Delaware's December franchise tax notification is calculated with the Authorized Shares Method by default, usually the more expensive of the state's two methods. Mintz attorneys note that Delaware defaults to this method because the state has no visibility into a company's actual assets when it generates the notice. If your charter authorizes 10,000,000 shares, that default works out to $85,165: $250 for the first 10,000 shares plus 999 increments of $85. Recalculated under the Assumed Par Value Capital Method, the same company can owe as little as the $400 minimum.
For LLCs, LPs, and general partnerships there is nothing to calculate, but the timing needs care this year. House Bill 400 raises the flat annual tax for Delaware LLCs, LPs, and general partnerships from $300 to $400, effective January 1, 2026, and the bill was signed into law on May 21, 2026. Delaware bills these entities in arrears, so the payment due June 1, 2026 still covers the 2025 tax year at the old $300 rate; the new $400 rate first appears on the payment due June 1, 2027, which covers the 2026 tax year.
The same pattern applies to registered series, whose per-series tax rises from $75 to $100 starting with the 2026 tax year. Corporations must also include a "Nature of Business" disclosure on the Annual Report under Senate Bill 95, which was signed into law on June 30, 2025; the disclosure itself took effect August 1, 2025, and a related amendment to 8 Del. C. § 503(h) applies to corporate tax years beginning on or after January 1, 2026. Standard corporate tax rates, minimums, and maximums did not change.
What each Delaware entity type owes in 2026
Your entity type determines both the amount and the deadline; corporations calculate their tax while alternative entities pay a flat amount that is currently in transition under HB 400. Here is the picture for payments coming due during 2026. Confirm every deadline and rate against current Division of Corporations instructions each year.
Entity type | Deadline | Annual tax/fee | Late penalty |
|---|---|---|---|
Domestic corporation | March 1 | $175 to $200,000 + $50 report fee | $200 + 1.5%/month interest |
Foreign corporation | June 30 | $250 report fee | $250 + 1.5%/month interest |
LLC / LP / GP | June 1 | $300 (2025 tax year); $400 first due June 1, 2027 for the 2026 tax year | $200 + 1.5%/month interest |
Registered series (LLC) | June 1 | $75 per series (2025 tax year); $100 first due June 1, 2027 for the 2026 tax year | $50 per series + 1.5%/month interest |
Corporate rates and deadlines are unaffected by HB 400. For alternative entities, budget for $400 (or $100 per series) starting with money set aside for the payment due in June 2027, even though the bill you receive in 2026 still reflects the old rate.
Two more rules for alternative entities, per Division of Corporations guidance: there is no proration, so an LLC formed in November owes the full annual tax for that tax year, and the tax is assessed if the entity is active in Division of Corporations records at any point between January 1 and December 31. LLCs, LPs, and GPs have a payment obligation but no annual report filing.
How the two corporate calculation methods work
If you run a Delaware C-Corp, 8 Del. C. § 503 lets you calculate your tax each year under whichever method produces the lower result; this is an annual calculation, not a one-time election. No election form exists: the online filing defaults to the Authorized Shares Method, and entering issued shares and gross assets triggers the recalculation.
Senate Bill 95 amended § 503(h), effective for tax years beginning on or after January 1, 2026, so confirm the current subsection language when calculating. The Division of Corporations' official calculation instructions are direct: use the method that results in the lesser tax.
Authorized shares method
This method counts only the shares your Certificate of Incorporation authorizes, not shares actually issued:
5,000 or fewer authorized shares: $175 (the minimum)
5,001 to 10,000 shares: $250
Each additional 10,000 shares (or portion): add $85
Maximum: $200,000 for standard filers; $250,000 for Large Corporate Filers
A corporation with 100,000 authorized shares owes $250 plus nine $85 increments, or $1,015. Venture-backed startups routinely authorize tens of millions of shares, which is why default notices run into five and six figures.
