# Delaware Franchise Tax FAQ

> Last synced: 2026-02-27. Confirm with the [official source](https://corp.delaware.gov/paytaxes/) before filing.

## What is the Delaware franchise tax?

The franchise tax is a fee paid to the State of Delaware for the privilege of being incorporated or organized in Delaware. It is **not** a tax on income or business activity — it is a tax on the corporate charter itself. All Delaware-formed entities owe it regardless of where they operate or whether they have revenue.

## When is the franchise tax due?

| Entity Type | Due Date |
|-------------|----------|
| Domestic C-Corps (and S-Corps) | **March 1** of each year (for the prior tax year) |
| LLCs, LPs, and GPs | **June 1** of each year |
| Foreign corporations | **June 30** of each year |

Example: A C-Corp's 2025 franchise tax is due **March 1, 2026**.

## What are the two calculation methods for C-Corps?

Delaware provides two methods. You may use whichever produces the **lower** tax:

1. **Authorized Shares Method**: Based only on the number of authorized shares. Simple but often produces a higher tax for companies with many authorized shares.

2. **Assumed Par Value Capital (APVC) Method**: Based on authorized shares, issued shares, par value, and total gross assets. Almost always produces a lower tax for startups and private companies with low par value stock.

The state automatically calculates using the Authorized Shares Method unless you provide gross assets and issued shares to enable the APVC calculation. Always provide this information to get the lower amount.

## Where do I get my total gross assets figure?

Total gross assets come from **IRS Form 1120, Schedule L, Line 15** (Total Assets). This is the balance sheet total before any depreciation or deductions.

If you have not yet filed Form 1120 for the tax year, estimate total gross assets by adding:
- Bank and investment account balances
- Accounts receivable
- Property and equipment (at cost, before depreciation)
- Any other assets (prepaid expenses, deposits, IP, etc.)

Use the figure as of **December 31** of the tax year.

## What if I filed late?

Late filing results in:
- **$200 flat penalty**
- **1.5% monthly interest** on the unpaid franchise tax amount, accruing from the original due date

Interest compounds monthly until the tax is paid in full. There is no grace period.

## What if my corporation is dissolved or inactive?

Franchise taxes continue to accrue every year until **official dissolution documents are filed** with the Delaware Division of Corporations. Simply ceasing operations, letting the entity go "inactive," or failing to file does **not** stop the tax obligation.

If you no longer need the entity:
1. File a Certificate of Dissolution (Short Form if no assets, or Long Form with board/stockholder approval)
2. Pay all outstanding franchise taxes, penalties, and interest
3. Pay the dissolution filing fee

A corporation that fails to file for two consecutive years may be **voided by proclamation**. Reviving a voided entity requires paying all back taxes, penalties, interest, plus a revival fee — often significantly more expensive than the original taxes.

## Can I pay by credit card?

- **Yes**, if total franchise tax is **under $5,000**. Visa, MasterCard, American Express, and Discover are accepted.
- **No**, if total franchise tax is **$5,000 or more**. ACH (electronic bank transfer) is **required** above this threshold.

The filing fee is included in the payment total.

## What is a Large Corporate Filer?

A corporation qualifies as a Large Corporate Filer if it meets **both** criteria:
1. Listed on a **national stock exchange** (NYSE, NASDAQ, etc.)
2. Reports **$750 million or more** in consolidated annual gross revenues **or** consolidated assets

Large Corporate Filers pay a flat franchise tax of **$250,000** per year. They do not need to calculate tax using either the Authorized Shares or APVC method.

## What if my authorized shares changed during the year?

If you amended your certificate of incorporation to change the number of authorized shares during the tax year, the franchise tax is **prorated**:
- The period before the amendment uses the prior share count
- The period after the amendment uses the new share count
- Both periods are calculated at the annual rate, then prorated by months

## Do I need to file even if I have no revenue?

**Yes.** The franchise tax is not based on revenue or income. It is based on the corporate charter (authorized shares, par value, and gross assets). Even a corporation with zero revenue and minimal assets owes at least the minimum tax ($175 under Authorized Shares or $400 under APVC).

## What is the difference between franchise tax and income tax?

- **Franchise tax**: Paid to Delaware for the privilege of being incorporated there. Based on authorized shares/assets. Due annually regardless of activity.
- **Income tax**: Paid to the state(s) where the company conducts business, based on taxable income. Delaware does **not** impose income tax on corporations that are incorporated in Delaware but conduct no business within the state.

## How do I find my Delaware Business Entity File Number?

Your file number is assigned when the entity is formed. You can find it:
- On your original Certificate of Incorporation or Certificate of Formation
- On prior annual report filings or franchise tax receipts
- By searching the Delaware Division of Corporations entity search: https://icis.corp.delaware.gov/ecorp/entitysearch/namesearch.aspx
- By contacting your registered agent

## What happens if I overpay?

Overpayments are applied as a credit toward the next year's franchise tax. To request a refund instead, contact the Delaware Division of Corporations at 302-739-3073, Option 3.
