What Taxes Does an LLC Pay in Delaware?
Delaware LLCs pay a $300 annual franchise tax due June 1 each year (6 Del. C. § 18-1107). Members report pass-through income at graduated rates of 2.2%–6.6%. LLCs operating in Delaware also owe gross receipts tax (0.0945%–1.9914% depending on industry). Delaware has no sales tax.
Annual Franchise Tax
All domestic and foreign LLCs pay a flat $300 franchise tax annually, regardless of income or business size. Series LLCs owe an additional $75 per registered series. Payment is due June 1 each year, beginning the year after formation.
Missing the deadline triggers a $200 penalty plus 1.5% monthly interest. If taxes remain unpaid for three consecutive years, the Division of Corporations automatically cancels your Certificate of Formation (6 Del. C. § 18-1108). You can reinstate by filing a Certificate of Revival and paying all delinquent taxes and penalties.
Pass-Through Income Tax
Delaware does not tax LLC income at the entity level. Instead, income passes through to members, who report it on personal tax returns at graduated rates of 2.2%–6.6%. Single-member LLCs default to disregarded entity status (Schedule C, Form 1040); multi-member LLCs default to partnership treatment (Form 1065, Schedule K-1).
No state income tax applies to income earned entirely outside Delaware. Members are responsible for federal self-employment tax on their distributive share.
Gross Receipts Tax
Businesses operating in Delaware must pay gross receipts tax on revenue generated within the state. Tax rates range from approximately 0.0945% to 1.9914% depending on industry classification. The Division of Revenue determines your specific rate based on your business activity.
Federal Tax Elections
LLCs can elect S-corporation or C-corporation taxation by filing Form 2553 or Form 8832 with the IRS. S-corp elections may reduce self-employment tax but require payroll compliance. C-corp elections create double taxation but offer retention benefits.
Estimated Tax Payments
Members owing estimated federal taxes must pay quarterly: April 15, June 15, September 15, and January 15.
For specific tax obligations and rate determinations, contact the Delaware Division of Revenue at https://revenue.delaware.gov/.
This is general information, not legal advice.