Delaware Corporate Tax: What It Is and How It Works

Delaware is a popular state for corporations because it offers business-friendly laws, a specialized court for corporate cases and tax advantages for companies operating outside the state. For businesses incorporated or operating within the state, it’s important to understand the Delaware corporate tax rate, its application and the process for filing corporate taxes. 

A financial advisor can offer you personalized guidance for your business needs.

What Is the Delaware Corporate Tax Rate?

As of 2025, Delaware’s corporate tax rate is 8.70%. This rate applies uniformly, as Delaware does not have a graduated corporate tax system with varying brackets. Instead, all taxable corporate income is subject to the same rate.

In addition to Delaware’s corporate tax rate, a franchise tax is levied on entities incorporated in the state, regardless of whether they conduct business there. The amount varies based on factors such as the par value of the company’s stock and number of authorized shares.

How Does the Delaware Corporate Tax Rate Work?

The application of Delaware’s corporate tax rate depends on a corporation’s activities and presence within the state. Corporations operating inside and outside of Delaware are treated differently:

• Domestic corporations: These are companies incorporated in Delaware. They are subject to the state’s corporate income tax on earnings from business activities conducted within Delaware. Additionally, they must pay the annual franchise tax and file an annual report by March 1 each year.
• Foreign corporations: Companies incorporated outside of Delaware but doing business within the state are also subject to Delaware’s corporate tax rate on income earned in the state. They are not required to pay the franchise tax, but must file a corporate income tax return.

For corporations incorporated in Delaware but operating elsewhere, these are required to pay the annual franchise tax and file an annual report with Delaware. 

How to File Your Delaware Corporate Taxes

Filing corporate taxes in Delaware involves several steps to maintain compliance with state regulations. Here are five general steps to help corporations complete the filing process. A tax consultant can also provide insights into this process.  

1. Determine Your Filing Requirements

Before initiating the filing process, it’s important to understand your corporation’s specific obligations:

• Domestic corporations: Must file an Annual Franchise Tax Report and pay the associated franchise tax by March 1 each year. Additionally, if conducting business within Delaware, they must file a Corporate Income Tax Return (Form CIT-TAX) by the 15th day of the fourth month following the end of their fiscal year, typically April 15 for calendar-year taxpayers.
• Foreign corporations: If conducting business in Delaware, they are required to file Form CIT-TAX to report income earned within the state. The due date aligns with that of domestic corporations.

2. Gather Necessary Documentation

This step can include:

• Financial statements: Prepare detailed income statements and balance sheets reflecting the corporation’s financial activities.
• Pro forma federal tax return: Delaware requires corporations to attach a completed copy of a pro forma federal tax return, including all schedules and attachments, to the state tax return.
• Records of gross receipts: If subject to the gross receipts tax, maintain records of all revenues to ensure accurate reporting.

3. Complete and Submit Required Forms

These forms include:

• Form CIT-TAX: Used for reporting corporate income tax. Ensure all income, deductions and credits are accurately reported.
• Annual franchise tax report: Filed online through the Delaware Division of Corporations’ website. The report requires information about the corporation’s directors, officers, and authorized shares.
• Form CIT-EXT: If an extension is needed, this form requests additional time to file the corporate income tax return. Note that an extension to file does not extend the time to pay any taxes due.

4. Make Necessary Payments

Those could include:

• Franchise tax: Payment is due by March 1. The amount varies based on the corporation’s capitalization and can be calculated using the authorized shares method or the assumed par value capital method.
• Corporate income tax: Payments are due by the original due date of the return, typically April 15 for calendar-year taxpayers. Estimated tax payments may also be required throughout the year.
• Gross receipts tax: If applicable, this tax is typically filed and paid on a monthly or quarterly basis, depending on the business activity.

Payments can be made electronically through the Delaware Division of Revenue’s online portal or by mailing a check with the appropriate payment voucher.

5. Maintain Compliance With Ongoing Requirements

These can include:

• Estimated tax payments: Corporations expecting a tax liability exceeding $5,000 are required to make quarterly estimated tax payments.
• Record keeping: Maintain all tax records, including filed returns and supporting documentation, for at least three years in case of audits or inquiries.
• Stay informed: Tax laws and rates can change. Regularly consult the Delaware Division of Revenue’s website or a tax advisor to stay updated on any changes affecting your corporation.

Bottom Line 

Delaware’s corporate tax structure is designed to attract businesses with its favorable legal environment and competitive tax policies. Delaware’s franchise tax is a key consideration for corporations incorporated there, even if they conduct business elsewhere. Whether you’re a domestic or foreign corporation, given the complexity of tax regulations and potential legislative changes, working with a top financial advisor in Delaware can provide valuable guidance in navigating corporate taxes in the First State.

Tax Planning Tips

• If you are looking for ways to lower your tax liability, a financial advisor who specializes in tax planning can help optimize your finances. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• Self-employed individuals and business owners can lower taxable income by deducting home office costs, retirement contributions and business expenses. Structuring income for a qualified business income (QBI) deduction can also help reduce taxes.

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