Delaware Franchise Tax: What It Is and How to Pay It

Every Delaware corporation — regardless of where it operates or whether it generates revenue — is required to pay an annual Delaware Franchise Tax and file an Annual Report. This is one of the most common compliance obligations founders overlook after incorporation.

What Is the Delaware Franchise Tax?

The Delaware Franchise Tax is an annual fee paid to the State of Delaware for the privilege of being incorporated there. It is not a tax on income or profits — it is simply a fee for maintaining your corporation in good standing.

If you fail to pay, Delaware will void your corporate status, which can jeopardize your business operations, banking relationships, and investor transactions.

Who Must Pay?

• All Delaware corporations, including C Corporations
• Required even if you have no revenue, no employees, or do not operate in Delaware
• Due annually by March 1st each year

How Much Is the Franchise Tax?

Delaware offers two calculation methods. You are required to use whichever results in a lower tax.

Method 1: Authorized Shares Method

This is the default method and often results in a very high tax for startups with many authorized shares.

• 5,000 or fewer authorized shares: $175
• 5,001 to 10,000 shares: $250
• Each additional 10,000 shares (or portion thereof): $85

Example: A startup with 10,000,000 authorized shares would owe approximately $85,000 under this method.

Method 2: Assumed Par Value Capital Method (Recommended for Startups)

This method usually results in a much lower tax for startups. It is based on the assumed par value of your stock relative to total gross assets.

Most early-stage startups with minimal assets pay the minimum franchise tax of $400 using this method.

Always request the Assumed Par Value Capital Method when filing.

Annual Report Filing Fee

In addition to the franchise tax, corporations must pay a $50 Annual Report filing fee to the Delaware Division of Corporations.

Minimum total annual cost: $450 (for most early-stage startups)

Late Payment Penalties

If you miss the March 1st deadline:

• $200 penalty is added immediately
• 1.5% monthly interest is charged on the unpaid balance

How to File and Pay

1. Go to the Delaware Division of Corporations website: corp.delaware.gov
2. Click on "File Annual Report"
3. Enter your corporation's file number
4. Select the Assumed Par Value Capital Method
5. Enter your total gross assets and total issued shares
6. Review the calculated tax
7. Pay by credit card or ACH

You will receive a filing confirmation, which serves as proof of good standing.

Staying in Good Standing

Maintaining good standing in Delaware is essential for:

• Raising investment rounds
• Opening or maintaining business bank accounts
• Entering into contracts
• Mergers and acquisitions
• Obtaining a Certificate of Good Standing for banking or legal purposes

Need Help Filing Your Delaware Franchise Tax?

EasyFiling can help you stay compliant with your Delaware annual filing requirements. Learn more about our compliance services.

Updated on: 21/02/2026