Does Delaware have a franchise tax for LLCs?
Yes. Delaware imposes a flat annual franchise tax of $300 on all domestic and foreign LLCs, due June 1 each year under 6 Del. C. § 18-1107. Series LLCs pay an additional $75 per registered series. This mandatory annual fee applies regardless of LLC income or activity level and is separate from federal income tax obligations.
Payment Deadline and Penalties
The first franchise tax payment is due June 1 of the year following formation. Delaware enforces a strict deadline with no grace period. Late payment triggers a $200 penalty plus 1.5% monthly interest on unpaid taxes and penalties combined.
Failure to pay for three consecutive years results in automatic cancellation of your Certificate of Formation under 6 Del. C. § 18-1108. Reinstatement requires filing a Certificate of Revival and paying all delinquent taxes, penalties, and interest.
Franchise Tax vs. Income Tax
The $300 franchise tax is distinct from Delaware's personal income tax. LLC income passes through to members at graduated rates of 2.2%–6.6%. However, income earned entirely outside Delaware is not subject to state income tax.
Delaware also imposes a gross receipts tax on businesses operating within the state (approximately 0.0945%–1.9914%, depending on industry). This applies to Delaware-source revenue independent of both franchise and income taxes.
Payment Process
File your annual franchise tax payment online with the Delaware Division of Revenue by June 1 each year. Set a calendar reminder to avoid penalties and potential dissolution. If you've missed prior years, contact the Division of Revenue at https://revenue.delaware.gov/ to determine your exact obligation and arrange payment.
Key Takeaway
The $300 annual franchise tax is a mandatory compliance requirement for maintaining your LLC's active status in Delaware. It applies uniformly to all LLCs regardless of size or profitability. Missing three consecutive payments results in automatic dissolution—reinstatement is costly and time-consuming.
This is general information, not legal advice. Consult a Delaware business attorney or the Division of Revenue for specific tax situations.