Delaware Franchise Tax Penalty: $200 + 1.5% a Month

The Delaware franchise tax penalty is a flat $200 plus interest of 1.5% per month. For a corporation, the $200 applies if the annual report is not filed by 1 March, with interest on the unpaid tax; for an LLC, LP or GP, the $200 applies if the $400 tax is not paid by 1 June, with interest on both the tax and the penalty (Delaware). If you don’t pay at all, a corporation’s charter is declared void after one year, and an LLC’s certificate is cancelled after three.

Below: the penalty table, worked examples with real numbers, what “void” and “cancelled” mean, what revival costs, and the narrow ways to get penalties reduced. Figures come from the Delaware Division of Corporations and the Delaware Code, checked 31 Oct 2026. Fees change, so confirm on the linked pages before you pay.

This is general information, not tax or legal advice. Confirm with a CPA or Delaware registered agent for your situation.

Delaware franchise tax penalty at a glance

Sources: Delaware franchise tax, LLC/LP/GP instructions, fee schedule, August 2026, 8 Del. C. § 510, 6 Del. C. § 18-1108. As of October 2026.

Two related deadlines are easy to confuse with these. Foreign corporations registered in Delaware file an annual report by 30 June for $250, with a $250 penalty if it is not filed. And corporations owing $5,000 or more pay quarterly estimates: 40% by 1 June, 20% by 1 September, 20% by 1 December, and the rest by 1 March (Delaware).

Delaware franchise tax late penalty: corporations

Under Delaware law, a corporation that fails to file a complete annual franchise tax report by 1 March pays $200, which is added to the franchise tax and becomes part of it (8 Del. C. § 502). The Division of Corporations adds that “interest at 1.5% per month is applied to any unpaid tax balance” (Delaware).

Worked example: a startup C-corp that missed 1 March 2026

Assume a small Delaware C-corp that owes the $400 minimum under the assumed par value method, plus the $50 report fee, and pays on 1 November 2026, about 8 months late.

• Tax: $400
• Report fee: $50
• Late penalty: $200
• Interest on the $400 tax: $400 × 1.5% × 8 = $48
• Total: $400 + $50 + $200 + $48 = $698

Because § 502 folds the $200 into the tax, the State may compute interest on $600 instead: $600 × 1.5% × 8 = $72, for a total of $722. The exact figure appears when you log in to pay. Either way, paying 8 months late costs roughly $250 to $270 more than paying on time ($450).

Delaware LLC late penalty

For LLCs, LPs and GPs the rule is simpler. The $400 annual tax for the prior year is due by 1 June, and “failure to pay the required annual taxes will result in a penalty of $200.00 plus 1.5% interest per month on tax and penalty.” There is no proration: any day active between 1 January and 31 December triggers the full $400 (Delaware).

Worked example: a Delaware LLC that missed 1 June 2026

• Tax: $400
• Penalty: $200
• Interest base: $400 + $200 = $600
• Interest for 6 months (paid around 1 December 2026): $600 × 1.5% × 6 = $54
• Total: $654, against $400 if paid on time

These examples use simple monthly interest for illustration. The State’s system calculates the exact amount.

What happens if you don’t pay Delaware franchise tax

Corporations: the charter becomes void

If a corporation “neglects or refuses for 1 year” to pay its franchise tax or to file a complete annual report, its charter “shall be void, and all powers conferred by law upon the corporation are declared inoperative,” unless the Secretary of State gives more time for good cause. By 30 November each year, the Secretary of State must notify delinquent corporations that the charter will become void unless the taxes are paid and the report filed by 1 March of the following year (8 Del. C. § 510).

In practice: miss 1 March 2026, expect a notice by 30 November 2026, and if you still have not paid and filed by 1 March 2027, the charter is void.

LLCs: the certificate of formation is cancelled

A Delaware LLC’s certificate of formation “shall be canceled if the annual tax … is not paid for a period of 3 years from the date it is due,” effective on the third anniversary of that due date. The State publishes the list of cancelled LLCs online by 31 October each year (6 Del. C. § 18-1108).

Example: an LLC that never pays the tax due 1 June 2024 is cancelled on 1 June 2027 if it is still unpaid.

Good standing in the meantime

Long before “void” or “cancelled”, unpaid tax shows up when someone checks your status. Delaware says a corporation “reinstating their status to good standing is required by law to file an Annual Report and pay any and all tax due” (Delaware). Banks, investors and acquirers commonly ask for a good standing certificate, which costs $50 for the short form (fee schedule). Back taxes discovered during a fundraise or a bank review cost time as well as money.

How to revive a void corporation or cancelled LLC

Sources: 8 Del. C. § 312, 6 Del. C. § 18-1109, fee schedule, Delaware. Expedited handling costs extra: $100 for 24-hour or $200 for same-day on revival filings.

