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Delaware LLC Annual Tax: $400 Due June 1, $200 Late Penalty, 1.5% Monthly Interest and How to Keep Good Standing

Delaware LLC Annual Tax: $400 Due June 1, $200 Late Penalty, 1.5% Monthly Interest and How to Keep Good Standing

If you own a Delaware LLC, you owe a flat annual tax to the Delaware Division of Corporations every year. This is not an income tax, not a sales tax, and not the state business license fee. It is a separate corporate-level tax that keeps your LLC in good standing. Miss this deadline or fail to pay, and you lose the ability to sue in Delaware courts, file documents, or prove that your LLC is in legal standing. Understanding when it's due, how much it costs, what happens when you're late, and how to restore a lapsed LLC is critical.

The $400 Annual Tax: What It Is and Who Pays It

Every domestic LLC formed in Delaware, every foreign LLC registered to do business in Delaware, every limited partnership, and every general partnership must pay a flat annual tax of $400 to the Delaware Division of Corporations. This applies to LLCs of any size and any location. Whether your LLC earns $10,000 or $10 million, the tax is the same: $400.

This is different from Delaware's gross receipts tax (a business-level tax based on revenue, which you pay separately through your business license), and it is different from any federal or state income tax you may owe on profits. The $400 annual tax is purely a Delaware corporate-level fee tied to the existence of your LLC entity.

The $400 annual tax rate became effective in tax year 2026, as set forth in Delaware House Bill 400 and codified in 6 Delaware Code Section 18-1107(b). This means the first $400 payment is due June 1, 2027, covering the 2026 tax year. If you paid $300 in June 2026, that was for the prior tax year under the previous rate. Always confirm the current amount and due date by visiting the Division of Corporations website at https://corp.delaware.gov/.

If you formed your LLC on any date during the year, the first tax payment is not due until June 1 of the following calendar year. For example, if you formed your LLC on December 15, 2024, your first tax payment is due June 1, 2025, not at formation.

When the Tax Is Due and How to Pay

The annual tax is due on June 1 following the calendar year in which your LLC existed. It must be paid every year, with no exceptions for partial years. If you formed your LLC on January 1 or December 31, you pay the full $400 both years. There is no proration by month.

Payment is made through the Division of Corporations. Visit https://corp.delaware.gov/ for current payment instructions, acceptable payment methods, and the mailing address if paying by check. Many owners pay online through the Division's tax payment page.

Set a calendar reminder for early May so you are not caught off guard. June 1 arrives quickly, and payment methods may take several business days to process.

What Happens If You Miss the Deadline: The $200 Penalty and 1.5% Monthly Interest

If the $400 tax is not paid by June 1, Delaware imposes a flat $200 penalty plus 1.5% interest per month on the unpaid balance. This is not trivial. Missing the deadline by one day triggers both penalties immediately.

Here is an example of how the charges accumulate. Suppose the $400 tax was due June 1 but not paid until August 15, a two-month delay:

  • Original tax owed: $400
  • Late penalty: $200
  • Interest for June (1.5% of the $600 tax plus penalty): $9.00
  • Interest for July: $9.00
  • Interest for August (a portion of a month counts as a month): $9.00
  • Total owed: approximately $627 or more

The longer you delay, the more interest compounds. After three months of non-payment, the monthly interest alone becomes substantial, and the Delaware Attorney General can file a Chancery Court injunction to enforce collection. At that point, you face legal proceedings and potential court costs on top of the original tax and penalties.

