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How is it calculated?

The Delaware Annual Franchise Tax assessment is based on the authorized shares of your company.  Here is how the tax is calculated.

Authorized Share Method or
Assumed Par Value Capital Method
Startup can choose the method that results in lesser tax
Total will never be less than $175.00 or more than $200,000

What you need to know

Gross Assets as of 12/31
Par Value of all share classes
Total shares authorized of all share classes
Total shares issued of all share classes

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Sign up below to get the Delaware Franchise Tax Calculator so you can see an estimate of how much you will owe Delaware for your 2021 Annual Franchise Tax.

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FAQ

Do I need to file Delaware Franchise Tax?

If you incorporated in Delaware, yes, you need to file and pay the Delaware Franchise Tax. Startups are required to file even if you had no financial activity during the year.

When do I need to file the Delaware Franchise Tax?

By March 1, 2022. If you miss the deadline, we can still do a late filing for you: sign up for TaxPass.

What Method Should I Use?

Delaware allows you to use the method that results in the lesser tax. Most startups use the Assumed Par Value Capital Method.

How much should I expect to pay?

Most startups owe a Delaware Franchise Tax amount of $450.00 - $10,000.00. If you've received a bill for $50,000.00+, its because Delaware has calculated your tax using the Authorized Shares Method. Don't be alarmed, you can pay the tax amount based on the method that results in the lesser tax - in most cases this is the Assumed Par Value Capital Method. If you need assistance with this, we'd love to help. Learn more here.

What is par value?

Par value is the value per share. Generally, the par value is usually set at $0.0001 or $0.00001. The par value has no connection to the market value of shares.

What are my gross assets?

For startups filing taxes on cash basis (majority of startups), your gross assets as of will include: Cash, Investments (Brokerage/Money Market/Treasury Accounts), Fixed Assets (laptops, etc.), Crypto, Accounts Receivable, Inventory, Real Estate, Investments or Loans to Foreign or Domestic Subsidiaries.

I have more questions. Where can I find answers?

When you sign up for TaxPass you get a dedicated Tax Accountant and shared slack channel. We'd love to help you this tax season. Learn more here.

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