Delaware Franchise Tax Calculator: Why Your Bill Says $85,165 and What You Actually Owe (2026)

Every February, founders who incorporated in Delaware the previous year open an email from the state that says something like $85,165 due March 1. Their company has one product, two people and about $50,000 in the bank. The number is not a typo, and it is not a scam. It is what Delaware's default method produces for a corporation with 10,000,000 authorized shares, which is the standard setup on most startup incorporation templates.

The same company, reported under Delaware's other method, owes $400.

Delaware has two ways to calculate franchise tax on a corporation. The company pays whichever is lower. The notice is computed by the method that is almost always higher for a startup, and it is up to the company to fill in two extra numbers on the annual report to get the lower one. The notice is designed to be paid, not read. This page is the reading.

The calculator below runs both methods, shows the five intermediate figures the state's form asks for, adds the annual report fee and any late penalty and interest, and handles the flat annual tax for LLCs, LPs and GPs (due June 1) as well. The rules are taken from the Delaware Division of Corporations and were checked against its pages in September 2026. Figures change, and the state's own numbers govern, so verify the current rules at corp.delaware.gov before paying or filing.

This article is for general information only and does not constitute legal, tax, or financial advice. It does not tell you which method to elect for your company. Laws and fees change; verify current figures with the Delaware Division of Corporations and consult a qualified professional before making decisions based on this content.

The short version

• Corporations file an annual report and pay franchise tax by March 1. The tax is calculated under two methods and the company pays the lower. The minimum is $175 under one method and $400 under the other; the maximum is $200,000 (higher for a Large Corporate Filer). The annual report fee is $50 for a non-exempt domestic corporation and $25 for an exempt one.
• LLCs, limited partnerships and general partnerships pay a flat annual tax by June 1, with no annual report to file: $300 for tax year 2025 (the payment that was due June 1, 2026) and $400 from tax year 2026 onward (first due June 1, 2027), after House Bill 400 was signed on May 21, 2026.
• Late means a $200 penalty plus interest at 1.5% per month. For corporations the interest runs on the unpaid tax. For LLCs it runs on the tax and the penalty.
• Owing $5,000 or more as a corporation means quarterly estimated payments through the year rather than one payment in March.
• The state's notice for a corporation is computed under the Authorized Shares Method. If your company has millions of authorized shares and modest assets, the Assumed Par Value Capital Method is usually far lower, and the state accepts it when the annual report is filed with issued shares and gross assets filled in.

Why the notice says $85,165: the two methods

Method one: the Authorized Shares Method

This method looks at one number: how many shares the certificate of incorporation authorizes the company to issue. Not how many are actually issued, not what they are worth. Just the ceiling.

The schedule is simple. Up to 5,000 authorized shares is the $175 minimum. From 5,001 to 10,000 shares is $250. Above 10,000, every additional 10,000 shares, or any part of 10,000, adds $85. The result is capped at $200,000.

Startup templates typically authorize 10,000,000 shares so the company has room for founders, an option pool and several financing rounds without amending its certificate every time. Run that through the schedule: $250 for the first 10,000, then 999 more blocks of 10,000 at $85 each, which is $84,915. Total: $85,165. That is the number on the notice, and the state computed it correctly. It simply used the method that ignores what the company is actually worth.

For a corporation with no-par stock, the state notes that this method will always produce the lower tax, so the second method is not worth running.

Method two: the Assumed Par Value Capital Method

This method needs two more figures from the company: total issued shares (including treasury shares) and total gross assets, meaning the total assets reported on Schedule L of the federal return for the year, or gross assets at year end if no return has been filed yet. The tax is $400 for each $1,000,000 of "assumed par value capital," or any part of a million, with a $400 minimum.

Delaware publishes a worked example, and it is worth following once because the calculator above reproduces exactly these steps. The example company has 1,000,000 shares authorized at $1.00 par and 250,000 shares at $5.00 par, 485,000 shares issued, and $1,000,000 in gross assets.

1. Assumed par. Divide gross assets by issued shares, carried to six decimal places: $1,000,000 / 485,000 = $2.061856.
2. Classes with par below the assumed par count at the assumed par. The $1.00 class is below $2.061856, so 1,000,000 x $2.061856 = $2,061,856.
3. Classes with par above the assumed par count at their own par. The $5.00 class: 250,000 x $5.00 = $1,250,000.
4. Add them. $2,061,856 + $1,250,000 = $3,311,856 of assumed par value capital.
5. Round up to the next million (because it is over $1,000,000) and multiply by $400: 4 x $400 = $1,600.

Under the Authorized Shares Method, the same company (1,250,000 authorized shares) would owe $10,790. It pays $1,600.

