Delaware Annual Franchise Tax Report: Deadlines and Penalties

The Delaware annual franchise tax report is due on or before March 1 each year for every domestic corporation on the state’s rolls, whether or not the company did any business or earned any revenue. The tax itself runs from a $175 minimum to a $200,000 ceiling depending on your stock structure and assets, and missing the March 1 deadline triggers a flat $200 penalty plus 1.5% monthly interest starting the next day.¹

Who Has to File

Every domestic corporation incorporated in Delaware must file the annual report with the Secretary of State, regardless of where it operates or whether it operates at all.¹ A company that stopped doing business years ago but never formally dissolved is still on the hook. The tax, penalties, and interest keep accruing against dormant shells the same way they do against active companies.

Stock Corporations

Public and private stock corporations both file the annual report and pay franchise tax. The amount depends on authorized shares and total gross assets, with a $175 floor and a $200,000 cap.²

Non-Stock Corporations

Non-stock corporations split into two groups. Those that qualify as exempt (generally nonprofits organized exclusively for charitable, religious, educational, or similar purposes) file the annual report but owe no franchise tax.³ Non-exempt non-stock corporations pay a flat $175.²

Foreign Corporations

Corporations formed elsewhere but registered to do business in Delaware file their annual report on or before June 30, not March 1. The filing fee is $125, and a late filing adds a $125 penalty.⁴

What About LLCs and Partnerships?

Delaware LLCs, limited partnerships, and general partnerships do not file the annual report and are not subject to the corporate franchise tax. They owe a separate flat $300 annual tax due on or before June 1. The same $200 penalty and 1.5% monthly interest apply to a late payment.⁵

What Goes on the Report

The annual report is more than a payment slip. Domestic corporations must supply current information about officers, directors, and principal place of business, along with a description of the nature of the business (how the company generates revenue).⁴

If you want to use the Assumed Par Value Capital Method to calculate the tax, you also have to report total gross assets (as shown on federal Form 1120, Schedule L, where applicable) and issued shares for each class of stock. Leave those fields blank and the Division of Corporations will bill you under the Authorized Shares Method, which is usually the worse deal for companies with large share authorizations.

How the Tax Is Calculated

Delaware gives you two methods. You can compute both and pay whichever is lower. The state defaults to the Authorized Shares Method, so the burden is on you to run the second calculation and report the data that supports it.

Authorized Shares Method

This method looks only at the number of shares your corporation is authorized to issue, not how many are actually outstanding:²

5,000 shares or fewer: $175 (the minimum)
5,001 to 10,000 shares: $250
Over 10,000 shares: $250 plus $85 for each additional 10,000 shares or portion thereof, up to the $200,000 cap

This is where venture-backed startups get hit. A company authorized to issue 10 million shares of common stock, which is standard, would owe roughly $170,000 under this method. Almost always, the second method produces a fraction of that number.

Assumed Par Value Capital Method

This method factors in both issued shares and total gross assets, in three steps:

Divide total gross assets by total issued shares (across all classes) to get an assumed par value per share.
Multiply that assumed par value by total authorized shares to get the assumed par value capital.
Apply the rate of $400 per $1 million (or any portion thereof) of assumed par value capital.

The minimum under this method is $400, and the maximum is the same $200,000.² A corporation with 10 million authorized shares, 1 million issued, and $2 million in gross assets pays a tiny fraction of what the Authorized Shares Method would produce. Most Delaware corporations should evaluate this method every year.

Deadlines and Estimated Payments

Domestic corporations file and pay by March 1 through the Division of Corporations portal.⁴ Delaware does not grant automatic extensions. Foreign corporations file by June 30.

Corporations that owe $5,000 or more in franchise tax must make quarterly estimated payments during the year, and the schedule is front-loaded:

June 1: 40% of the estimated annual tax
September 1: 20%
December 1: 20%
March 1: remaining balance

Estimates are based on the prior year’s total tax.⁶ A missed estimated payment carries the same interest penalty as a missed annual filing. Overpayments are reconciled when the annual report is filed.

What a Late Filing Costs

A $200 penalty applies to any annual report not filed by March 1, and interest of 1.5% per month runs on the unpaid balance, including on the penalty itself.³ Interest begins the day after the deadline, so a one-day slip still costs $200.

A delinquent corporation is marked “not in good standing” by the Division of Corporations. That status blocks certificates of good standing and shows up in any due diligence review, which can hold up financings, banking relationships, and mergers.

Charter Revocation

Ignoring the tax long enough leads to loss of the charter. On or before June 30 each year, the Secretary of State reports to the Governor every corporation that failed to pay franchise tax or file the annual report for the preceding year, and the Governor issues a proclamation revoking those charters.⁷ Once revoked, the corporation cannot sue, contract, or otherwise operate as a legal entity.

Reinstatement is available but expensive. The corporation has to pay all back taxes, the $200 penalty for each missed year, compounding monthly interest, and a reinstatement fee, then submit the required documents to the Division of Corporations before the charter is restored.

Fixing an Error After Filing

If you find a mistake in a report you already filed, you can submit an amendment to the Division of Corporations. Common corrections involve asset figures, share counts, or officer and director details. An amendment that increases the tax should be paid right away, because interest runs from the original due date on any underpayment.

If the mistake caused an overpayment, you can petition the Secretary of State for a refund, but the window is short. The petition must be filed no later than March 1 of the second calendar year following the tax year in question.¹ An overpayment on the 2025 report has to be claimed by March 1, 2027. After that, the money stays with the state.

1
Delaware Code Online. Delaware Code Title 8 – Corporation Franchise Tax
2
Delaware Division of Corporations. How to Calculate Franchise Taxes
3
Delaware Division of Revenue. Delaware Annual Franchise Tax Report
4
Delaware Division of Corporations. Annual Report and Tax Instructions
5
Delaware Division of Corporations. Delaware Division of Corporations – LLC/LP/GP Franchise Tax Instructions
6
Delaware Division of Corporations. Annual Report and Tax Information
7
Justia Law. Delaware Code Title 8 – 511 Repeal of Charters