Delaware LLC Franchise Tax Explained: What You Owe, When You Owe It, and How to Calculate It
Delaware is famous for business formation. Over a million entities are formed there. One cost every Delaware LLC owner needs to understand is the annual franchise tax.
This article explains what the Delaware franchise tax is for LLCs, how much it costs, when it is due, and what happens if you miss the deadline. We also cover the difference between the LLC franchise tax and the more complex corporation calculation, which confuses a lot of people who search for Delaware franchise tax information.
Nothing here is legal or tax advice. Consult a licensed Delaware attorney or CPA for guidance on your specific situation.
What Is the Delaware Franchise Tax?
Delaware charges all entities formed in the state an annual franchise tax. This is a fee for the privilege of maintaining your entity in Delaware, separate from any income tax.
Delaware has no state personal income tax for non-residents. But the franchise tax applies regardless of whether the LLC has any income or business activity in Delaware. An LLC that was formed in Delaware and has never earned a dollar still owes the annual franchise tax every year it remains active.
For LLCs, the franchise tax is straightforward: a flat fee due each year.
How Much Does a Delaware LLC Pay in Franchise Tax?
Delaware LLCs owe a flat $300 per year in franchise tax. That figure applies to standard LLCs regardless of revenue, assets, or number of members.
This is simpler than the Delaware corporation franchise tax, which uses one of two calculation methods based on authorized shares or assumed par value (and can be several thousand dollars per year for corporations with a large number of authorized shares). If you have read confusing articles about Delaware franchise tax being thousands of dollars per year, those articles are likely referring to corporations, not LLCs.
For an LLC, the number is $300. That is the current published rate as of the date of this article.
Also note: Delaware LLCs do not pay a separate registration maintenance fee beyond the franchise tax. The $300 covers the annual cost of keeping the entity in good standing.
When Is the Delaware LLC Franchise Tax Due?
Delaware LLC franchise taxes are due by June 1 of each year, covering the prior calendar year.
For an LLC formed in 2025, the first franchise tax payment for tax year 2025 is due by June 1, 2026.
If you form a Delaware LLC partway through the year, you still owe the full year's franchise tax for that year. Delaware does not prorate the fee based on the formation date within the calendar year. An LLC formed in October owes the same $300 for that year as an LLC formed in January.
What Happens If You Miss the Deadline?
Delaware charges a $200 penalty for late payment of the franchise tax. Interest accrues on the unpaid amount at 1.5 percent per month.
More importantly, missing the franchise tax deadline puts your LLC at risk of losing its good standing status with the Delaware Division of Corporations. An LLC not in good standing may not be able to obtain a Certificate of Good Standing, which is often required by banks, commercial lenders, and parties to contracts.
Extended non-payment can result in the LLC being voided by the state. Reinstating a voided Delaware LLC requires filing a certificate of revival and paying all back taxes, penalties, and fees. The reinstatement process can be done, but it creates paperwork and delays that are worth avoiding.
The simplest way to stay in good standing is to calendar the June 1 due date and pay on time. Mark Kohler, CPA and attorney at Anderson Business Advisors, has noted that missed state annual fees are among the most common and most preventable LLC compliance failures, and that the cascade from late fee to loss of good standing to delayed banking is a real operational hazard for small business owners.
Delaware LLC vs. Delaware Corporation: Why the Tax Calculations Look So Different
Many business owners searching for Delaware franchise tax information encounter alarming numbers in the tens of thousands of dollars. Those numbers apply to Delaware corporations, not LLCs.
Delaware corporations use one of two franchise tax calculation methods:
- Authorized shares method. Based on the number of authorized shares in the certificate of incorporation. A corporation with 10 million authorized shares can owe several thousand dollars annually under this method.
- Assumed par value capital method. A calculation based on total gross assets divided by total issued shares, multiplied by the par value fraction. Often results in a lower tax for corporations with large authorized share counts.
Delaware corporations can choose whichever method produces the lower tax. For startups that authorized a large number of shares at formation (a common practice), the authorized shares method can produce surprisingly high tax bills, which is why the assumed par value method is often used instead.
For LLCs, none of this applies. The Delaware LLC franchise tax is $300, flat, no calculation required.
The Total Annual Cost of a Delaware LLC
When budgeting for a Delaware LLC, the franchise tax is the primary state-level recurring cost. Here is a simple annual budget summary.
| Cost Item | Annual Amount |
|---|---|
| Delaware franchise tax | $300 |
| Registered agent fee (varies by provider) | See /pricing/ |
| Delaware state filing (formation, one-time) | $110 |
| Federal and state income tax (varies) | Depends on income |
The one-time formation fee is $110. After that, the main annual state cost is $300 in franchise tax plus your registered agent fee.
For context, Wyoming's annual report fee for LLCs is $60 per year. Delaware's ongoing cost is higher, but the institutional benefits of Delaware formation, including the Chancery Court and the well-developed LLC statute, explain why many investors and startups still choose Delaware despite the higher annual cost.
We outline our registered agent pricing for Delaware at /pricing/.
Who Handles Franchise Tax Filing?
Delaware makes it relatively simple. LLCs pay the franchise tax directly to the Delaware Division of Revenue through the online filing portal at corp.delaware.gov. You do not file a separate tax return for the franchise tax. The portal handles the payment.
Your registered agent does not automatically pay the franchise tax on your behalf. Keeping track of the June 1 deadline is the LLC owner's responsibility. Some registered agents offer reminders as a courtesy, but the payment obligation rests with the entity.
We send annual reminder notices to our clients about their Delaware filing deadlines. Learn more about our Delaware registered agent services at /services/.
Franchise Tax and Good Standing: Why It Matters Practically
A Delaware LLC in good standing can obtain a Certificate of Good Standing from the Division of Corporations, usually within one business day. Certificates of Good Standing are routinely required by:
- Banks when opening a business bank account
- Lenders and investors reviewing due diligence
- Commercial landlords and counterparties to significant contracts
- Other states when registering the LLC as a foreign entity
If your LLC is not in good standing because of an unpaid franchise tax, the state will not issue the certificate. This can delay transactions or create complications at inopportune moments. Keeping the franchise tax current is part of maintaining a functioning Delaware LLC.
More information about Delaware LLC maintenance is on our blog at /blog/.
Summary
Delaware LLCs owe $300 in franchise tax annually, due by June 1. The franchise tax is flat, it applies regardless of revenue, and late payment triggers a $200 penalty plus interest. The franchise tax is straightforward compared to the corporation calculation, which uses a shares-based formula and is not relevant to LLC owners.
If you would like a reliable, professional registered agent for your Delaware LLC, we are at delawarellcservice.com.