Assumed par value capital method
This method taxes $400 per $1,000,000 (or portion) of "assumed par value capital," with a $400 minimum. The calculation uses these inputs and steps:
It requires two inputs: total issued shares including treasury shares, and total gross assets as reported on U.S. Form 1120, Schedule L.
The formula: divide gross assets by issued shares to get the "assumed par," apply it to authorized shares whose actual par value is below it (shares with higher actual par use their actual par), sum the results, round up to the next million if over $1,000,000, then divide by $1,000,000 and multiply by $400.
The gross assets figure comes from Schedule L for the fiscal year ending in the calendar year prior to filing.
After certain charter amendments, Delaware rules may require a corporation to report issued shares and gross assets within 30 days and prorate the tax across the affected portion of the year.
Confirm this last requirement with Delaware counsel or current Division instructions.
Delaware's own worked example shows the gap. A corporation with 1,000,000 shares at $1.00 par and 250,000 shares at $5.00 par, 485,000 issued shares, and $1,000,000 in gross assets owes $10,790 under the Authorized Shares Method but $1,600 under this method, a $9,190 difference on identical facts. For a venture-backed technology C-Corp with 15,000,000 authorized shares at $0.01 par, 10,000,000 issued, and $1,200,000 in gross assets, the tax comes to $800.
When the assumed par value method backfires
Two situations reverse the usual outcome. For no-par-value stock, the Division of Corporations states the Authorized Shares Method generally results in the lesser tax. Mintz attorneys also caution that companies should have issued around half or more of their authorized shares before relying on the assumed par value method, since a large authorized count with very few issued shares applies a high assumed par across every authorized share and can produce a large liability. Delaware's downloadable Excel calculator estimates tax for par-value stock; no-par companies should contact a Franchise Tax Specialist at (302) 739-3073, option 3.
Deadlines, installments, and the cost of non-payment
The 2026 calendar has three main deadlines: March 1 for domestic corporations, June 1 for alternative entities, and June 30 for foreign corporations. Larger domestic corporations may also pay quarterly installments. Confirm all dates against current Division of Corporations instructions each year.
Corporate filing requirements
Domestic corporations face several annual filing requirements:
Domestic corporations file the Annual Report and pay franchise tax by March 1, per the Division's annual report instructions.
Electronic filing is mandatory, and the report fee is $50 for non-exempt corporations ($25 for exempt).
The report must include the "Nature of Business" field required under Senate Bill 95.
That $50 fee sits on top of the calculated tax.
The foreign corporation annual report fee increased from $125 to $250 for 2026, with foreign reports due June 30.
Confirm the March 1 and June 30 dates against current Delaware instructions each year.
Quarterly estimated installments
Corporations whose prior-year tax was $5,000 or more are subject to quarterly estimated installments: 40% by June 1, 20% by September 1, 20% by December 1, and the remainder with the March 1 Annual Report. Payments over $5,000 generally must be made by ACH Debit; confirm current payment method requirements against Division of Corporations instructions.
Penalties, void charters, and revival costs
Missing a deadline triggers a $200 penalty for domestic corporations and LLCs, LPs, and GPs, plus 1.5% monthly interest on unpaid tax and penalty. Foreign corporations face a $250 penalty, while registered series face a $50-per-series penalty; each also accrues 1.5% monthly interest as shown in the table above. Delaware will not issue a certificate of good standing while franchise tax remains unpaid, which can block financings, M&A closings, and foreign qualifications in other states.
The escalation timelines differ sharply by entity type, and both carry a cure window. Under 8 Del. C. § 510, a corporation that neglects to pay assessed franchise tax or file a complete annual report for one year has its charter voided and its corporate powers declared inoperative, but the Secretary of State may grant additional time for good cause shown. Under 6 Del. C. § 18-1108, an LLC's certificate of formation (or a registered series' certificate) is cancelled if the annual tax remains unpaid for three years from its due date, effective on the third anniversary.
