Delaware LLC annual tax raised to $400 effective 1/1/2026

Delaware House Bill 400, §23, raises the annual tax on LLCs from $300 to $400, effective for tax years beginning on or after January 1, 2026 (6 Del. C. § 18-1107). The change is part of Delaware’s broader fiscal package and applies to LLC annual tax payments due March 1, 2026.

Background on Delaware’s LLC tax structure

Delaware requires every LLC registered in the state to pay an annual tax to the Delaware Division of Corporations. This tax is separate from any franchise tax that may apply to corporations, and it is separate from the registered agent fee that most LLCs also pay. The annual tax is a flat amount — it does not vary with revenue, profit, or the number of members.

Prior to HB 400, the annual tax was $300. The new $400 figure applies to all Delaware LLCs regardless of size, activity, or whether the LLC is domestic (formed in Delaware) or foreign (formed elsewhere but registered in Delaware). The tax is due annually and must be paid to keep the LLC in good standing with the Division of Corporations.

What changed on the calculator

• state.llc.recurring for Delaware moved from 300 to 400.
• The S-Corp recurring in Delaware remains the same flat $400 (DE’s corporate annual franchise tax is a separate filing and is not included in the BizTaxMetrics “S-Corp recurring” field — DE’s corporate annual franchise tax is $400 minimum for a stock corporation with no-par shares; the LLC tax is the relevant number for a default-taxed LLC).

The calculator’s Delaware page now reflects the $400 recurring cost for both LLCs and S Corps. Because the LLC and S-Corp recurring fees are identical in Delaware ($400 each), the state-level cost does not affect the breakeven analysis — the entire federal payroll-tax delta flows through to the net modeled benefit. This is one of the structural advantages of Delaware for small S-Corp owners: the state fee does not penalize the S-Corp election relative to the LLC.

Why this matters for small business owners

For a small out-of-state LLC owner using Delaware as a registered-agent jurisdiction, the increase is small in absolute terms ($100) but it moves the break-even slightly. Most Delaware LLCs that are formed for liability protection but operate in another state pay this annual tax regardless of whether they have economic activity in Delaware. The increase affects both LLCs and S Corps equally, so it does not change the relative advantage of one structure over the other.

The more significant consideration for Delaware-registered business owners is that the annual tax is owed even if the LLC has no revenue. A dormant LLC in Delaware still costs $400 per year. For business owners who are evaluating whether to maintain their Delaware registration, the increase may be a reason to consider domesticating the entity in the state where they actually operate — particularly if that state has a lower or zero annual fee.

Comparison with other states

Delaware’s $400 annual tax is moderate compared to other states. California’s $800 minimum franchise tax is the highest for small LLCs. New York charges a $9 biennial statement fee for LLCs, but it also layers on an annual fixed-dollar LLC fee (starting at $25) plus first-year newspaper publication requirements that can cost $1,000+. Texas has no annual fee for most LLCs (annualized revenue under $2.65M). Wyoming charges $50 or $60 depending on assets. The BizTaxMetrics state-by-state comparison shows the full breakdown for all 50 states.

What happens if you do not pay

The annual tax is due on March 1 of each year. Delaware does not automatically dissolve an LLC that misses a single payment — the obligation keeps accruing — but the practical consequences show up quickly:

• Late-payment penalties. Delaware adds a statutory penalty plus interest to any annual tax that is not paid when due, so a missed March 1 deadline makes the same $400 obligation more expensive.
• No certificate of good standing. The Division of Corporations will not issue a good-standing or tax-status certificate while the tax is unpaid. Banks, counterparties, foreign-state filings, and investors routinely ask for that certificate, so an unpaid tax can stall a loan, a requalification, or a sale.
• Friction on other filings. While the tax is outstanding, expect delays on name changes, mergers, amendments, and foreign qualifications that touch the same entity record.
• Accruing liability. Multiple missed years stack up. An LLC that has been dormant for three years may owe three years of tax plus penalties and interest before it can be brought back into good standing.

For a single late month, the fix is simple: pay the tax and any penalty through the Division of Corporations, then request the certificate if you need one. The cost of catching up is almost always lower than the cost of letting a lender or a state filing stall while the entity sits out of good standing.

Domestic vs. foreign LLCs

The $400 applies to both categories. A domestic LLC is one formed in Delaware, and it owes the annual tax every year regardless of where its members live or where its customers are. Aforeign LLC — formed in another state but registered to do business in Delaware — owes the same $400 annual tax for as long as that Delaware registration stays active.