Consequences of Non-Payment: Loss of Good Standing

If you do not pay the $400 annual tax by June 1, your LLC immediately loses good standing status with the Delaware Division of Corporations. Loss of good standing carries serious legal consequences:

  • No Access to Delaware Courts. Your LLC cannot file a lawsuit or be a plaintiff in any Delaware court proceeding. If someone sues your LLC, you can still be named as a defendant, but you cannot initiate legal action.
  • No Filing Ability. You cannot file any new documents with the Division of Corporations, such as an amendment to your certificate of formation or a request for a good standing certificate.
  • No Good Standing Certificate. You cannot obtain an official good standing certificate from Delaware, which many banks, vendors, and partners require to open accounts, secure financing, or conduct business.
  • Potential Injunction. After three months of non-payment, the Delaware Attorney General may file a Chancery Court injunction against your LLC to compel payment and recover legal costs.
  • Involuntary Cancellation. If the tax remains unpaid for three consecutive years, the Delaware Division of Corporations will automatically cancel your certificate of formation. Your LLC will cease to exist under Delaware law.

These consequences are not theoretical. Lapsed status is recorded in the Division's database and is visible to anyone who searches for your LLC. Banks will refuse to open business accounts, investors will decline to fund, and customers may lose confidence. The reputational and operational damage can be severe.

How to Restore Good Standing After Missed Payments

If you fall behind on the annual tax, you can restore your LLC to good standing, but you must pay all back taxes, penalties, and accrued interest for every year the tax was not paid. Delaware does not forgive or reduce these amounts.

For example, if your LLC missed the payments due June 1, 2025 and June 1, 2026, you must pay:

  • $300 for the payment missed in June 2025, plus penalties and interest
  • $300 for the payment missed in June 2026, plus penalties and interest
  • Any current-year tax due

Contact the Delaware Division of Corporations to request a detailed statement of all amounts due, including interest calculated through the current date. Once you have paid the full amount, the Division will restore your good standing status, and you will regain the ability to file documents, obtain a good standing certificate, and use Delaware courts.

The restoration process is straightforward but requires full payment with no partial-payment options. Budget accordingly and plan for prompt payment.

Special Considerations: Registered Series and Closing Your LLC

If your LLC is a registered series under Delaware law, the rules differ slightly. Each registered series owes a $100 annual tax (not $400) and faces a $50 penalty if unpaid. The same interest rate of 1.5% per month applies. Consult the Division of Corporations if your LLC structure includes registered series.

If you plan to close or dissolve your LLC, you must pay the full annual tax for the year of cancellation before the certificate of formation can be canceled. You cannot close your LLC while owing back taxes. This is a frequent source of confusion and delay for LLC owners attempting to wind down their businesses.

Avoid Deceptive Solicitations and Scams

Because the annual tax is a genuine and mandatory requirement, opportunistic third parties send fake bills, urgent notices, and misleading invoices to LLC owners, demanding payment for services that do not exist or that charge far more than the official state fee.

Remember: legitimate communications from the Delaware Division of Corporations come through your registered agent or are posted on the official Division website. They do not come via email from unfamiliar companies or unsolicited postcards from servicers offering to "handle your Delaware filing for a fee."

The official annual tax payment is sent to the Division of Corporations directly or through the eCorp portal. No intermediary is required, and no discount service can reduce the amount owed.

If you receive a suspicious notice, verify its legitimacy by calling the Division of Corporations at its official phone number (available on corp.delaware.gov) or by logging into your eCorp account and checking your file directly.

Keeping Your LLC in Good Standing: A Checklist

To maintain good standing and avoid penalties, follow these steps:

  1. Know Your Due Date. The annual tax is due June 1 each year, every year, without exception.
  2. Confirm the Current Amount. Visit https://corp.delaware.gov/ to confirm the current tax amount. It is $400 as of tax year 2026, but legislation can change it.
  3. Set a Reminder in May. Mark your calendar for May 1, 15, or 25 so you have time to process payment before June 1.
  4. Pay Through Official Channels. Use the Division of Corporations eCorp portal or authorized payment methods listed on the official website.
  5. Keep Proof of Payment. Save payment confirmations, receipts, and transaction records for your business records and in case of disputes.
  6. Update Your Registered Agent. Ensure your registered agent is current and actively monitored. Official notices must reach your agent's address.
  7. Monitor Your Status. