What is Delaware franchise tax?

Delaware franchise tax is an annual fee paid by all corporations incorporated in Delaware, regardless of where they operate. It is not based on income; it is based on authorized shares or assumed par value. The minimum is $175 under the authorized shares method or $400 under the assumed par value method, plus the $50 annual report fee; the maximum is $200,000.

How is Delaware franchise tax calculated?

Delaware offers two calculation methods: the Authorized Shares method (based on number of authorized shares) and the Assumed Par Value method (based on shares, par value, and total gross assets). Corporations can pay whichever amount is lower.

When is Delaware franchise tax due?

Delaware franchise tax for C-Corps is due annually on March 1. The annual report and payment must be filed together through the Delaware Division of Corporations. Late payments incur a $200 penalty plus 1.5% monthly interest.

Why did I receive a Delaware franchise tax bill of about $85,000?

Delaware defaults to the Authorized Shares method, which produces inflated bills for startups with 10-50 million authorized shares. Use the Assumed Par Value Capital method instead. It factors in your actual issued shares, par value, and total assets, and is almost always dramatically lower for venture-backed startups (often $400-$2,000).

How does the Assumed Par Value Capital method work?

The method divides total gross assets by total issued shares to derive an assumed par value, then multiplies by total authorized shares to get the assumed par value capital, taxed at $400 per $1,000,000 (minimum $400, maximum $200,000). It rewards startups with relatively few issued shares and low total assets, typical of early-stage companies.

What happens if I don't pay Delaware franchise tax?

Non-payment leads to a $200 penalty plus 1.5% monthly interest. After two years, the state administratively dissolves the corporation, meaning lost limited liability protection and inability to fundraise, sign contracts, or maintain bank accounts. Reinstatement requires back taxes, penalties, and a reinstatement fee, plus filing the missing annual reports.

Do I still owe Delaware franchise tax if my startup is in California or another state?

Yes. Delaware franchise tax applies to all corporations incorporated in Delaware, regardless of where they operate or have employees. Most US venture-backed startups are Delaware C-Corps for governance reasons and pay this tax in addition to their home state's franchise tax (e.g., California's $800 minimum).

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Delaware Franchise Tax Calculator

Compare both calculation methods side by side and pay the lowest amount allowed. Built for Delaware C-Corps.

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Authorized Shares

Issued / Outstanding Shares

Total Gross Assets ($)

Par Value Per Share ($)

Method Comparison

Authorized Shares Method

$85,165

Assumed Par Value Method

$85,165

Recommended

Tax Due

$85,165

Annual Report Fee

$50

Total Due

$85,215

Savings

vs. other method

Delaware franchise tax and annual report are due by March 1. Late filing incurs a $200 penalty plus 1.5% monthly interest.

Both methods cap at $200,000 maximum. Authorized-shares amounts shown above $200K are reduced to the cap before comparison.

This calculator provides an estimate. Consult your accountant for the exact amount due.

Need help filing your Delaware franchise tax? Our CFO team handles compliance so you can focus on building.

Frequently Asked Questions

What is Delaware franchise tax?: Delaware franchise tax is an annual fee paid by all corporations incorporated in Delaware, regardless of where they operate. It is not based on income; it is based on authorized shares or assumed par value. The minimum is $175 under the authorized shares method or $400 under the assumed par value method, plus the $50 annual report fee; the maximum is $200,000.
How is Delaware franchise tax calculated?: Delaware offers two calculation methods: the Authorized Shares method (based on number of authorized shares) and the Assumed Par Value method (based on shares, par value, and total gross assets). Corporations can pay whichever amount is lower.
When is Delaware franchise tax due?: Delaware franchise tax for C-Corps is due annually on March 1. The annual report and payment must be filed together through the Delaware Division of Corporations. Late payments incur a $200 penalty plus 1.5% monthly interest.
Why did I receive a Delaware franchise tax bill of about $85,000?: Delaware defaults to the Authorized Shares method, which produces inflated bills for startups with 10-50 million authorized shares. Use the Assumed Par Value Capital method instead. It factors in your actual issued shares, par value, and total assets, and is almost always dramatically lower for venture-backed startups (often $400-$2,000).
How does the Assumed Par Value Capital method work?: The method divides total gross assets by total issued shares to derive an assumed par value, then multiplies by total authorized shares to get the assumed par value capital, taxed at $400 per $1,000,000 (minimum $400, maximum $200,000). It rewards startups with relatively few issued shares and low total assets, typical of early-stage companies.
What happens if I don't pay Delaware franchise tax?: Non-payment leads to a $200 penalty plus 1.5% monthly interest. After two years, the state administratively dissolves the corporation, meaning lost limited liability protection and inability to fundraise, sign contracts, or maintain bank accounts. Reinstatement requires back taxes, penalties, and a reinstatement fee, plus filing the missing annual reports.
Do I still owe Delaware franchise tax if my startup is in California or another state?: Yes. Delaware franchise tax applies to all corporations incorporated in Delaware, regardless of where they operate or have employees. Most US venture-backed startups are Delaware C-Corps for governance reasons and pay this tax in addition to their home state's franchise tax (e.g., California's $800 minimum).

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Estimates only. This tool is for planning and is not tax or legal advice. Your actual position depends on facts this calculator does not see, so confirm the numbers with a qualified CPA or attorney before you file.

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