Revival restores the company “with all the rights, franchises, privileges and immunities” and its debts and liabilities, as if it had not lapsed (§ 312). For LLCs, revival validates contracts and acts done while the certificate was cancelled (§ 18-1109). A revival also needs a registered agent in Delaware, and if your old company name has been taken, the LLC certificate must give a new one.

Worked example: a corporation void for more than 5 years

Say a corporation that would owe the $400 minimum today has been void for 6 years. Under § 312(g) it pays 3 × $400 = $1,200 in place of the back taxes and penalties, plus the $189 filing fee: $1,389 before agent fees and the current year’s report. Compare that with six years of back tax, $200 penalties and 1.5% monthly interest, and the cap is often cheaper.

Delaware franchise tax penalty abatement: what is actually possible

Search results promise “penalty abatement”. The Delaware Code is narrower than that:

• Wrongly calculated amounts. A corporation that believes its tax, penalties or interest were “erroneously or illegally fixed” can petition the Secretary of State for a reduction or refund, no later than 1 March of the second calendar year after the tax year. If the Secretary agrees, the amounts are resettled and any overpayment refunded. A corporation can seek a fresh review in the Court of Chancery within 60 days of the decision (8 Del. C. § 505).
• Before reviving. A void corporation can petition for a reduction of the taxes, penalties or interest the State says it owes for revival, before filing the certificate (§ 505(b)).
• Exempt corporations only. The Secretary of State “may remit all or part of the penalties and interest” for corporations not required to pay the annual tax (§ 505(c)).
• More time for good cause. § 510 lets the Secretary of State extend time to pay or file before a charter goes void.

We found no general “first-time” or “reasonable cause” waiver for late-payment penalties in the statute or on the Division’s pages. Treat any service promising one as an attempt, not a sure thing.

The bigger saving: recalculate the tax

Many founders who panic about a huge bill are looking at the authorized shares method: $175 for up to 5,000 shares, $250 for 5,001 to 10,000, then $85 for each additional 10,000 (Delaware). Delaware says to “use the method that results in the lesser tax.”

A startup with 10,000,000 authorized shares at $0.00001 par, 8,000,000 issued and $50,000 of gross assets:

• Authorized shares method: $250 + (9,990,000 ÷ 10,000 = 999) × $85 = $250 + $84,915 = $85,165
• Assumed par value capital method: $50,000 ÷ 8,000,000 = $0.00625 assumed par. Par ($0.00001) is below that, so 10,000,000 × $0.00625 = $62,500 assumed par value capital. $62,500 ÷ $1,000,000 × $400 = $25, which is below the minimum, so the tax is $400

Same company, same year: $85,165 versus $400. The assumed par value method needs your issued shares and total gross assets, which Delaware defines as the total assets on the federal Form 1120, Schedule L (Delaware). Penalties and interest then apply to the much smaller tax. If you already paid on the wrong method, that is what the § 505 petition is for.

How to pay Delaware franchise tax

• Where: online through the Division of Corporations’ tax portal for both corporations and LLCs, LPs and GPs. Delaware requires electronic filing of domestic corporations’ annual reports. The LLC payment system runs 8:00am to 11:45pm Eastern.
• How: Visa, Mastercard, American Express, Discover, or ACH debit. ACH is required for payments over $5,000.
• What you need: your Delaware file number, plus issued shares and gross assets if you use the assumed par value method.
• Notices: Delaware sends annual report and franchise tax notices to registered agents in December. Make sure your agent forwards them.

Watch for scam notices

Delaware warns about deceptive solicitations, including a “Corporate Records Service” mailer asking for $125 for meeting minutes, and says to be suspicious of any letter or email that does not come from the State or your own registered agent (Delaware, LLC instructions). Pay only through the official portal or your agent.

Who should act now, and who can relax

Act this week if you owe for more than one year, your corporation is close to the one-year void line, or you are about to raise money or open a bank account. Check your status, pay through the official portal, and file the corporate report using the method that gives the lower tax.

Less urgent if you are a few weeks late on a single year. The cost is the $200 plus a small amount of interest; pay it and set a reminder for next year.

Consider closing the company instead if it is dormant. A Delaware LLC owes the full $400 for any year it is active, even for one day, and cancelling still requires paying annual taxes (Delaware, fee schedule). Our Delaware vs Wyoming LLC comparison shows the yearly cost of each state, and the Delaware C-corp vs LLC guide explains which structure fits a funded startup.

If you own a US LLC from outside the US, Delaware’s penalty is usually the smaller risk next to the IRS’s Form 5472 penalty. See our Form 5472 guide. More setup guides are in the US Company Setup hub.