Now the startup case. 10,000,000 shares authorized at $0.0001 par, 8,000,000 issued, $50,000 of gross assets. Assumed par is $50,000 / 8,000,000 = $0.006250. The par value of $0.0001 is below that, so all 10,000,000 authorized shares count at $0.006250, which is $62,500 of assumed par value capital. That is under $1,000,000, so the $400 minimum applies. The company owes $400, plus the $50 report fee.

The gap between the two methods for this company is $84,765. Nothing about the business changed between the two calculations. Only the method did.

Which one you pay

The lower one. Delaware's own page says to use the method that results in the lesser tax, and the total will never be less than $175 or more than $200,000. In practice the annual report form on the state's site recalculates when the issued shares and gross assets fields are completed. If those fields are left blank, the Authorized Shares figure stands.

One wrinkle: if the company amended its certificate during the year to change its authorized shares or par value, the state prorates the tax across each period, day by day, and asks for issued shares and gross assets as of each change. The calculator on this page does not model that; the state's calculator does.

LLCs, LPs and GPs: a flat tax, now $400, and no report

Delaware does not run either method on limited liability companies, limited partnerships or general partnerships. They pay a flat annual tax, due June 1 each year for the previous calendar year, and file no annual report. A dormant single-member LLC with no bank account owes the same amount as an operating one with a hundred employees.

The amount just changed. For tax year 2025, paid by June 1, 2026, it was $300. House Bill 400, signed on May 21, 2026, raised it to $400 starting with tax year 2026, so the payment due June 1, 2027 is $400, and every year after that. The same bill raised the registered series fee, the per-partner fee for LLPs and the foreign corporation report fee, and left the corporate franchise tax schedule above untouched. As of September 2026 the Division of Corporations' own pages disagree with each other: its alternative entity tax instructions already say $400, while its franchise tax overview and FAQ still say $300. The instructions page and the bill are the ones to trust, and the calculator above lets you pick the tax year.

That flatness is the reason Delaware LLCs look expensive next to some other states on a pure fee basis, and the reason they look cheap next to a Delaware corporation with a large authorized share count that never filed the assumed par figures. For the LLC there is nothing to optimise. There is only the date.

Foreign-owned Delaware LLCs have a second, federal obligation that is unrelated to the state tax and far larger: the annual Form 5472 filing, with a $25,000 penalty for missing it. That is covered in Form 5472 for foreign-owned LLCs.

Deadlines, penalties, interest and the quarterly schedule

Corporations: March 1. Both the annual report and the tax are due by then. The penalty for not filing a completed annual report on time is $200, and interest of 1.5% per month is applied to any unpaid tax balance. Three months late on a $400 bill is $400 + $200 + $18 of interest, so $618 before the report fee.

LLCs, LPs and GPs: June 1. The penalty for non-payment or late payment is $200, and interest accrues on the tax and the penalty at 1.5% per month. Three months late on the $400 tax is $400 + $200 + $27 of interest, so $627. On the old $300 figure for tax year 2025 it is $300 + $200 + $22.50, so $522.50.

Quarterly estimates. A corporation owing $5,000 or more pays in instalments: 40% by June 1, 20% by September 1, 20% by December 1, and the remainder by March 1. The calculator shows the schedule whenever the lower method crosses that line. A company in the startup case above never gets near it; a company that leaves the Authorized Shares figure standing does.

Foreign corporations. A corporation formed elsewhere but registered to do business in Delaware files its annual report by June 30 with a $250 fee, and is assessed a $200 penalty if the report is not filed (both raised on August 1, 2026 by House Bill 400, from $125 each).

Payment is made online through the Division of Corporations, and the same portal is where the annual report is completed.

What "not in good standing" actually blocks

Delaware does not send anyone to collect $400. What it does is quieter and more inconvenient. An entity with unpaid tax is no longer in good standing, and the Division will not issue a certificate of good standing while tax is owed. Banks ask for that certificate when opening accounts. Investors and their counsel ask for it at closing. Other states ask for it when the company registers there, or renews a registration, as a foreign entity. Some payment processors and marketplaces check it too. The cost of being out of good standing is not the penalty; it is the transaction that stalls until the certificate can be produced.

For corporations there is a harder stop. Under Delaware law, a corporation that neglects to pay its franchise tax or to file a complete annual report for a year has its charter declared void, and the state gives notice by November 30 that the charter will become void unless the tax is paid and the report filed by the following March 1. Reviving a voided or non-compliant entity requires filing the missing reports and paying everything owed, including penalties and interest, before the state will restore its status. The state's own page says as much for any corporation ending its existence or reinstating to good standing.

The recurring cost of keeping a Delaware entity

The franchise tax is the largest recurring line for most Delaware entities, but it is not the only one. Every Delaware entity needs a registered agent with a Delaware address, and unless a founder lives there that is a service typically costing about $125 a year. So the floor for a Delaware LLC is $400 in tax (from tax year 2026) plus the agent; for a small corporation with 5,000 or fewer authorized shares it is $175 in tax plus the $50 report fee plus the agent.

