Delaware franchise tax for startups: due dates, methods and the scary bill

Delaware franchise tax for startups is an annual charge for having a Delaware corporation or LLC, owed whether or not the company earns revenue. Corporations file an annual report and pay franchise tax by March 1 each year. LLCs pay a flat annual tax by June 1. The figure that surprises founders most is the corporation tax, because Delaware's default calculation can produce a notice far larger than the amount the company actually needs to pay. This guide explains how both work, using Delaware's published rules as of October 2026.

Why every Delaware company pays it

Delaware is a common choice for foreign founders, for reasons covered in our guide to the benefits of incorporating in the US and in why incorporate in Delaware. The franchise tax is part of that bargain. It is a state charge for the right to exist as a Delaware entity. It is separate from federal income tax, and it applies even if your company has no Delaware office and no Delaware customers.

Two details catch people out. First, the tax is assessed if the entity is active at any time in the calendar year and is not prorated. A company incorporated in late December still owes the full year. Second, it is easy to forget. Your company may sit dormant while you test the market, but Delaware's calendar keeps running.

That is a reason to time incorporation to the market rather than the other way round. Greatweek's US Market Entry work pressure-tests whether the US opportunity is real at your stage or a year too early, and the free US Market Entry Playbook sets out the commercial decisions to make before you form a company.

Corporations: what is due and when

According to Delaware's franchise tax page, as of October 2026, domestic corporations must file their annual report and pay franchise tax no later than March 1 of each year, and filing is online. The annual report fee is $50 for non-exempt domestic corporations. Missing the deadline costs a $200 penalty for not filing a completed annual report on or before March 1, plus interest of 1.5% per month on unpaid tax.

Corporations that owe $5,000 or more pay estimated tax in installments, with 40% due June 1. The minimum tax is $175 under one method and $400 under the other. The maximum is $200,000, or $250,000 for Large Corporate Filers.

A separate rule applies to foreign corporations registered to do business in Delaware: their annual report is due June 30, with a $250 fee and a $250 late penalty. That matters if your home company has registered in Delaware rather than forming a Delaware subsidiary.

The two calculation methods

Delaware publishes two ways to calculate franchise tax for corporations. You may use whichever produces the lower amount, and Delaware's franchise tax calculator explains the inputs each method needs.

The Authorized Shares method looks only at how many shares your certificate of incorporation authorizes. As of October 2026, Delaware's rates are $175 for 5,000 shares or fewer, $250 for 5,001 to 10,000 shares, and an additional $85 for each further 10,000 shares or portion of 10,000. Delaware's page states these rates have been effective since January 1, 2018.

The Assumed Par Value Capital method calculates an assumed par value capital figure from company information you report, then charges $400 per million, or portion of a million, of that figure. The minimum under this method is $400.

The two methods compared, using Delaware's published rates as of October 2026:

Why founders receive scary bills

Startups often authorize millions of shares so they can issue founder stock, an option pool and future investor shares without amending the charter. Under the Authorized Shares method, that share count drives the tax.

Here is an illustration using Delaware's published rates, not a real company. Take a corporation with 10,000,000 authorized shares.

1. 1The first 10,000 shares cost $250.
2. 2The remaining 9,990,000 shares make 999 blocks of 10,000, and 999 multiplied by $85 is $84,915.
3. 3Add the two and the calculation gives $85,165, which is below the $200,000 cap, so that is the figure the Authorized Shares method produces.
4. 4Add the $50 annual report fee on top.

Stripe's Atlas documentation notes that Delaware's default notices use the Authorized Shares method, which produces large bills for companies with more than 5,000 shares, and that most Atlas companies pay less using the Assumed Par Value Capital method. > The practical lesson is not to pay a notice at face value. Recalculate using the second method, file with the correct figures, and keep the working.

LLCs: a flat annual tax

LLCs are simpler. Delaware's official pages state that LLCs, LPs and GPs pay an annual tax of $400, due on or before June 1 (as of October 2026). There is no annual report. Late payment brings a $200 penalty and interest of 1.5% per month on the tax and penalty. The tax is not prorated.

Some third-party guides still quote an older, lower LLC figure. Use the amount on Delaware's own page, and check it again before each payment.

Registered agents and staying in good standing

Delaware's registered agent page says a registered agent must maintain a street address and office located in Delaware. The agent receives official notices, including franchise tax reminders, so the agent relationship and your compliance calendar go together.

Formation services often bundle the first year. Stripe Atlas includes the first year of registered agent service and lists US$100 annually after that. Harbor Compliance lists $99 for the first year for new customers, renewing at $159 annually. Firstbase lists its registered agent service at $299 per year per state. All prices are as of October 2026. Our guide to the cost of setting up a US company puts these lines into a first-year budget.

Frequently asked questions

When is Delaware franchise tax due for a C corporation?

Domestic corporations file the annual report and pay franchise tax by March 1 each year. Corporations owing $5,000 or more also pay estimated installments, with 40% due June 1 (as of October 2026).

How much is the Delaware LLC annual tax?

Delaware's official pages state $400, due on or before June 1, with no annual report (as of October 2026).

Why is my Delaware franchise tax bill so high?

Delaware's default notice uses the Authorized Shares method, which charges by the number of shares authorized. Startups with millions of authorized shares often pay less under the Assumed Par Value Capital method, which has a $400 minimum.

Do I owe Delaware franchise tax if I incorporated in December?

Yes. The tax is assessed if the entity is active at any time in the calendar year and is not prorated.

Franchise tax is small when handled correctly and expensive when ignored. Put March 1 or June 1 in your calendar on the day you incorporate. If you are weighing whether to form a US entity at all, book a 20-minute US Entry Review. These rules reflect Delaware's published pages as of October 2026; confirm your calculation with a qualified US tax advisor before filing.