actual size or earnings — it is purely a function of how many shares the certificate of incorporation authorized. That is the whole reason Delaware offers the second method as an alternative.

The practical lesson is to never let the Authorized Shares default drive your payment. Run the Assumed Par Value math on your real assets and issued shares, and in almost every early-stage case you will land at or near the $400 minimum. Keep the supporting figures — your total gross assets at year-end and your issued-share count — with your records, because Delaware can ask you to substantiate the lower number you paid.

Which method should a corporation use?

The rule is simple: a corporation pays the lower of the two. In practice this means almost every venture-style startup with a high authorized share count and modest assets uses the Assumed Par Value Capitalmethod. Delaware's notice defaults to Authorized Shares, so you recalculate and pay the smaller figure yourself. The table below shows the typical pattern across company profiles.

Note the second row: a corporation that keeps its authorized shares at or below 5,000 pays just $175 under Authorized Shares — cheaper than the $400 Assumed Par Value minimum. That is why some founders deliberately authorize a low share count if they do not need a big equity pool. The right answer always comes from running both numbers on your actual figures.

Consider a contrasting worked example to see the methods flip. Suppose a profitable operating corporation authorized only 5,000 shares, issued them all, and now holds $4,000,000 in total gross assets. Under Authorized Shares, 5,000 shares is the minimum bracket, so the tax is just $175. Under Assumed Par Value, the large asset base pushes the assumed par value capital well above $1,000,000, producing a tax of several thousand dollars. Here the corporation simply pays the $175Authorized Shares figure. The point is that there is no universal "cheaper" method — it depends entirely on the relationship between your share count and your assets, which is why you calculate both every year.

How do the LLC and corporation regimes compare overall?

Stepping back, here is the franchise tax picture for the two main Delaware entities side by side. Notice how much simpler the LLC column is — a single flat figure, no method, no annual report — versus the corporation column, where you must calculate, choose a method, and file a report.

The takeaway is not that one entity is universally cheaper — it is that they are different tools. The LLC wins on simplicity and predictable cost, which suits solo operators and non-resident founders. The corporation exists for raising venture capital and issuing stock options, and it accepts more compliance in exchange. Decide on the structure your business needs, then optimize the tax within it. Our Delaware LLC taxes overview and Delaware C-Corp guide cover the wider picture beyond franchise tax.

What does a non-resident owner need to know about all this?

If you are a non-resident who formed a single-member Delaware LLC, your franchise tax life is the simplest version of everything above: a flat $300 due June 1, with no method, no annual report, and no share math. You do not need a US Social Security Number to form the LLC or to pay the tax. The whole non-resident path — formation, EIN, and banking — is laid out on our Delaware LLC for non-residents guide, and the federal-ID step is covered in our EIN for a Delaware LLC walkthrough.

Franchise tax is a state obligation and is separate from your federal filings. A foreign-owned single-member LLC must also file Form 5472 with a pro-forma Form 1120 each year — the penalty for missing it is $25,000 — which is a completely different deadline from the June 1 franchise tax. See our Form 5472 for Delaware LLCs guide so you do not confuse the two. Banking and Stripe approval, where relevant, are each the provider's own decision; our Delaware LLC banking and Delaware Stripe account pages explain how to apply cleanly.

What franchise tax mistakes should you avoid?

The two methods cause more confusion than any other Delaware topic, and the mistakes are predictable. Knowing them in advance keeps you out of trouble and, in the corporation case, can save you a five-figure overpayment.

• Trying to "choose a method" for an LLC. There is no method. An LLC pays a flat $300. Anyone telling you to calculate authorized shares for an LLC is mixing up the entity types.
• Paying the corporation notice at face value. The notice defaults to Authorized Shares and is often grossly inflated. Always recalculate under Assumed Par Value before paying.
• Confusing the two due dates. LLCs pay June 1; corporations pay (and file an annual report) March 1. Calendar the right one for your entity.
• Forgetting it starts in year two. There is no franchise tax in the formation year; the first payment falls the following year.
• Mixing up franchise tax and income tax. Franchise tax is a flat state fee for the privilege of existing in Delaware, not a tax on profit. Your federal income tax is a separate matter — see our Delaware LLC taxes page.

Avoiding these is mostly about knowing your entity type and the one date that applies to it. For LLCs we form, we track the June 1 date and the flat $300 automatically; you can review the full cost picture, year one and year two, on our Delaware LLC cost breakdown.

How do you actually pay the franchise tax once you have the number?

For an LLC, paying is trivial: there is one flat figure, $300, and you remit it through the Delaware Division of Corporations online portal by June 1. You do not attach an annual report, you do not submit asset figures, and you do not pick a method — the amount is the same every year. If your registered agent or formation service tracks the date for you, the payment is little more than a confirmation click each spring.

For a corporation, the process has more moving parts. You file the annual report (which lists directors and officers) and pay the franchise tax together by March 1. The portal will display the Authorized Shares figure by default, and the recalculation to Assumed Par Value is done on the same screen by entering your total gross assets and issued shares. Once you enter those figures, the system shows the lower result, and you pay that. Large corporations whose tax exceeds a threshold also owe quarterly estimated payments through the year rather than a single March payment.

In both cases the late consequences are the same shape — a $200 penalty plus 1.5% interest per month and loss of good standing — but the trigger dates differ, so the single most valuable habit is calendaring the correct date for your entity. An LLC owner who mistakenly waits for a March deadline, or a corporation owner who waits until June, will both end up paying penalties for nothing. Match the date to the entity and the rest is routine.

How does franchise tax fit the wider Delaware setup?

Franchise tax is just one line in the annual upkeep of a Delaware entity. For an LLC, the recurring cost is the flat $300 plus your registered-agent renewal — and a Delaware registered agent is required for every entity, resident or not. There is no LLC annual report to add on top, which keeps the ongoing burden light and predictable.

This predictability is a genuine advantage when you are planning cash flow for a young business. An LLC owner knows, with certainty, that the state will want $300 every June 1 — no spreadsheet, no asset valuation, no risk of a surprise five-figure notice driven by a share count. A corporation owner accepts a little more annual work in exchange for the ability to issue stock, grant options, and raise institutional money. Neither is "better" in the abstract; the franchise tax mechanics simply reflect what each entity is built to do.

If you are still deciding how to form, our Delaware LLC formation guide and our step-by-step how it works page show the full path from name check to EIN to banking. Whichever entity you choose, the franchise tax rules above tell you exactly what you will owe each year — a flat $300 for an LLC, or the lower of two methods for a corporation — so there are no surprises on the notice.