For comparison, a Wyoming LLC's annual report starts at $60. Whether that difference matters depends entirely on why the company is in Delaware. A venture-backed corporation gets something for its $400 and its Court of Chancery. A solo consultant who formed a Delaware LLC on advice from a forum gets a $400 bill, a Form 5472 obligation if they are not a US person, and a foreign qualification in the state where they actually work.

Those trade-offs are argued out properly elsewhere on this site rather than here: Do you actually need Delaware? walks through who benefits, Delaware LLC vs Wyoming LLC puts the two side by side, running a Delaware company from Florida shows what a second state adds, and the real cost of an LLC in every state has the annual figures for wherever you actually live. This page is for the owner who already has the entity and the notice.

FAQ

How is Delaware franchise tax calculated?

For corporations, by two methods, and the company pays the lower. The Authorized Shares Method charges $175 for up to 5,000 authorized shares, $250 for 5,001 to 10,000, and $85 for each additional 10,000 shares or part thereof, capped at $200,000. The Assumed Par Value Capital Method divides gross assets by issued shares to get an assumed par, values each authorized class at the higher of its own par or the assumed par, and charges $400 per $1,000,000 of the result or part thereof, with a $400 minimum. LLCs, LPs and GPs pay a flat $400 from tax year 2026 ($300 for tax year 2025). The calculator above runs both corporate methods from the certificate and annual report figures.

What is the minimum Delaware franchise tax?

$175 for a corporation using the Authorized Shares Method, $400 for a corporation using the Assumed Par Value Capital Method, and a flat $400 for an LLC, LP or GP from tax year 2026 ($300 for tax year 2025 and earlier). A non-exempt corporation also pays a $50 annual report fee ($25 for an exempt corporation), so the smallest total corporate bill is $225.

Why is my Delaware franchise tax bill $85,000?

Because the notice is computed under the Authorized Shares Method, and 10,000,000 authorized shares produce $85,165 under that schedule regardless of what the company is worth. A corporation with modest gross assets can usually report under the Assumed Par Value Capital Method instead by entering its issued shares and gross assets on the annual report. For a company with $50,000 in assets and 8,000,000 issued shares, that method gives the $400 minimum. The calculator shows both figures for your numbers.

When is Delaware franchise tax due?

March 1 for corporations, together with the annual report. June 1 for LLCs, limited partnerships and general partnerships. Corporations owing $5,000 or more pay quarterly estimates: 40% by June 1, 20% by September 1, 20% by December 1, and the remainder by March 1. Foreign corporations registered in Delaware file their annual report by June 30.

What happens if I pay Delaware franchise tax late?

A $200 penalty, plus interest at 1.5% per month. For corporations the interest applies to the unpaid tax; for LLCs and partnerships it applies to the tax and the penalty. The entity falls out of good standing until everything is paid, which blocks certificates of good standing and the transactions that need them. A corporation that stays unpaid or unfiled for a year has its charter declared void under Delaware law.

Do Delaware LLCs file an annual report?

No. Delaware LLCs, LPs and GPs pay the flat annual tax by June 1 ($400 from tax year 2026, $300 for tax year 2025) and file no annual report with the state. Corporations file an annual report with their franchise tax by March 1. Note that other states where the LLC is registered as a foreign entity may have their own annual report requirements, and foreign-owned LLCs have federal filings such as Form 5472.

Can I reduce the number of authorized shares to lower the tax?

A corporation can amend its certificate of incorporation to change its authorized shares or par value. That is a state filing with its own fee on the Division's fee schedule, it generally needs board and stockholder approval, and the state prorates the franchise tax for the year of the change. Whether it is worth doing is a question for the company's counsel: for most startups the Assumed Par Value Capital Method already brings the tax to or near the $400 minimum without touching the capital structure that investors and option holders rely on. This page describes the mechanism; it does not recommend a course of action.

Sources

Primary sources for the figures on this page, checked in September 2026:

• Delaware Division of Corporations: Annual Report and Tax Information (fees, minimums, maximum, deadlines, penalty and interest, quarterly estimates, LLC tax)
• Delaware Division of Corporations: How to Calculate Franchise Taxes (both methods and the state's worked example)
• Delaware Division of Corporations: Pay Taxes / File Annual Report
• Delaware Division of Corporations: Annual Tax Instructions for LLCs, LPs and GPs (the $400 figure)
• Delaware General Assembly: House Bill 400 (2026) (annual tax changes effective for tax year 2026; signed May 21, 2026)
• Delaware Code, Title 8, Chapter 5, Section 510 (charter void after one year of non-payment or non-filing)
• Delaware Division of Corporations: Fee Schedule (amendment and certificate fees)