Both categories also need to maintain a Delaware registered agent with a Delaware street address, which is a separate recurring fee paid directly to the agent. If a foreign LLC stops doing business in Delaware, the practical move is to withdraw the Delaware registration rather than keep paying $400 a year for a registration you no longer need. Withdrawing ends future annual-tax obligations, although any tax already owed for the current year still has to be paid.

The true annual cost of a Delaware LLC

The $400 tax is the largest line item, but it is not the only one. A realistic annual budget for a small Delaware LLC looks like this:

• $400 — LLC annual tax, due March 1.
• $100 to $300 — registered agent renewal, which most owners renew automatically each year.
• $0 — there is no separate annual report for a Delaware LLC. Corporations, by contrast, file an annual report and pay a corporate franchise tax, which is a different (and larger) obligation.
• $0 to $100+ — optional costs such as an expedited filing, a bank fee, or a compliance service that monitors due dates.

In practice, most small Delaware LLCs spend roughly $500 to $700 per year to stay active. That figure matters when you are comparing Delaware against your home state, because the home-state alternative is often a much smaller fee — or no fee at all — plus the removal of a separate registered agent in Delaware.

How and when to pay

Payment is made to the Delaware Division of Corporations, normally through its online eCorp portal, and the deadline is on or before March 1 for the calendar tax year. The portal accepts card and ACH payments and issues a receipt that you should keep with your entity records — the receipt is what you will attach if a lender later asks for proof that the tax is current.

A simple compliance routine works better than a reminder the week before the deadline:

• Calendar the deadline as a recurring January task so there is time to confirm the payment went through.
• Confirm the registered agent renewal is paid separately, since that renewal often falls due in a different month.
• After paying, download the receipt and, if you need it, request a certificate of good standing for the current year.
• If the LLC is dormant, decide deliberately whether to pay the $400 or begin the withdrawal — but make the decision before March 1, not after the penalty applies.

Should you keep your Delaware registration?

The increase is a good moment to re-run the math. A Delaware LLC that actually operates in another state typically pays twice: the $400 Delaware annual tax and the fees of the home state where the business is registered as a foreign LLC. If the business has no Delaware-specific reason to be there — no Delaware investors, no Delaware real estate, no Delaware-contract requirement — domesticating or withdrawing can cut a recurring cost without changing your liability protection, tax treatment, or the ability to elect S-corp status.

On the other hand, if the LLC was formed in Delaware for a real reason (venture funding, a planned sale, a specific contract), $100 extra per year is rarely a decisive number. The tax increase does not change how the LLC is taxed, does not affect your S-corp election, and does not change the federal payroll-tax math that drives most S-corp decisions — Delaware's flat $400 applies to LLCs and S Corps equally, so the breakeven between the two structures is unchanged.

What we changed on BizTaxMetrics

• The calculator's Delaware recurring cost now shows $400 for both LLC and S-Corp structures.
• The Delaware state page was updated to reflect the new annual tax, the March 1 deadline, and the registered-agent cost that sits on top of it.
• The state-by-state comparison tables were re-checked so Delaware ranks consistently against California ($800), New York (publication plus fixed-dollar fee), and no-fee states.

Frequently asked questions

Does the $400 annual tax apply to an LLC taxed as an S corp?

Yes. Delaware's annual tax is imposed on the legal entity, not on its federal tax classification. An LLC that has elected S-corp status still owes the same $400.

Is the annual tax the same as the registered agent fee?

No. The $400 goes to the Division of Corporations. The registered agent fee is paid to your agent and is typically $100 to $300 per year. You need both to keep the entity active.

Does a Delaware LLC have to file an annual report?

No. Paying the annual tax is the yearly obligation for an LLC. Corporations have a separate annual report and franchise tax, which is a different filing.

What if my LLC earned nothing this year?

The tax is still owed. It is a flat charge for maintaining the registration, not a tax on revenue or profit.

Can I deduct the $400?

As an ordinary business expense it is generally deductible on your federal return, but whether it is worth taking (and in which entity's return) depends on your own situation — confirm with your preparer.

Is there a discount for early payment or multi-year payment?

No. Delaware charges a flat $400 per year, and the tax must be paid annually. Paying early avoids the late-payment penalty but does not reduce the amount.

Source

• Delaware Division of Corporations — 6 Del. C. § 18-1107 (LLC annual tax)
• Delaware HB 400, §23 (signed 2025)
• BizTaxMetrics Delaware state page