Delaware LLC Taxes: What You Owe and When
Delaware is famous for business-friendly laws — but that does not mean your LLC pays zero taxes. Here is exactly what a Delaware LLC owes, when it is due, and how the rules change depending on whether you live in Delaware or operate from another state.
Delaware LLC Tax Quick Facts (2026)
| State income tax on LLC profits | None (pass-through) |
|---|---|
| Annual franchise tax | $300 flat |
| Delaware personal income tax | 0%–6.6% |
| Corporate income tax (C-corps only) | 8.7% |
| Sales tax | None ($0) |
| Annual report | Not required for LLCs |
Delaware LLC Tax Overview
Delaware's tax treatment of LLCs depends heavily on how the LLC is classified for federal tax purposes and where the owners reside and operate. Here is the key framework:
| LLC Type | Delaware Entity Tax | Mandatory Annual Fee |
|---|---|---|
| Single-member LLC (disregarded) | None at entity level | $300 franchise tax |
| Multi-member LLC (partnership) | None at entity level | $300 franchise tax |
| LLC taxed as S-corp | None at entity level (federal S-corp rules apply) | $300 franchise tax |
| LLC taxed as C-corp | Delaware 8.7% corporate income tax (if operating in DE) | $300 franchise tax |
The bottom line: for the vast majority of Delaware LLCs — which are pass-through entities — the only mandatory Delaware-level tax is the $300 flat annual franchise tax.
The $300 Annual Franchise Tax
Every Delaware LLC, regardless of income, activity, or owner location, must pay an Annual Franchise Tax of $300. This is often confused with a corporate franchise tax (which is calculated differently for corporations), but for LLCs it is simply a flat fee.
Key details:
- Amount: $300 flat, every year, no exceptions
- Due date: June 1 of each year
- Applies to: All Delaware LLCs, including inactive ones
- Late penalty: $200 + 1.5% monthly interest on unpaid amounts
- How to pay: Online through the Delaware Division of Corporations portal
Even if your Delaware LLC had zero revenue, zero employees, and zero activity this year, you still owe the $300 franchise tax. The fee is mandatory for every Delaware LLC in existence, not just active ones. If you want to stop owing it, you must formally dissolve the LLC with the state.
Delaware Personal Income Tax on LLC Profits
Delaware has a graduated personal income tax with rates from 0% to 6.6% (as of 2026). If you are a Delaware resident, you pay this on your share of LLC pass-through income on your Delaware personal return.
| Income Range | Tax Rate |
|---|---|
| $0 – $2,000 | 0% |
| $2,001 – $5,000 | 2.2% |
| $5,001 – $10,000 | 3.9% |
| $10,001 – $20,000 | 4.8% |
| $20,001 – $25,000 | 5.2% |
| $25,001 – $60,000 | 5.55% |
| Over $60,000 | 6.6% |
If you are not a Delaware resident and your LLC does not conduct business inside Delaware, you generally do not owe Delaware personal income tax. You would owe your home state's personal income tax on the pass-through income instead.
No Delaware Sales Tax
Delaware is one of five U.S. states with no state sales tax (the others are Montana, New Hampshire, Oregon, and Alaska). This means:
- You do not need to collect sales tax from customers on goods or services
- You do not need to register with the Delaware Division of Revenue for sales tax purposes
- Delaware is particularly advantageous for retailers and e-commerce businesses operating within the state
However, if your LLC sells goods to customers in other states, you may still have sales tax obligations in those states under economic nexus rules. Delaware's lack of sales tax does not exempt you from other states' laws.
Delaware Gross Receipts Tax
Delaware imposes a gross receipts tax on businesses that sell goods or services within Delaware. Unlike sales tax (which is collected from customers), this is a business-level tax paid by the company on its total gross receipts.
Key points:
- Rates vary by industry: typically 0.0945% to 0.7468% of gross receipts
- Applies only to businesses with a physical presence, employees, or transactions conducted in Delaware
- Most out-of-state owners of Delaware LLCs who operate entirely outside Delaware are not subject to this tax
- There is a monthly exclusion threshold — many small businesses will owe little or nothing
Out-of-State Owners: What Do You Actually Owe?
This is the most frequently asked question. Here is the definitive answer for a typical out-of-state owner who forms a Delaware LLC but lives and operates elsewhere:
| Tax | Do You Owe It? |
|---|---|
| Delaware $300 annual franchise tax | ✅ Yes — every Delaware LLC owes this |
| Delaware personal income tax | ❌ Usually no — you pay your home state's income tax |
| Delaware sales tax | ❌ No — Delaware has no sales tax |
| Delaware gross receipts tax | ❌ Usually no — applies only if you operate inside Delaware |
| Federal income tax | ✅ Yes — applies to all US LLC owners regardless of state |
| Home state's income tax | ✅ Yes — your home state taxes your LLC pass-through income |
| Home state foreign LLC registration fee | ⚠️ Possibly — if you operate your business in your home state |
If you form a Delaware LLC but operate your business in, say, Texas, Texas may require you to register your Delaware LLC as a "foreign LLC" in Texas — meaning you pay both Texas's registration fees and Delaware's $300 annual franchise tax. This dual-state compliance is often overlooked and is a key reason why Delaware is not always the best choice for out-of-state small business owners.