Delaware franchise tax calculator
A startup with 10,000,000 authorized shares gets a Delaware notice for $85,215. Under the state's second method the same company usually owes $400 to $4,000. Three numbers show which one is yours.
Most startups pay far less than this. Add issued shares and gross assets above to see yours.
Show the math
Authorized Shares Method
This is an estimate. Delaware's own portal determines the final balance. It does not cover income tax, payroll tax, or registrations in states where you do business.
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Book a free call to hand it overHow Delaware calculates franchise tax, both methods
Delaware lets a corporation calculate its franchise tax two ways and pay the lower. The notice the state sends every February shows the higher one, because Delaware knows how many shares you authorised and nothing else about you.
The Authorized Shares method, which is on the notice
Counts shares. Up to 5,000 authorised shares is $175. Up to 10,000 is $250. Every additional 10,000 shares, or fraction of that, adds $85, up to a ceiling of $200,000. For the 10,000,000 shares in a standard startup charter that is $250 for the first 10,000 plus 999 blocks at $85, which is $85,165.
The Assumed Par Value Capital method, which is what most startups pay
Uses what the company is actually worth. Divide total gross assets by issued shares to get an assumed par value, multiply by authorised shares to get assumed capital, and pay $400 for every $1,000,000 of it, rounded up, with a $400 minimum. For a seed-stage company the assumed capital is almost always under a million dollars, and the tax is $400.
A worked example
A company with 10,000,000 authorised shares at $0.0001 par, 8,000,000 issued to founders and employees, and $600,000 of gross assets at year end. Assumed par value: $600,000 divided by 8,000,000 is $0.075 a share, which is higher than the stated par, so it is used. Assumed capital: 10,000,000 times $0.075 is $750,000. That rounds up to one block of $1,000,000, at $400 a block. Under the Authorized Shares method the same company owes $85,165. The difference is which method you pick on the form.
What moves the number
Gross assets
Total assets from the balance sheet on the last day of the fiscal year, not net of liabilities. Cash is the bulk of it for most startups, so a round that closes in December lands on this year's return and one that closes on January 2 lands on the next. The number is the one on Form 1120, Schedule L.
Issued shares
The denominator. More issued shares means a lower assumed par value and a lower tax. Unissued authorised shares are the expensive kind: they count in the multiplication but not the division. Ungranted option-pool shares are not issued.
Authorised shares
Set in the charter. Reducing it takes a charter amendment, rarely worth doing for the franchise tax alone, but a reason not to authorise far more shares than you plan to use.
Franchise tax is not Delaware corporate income tax
The two are separate, and searches for a "Delaware corporate tax calculator" usually mean the franchise tax above. Franchise tax is the price of existing as a Delaware corporation, owed every year by every corporation on the register, active or not. Delaware corporate income tax, at 8.7%, is charged on income from business actually conducted in Delaware. A startup incorporated there but operating from San Francisco, New York or Austin, with nothing in Delaware except its registered agent, is not doing business in the state and does not file the Delaware corporate income return. It does owe the state it operates in: California's $800 minimum, for example, applies the moment a founder works from there.
Deadlines and penalties
The annual report and the franchise tax are due March 1, with a $50 report fee owed under either method. Late filing adds a $200 penalty plus interest at 1.5% per month. A Delaware LLC pays a flat $300 on June 1 instead, with no annual report and no method to choose. Both dates sit on the Delaware C-corp tax calendar, and the arithmetic above is worked through in what your Delaware franchise tax actually costs.
Every figure here is an estimate of Delaware's published schedule; the state's own filing portal determines the final balance. Comparing states? See every state side by side, or work out which entity and state suit you.
Delaware franchise tax, asked directly
The questions founders send us with the notice attached.
The notice uses the Authorized Shares method, which counts the shares Delaware knows about and nothing else: 10,000,000 authorised shares comes to $85,165. The Assumed Par Value method, which uses gross assets and issued shares, usually comes to $400 for a seed-stage company. You choose the method when you file, and the portal recalculates.
Divide total gross assets by issued shares to get an assumed par value, multiply that by authorised shares to get assumed capital, then charge $400 for every $1,000,000 of assumed capital, rounded up, with a $400 minimum and a $200,000 maximum. The $50 annual report fee is added either way.
March 1 for corporations, together with the annual report and its $50 fee. A Delaware LLC is different: a flat $300 annual tax due June 1, with no annual report and no method to choose.
Usually not. Delaware corporate income tax, at 8.7%, applies to income from business conducted in Delaware. A corporation whose only Delaware presence is its registered agent is not doing business in the state and does not file the Delaware corporate income tax return. Franchise tax is different: it is owed by every Delaware corporation whether or not it has any activity there.
Delaware adds a $200 penalty plus interest at 1.5% per month on the unpaid balance. If the franchise tax comes to more than $5,000, Delaware also requires it in quarterly instalments through the year rather than one payment on March 1.