Revival is expensive: under 8 Del. C. § 312, a reviving corporation pays all back taxes, penalties, and interest, plus an additional multiple of the annual franchise tax if the charter has been void for an extended period; confirm the exact multiplier and current LLC revival filing fee against Delaware's current fee schedule before quoting a specific figure. An LLC revival requires a certificate of revival plus all back taxes, penalties, and interest.
What the math looks like across a fund structure
Each active Delaware entity in a fund stack generally has its own applicable annual obligation. A typical fund structure commonly includes three core entities: the fund LP, the GP LLC, and the management company LLC, with SPVs as additional entities some funds also use. A VC fund structure typically includes about 4 to 12 of the firm's own entities per fund, not its portfolio companies' compliance. The 50 to 200 range is an illustrative operating scale that applies more naturally to PE firms, family offices, hedge funds, and fund administrators. Once the $400 rate is fully phased in for the 2026 tax year and paid in 2027, the aggregate scales linearly:
Entity count | Annual franchise tax burden (at $400/entity) |
|---|---|
4 (minimum stack) | $1,600 |
10 (within a typical VC fund structure) | $4,000 |
50 (portfolio-scale structure) | $20,000 |
200 (portfolio-scale structure) | $80,000 |
The dollar amounts are the smaller problem; the operational load often catches fund managers:
Dormant SPVs owe the full tax every year they remain in Division of Corporations records, until each is formally dissolved via a Certificate of Cancellation.
Delaware sends franchise tax notifications to each entity's registered agent rather than to the entity, so a portfolio spread across multiple agents produces a fragmented notification chain.
Franchise tax and income taxes are distinct, which means franchise taxes often fall outside the annual tax engagement with outside accountants.
LLCs, LPs, and GPs generally share the same June 1 deadline regardless of formation date. Confirm that deadline against current Delaware instructions each year.
Any corporate entity that owed $5,000 or more the prior year adds the quarterly installment rhythm, creating near-continuous filing obligations across the calendar year.
Automate Delaware franchise tax filings with Discern
Estimating the tax is one problem; running both corporate methods every year and paying the applicable amount for every LLC and LP in the structure is another. Discern's entity compliance platform automates Delaware franchise tax calculations using both available corporate methods to identify the lower amount, handles Delaware franchise tax filing, and lets you manage filings and deadlines from a single dashboard so your entities stay in good standing.
For Discern's funds management support, Discern manages the SOS compliance layer for a firm's own fund LPs, GP LLCs, management companies, and SPVs across multiple vintages. For Discern's private equity offering, family offices, hedge funds, and fund administrators managing 50 to 200+ entities get portfolio-scale Delaware filings and entity compliance, without implying that VC firms manage portfolio-company compliance.
Book a demo with Discern to see how Discern can simplify Delaware franchise tax and compliance across your entire entity portfolio.
Frequently asked questions
Here are answers to a few questions that come up often when Delaware entities plan for the 2026 tax year.
Do I owe the new $400 LLC tax when I pay on June 1, 2026?
No. The payment due June 1, 2026 covers the 2025 tax year at the old $300 rate. The new $400 rate applies to the 2026 tax year and is first billed on the payment due June 1, 2027.
Does the Assumed Par Value Capital Method always produce a lower tax than the Authorized Shares Method?
Not always. It generally helps companies with large authorized share counts and modest gross assets, but the Division of Corporations notes that no-par-value stock generally comes out lower under the Authorized Shares Method instead.
What happens if I never file or pay Delaware franchise tax?
A corporation that neglects payment or a complete annual report for one year has its charter voided and its corporate powers declared inoperative, though the Secretary of State can grant additional time for good cause shown. An LLC's certificate of formation is cancelled after three unpaid years, effective on the third anniversary of the due date.
Do Delaware LLCs and LPs file an annual report like corporations do?
No. LLCs, LPs, and GPs pay a flat annual tax by June 1 but do not file an annual report. Only corporations file the Annual Report, which is due March 1 for domestic corporations and June 30 for foreign corporations.
Updated on
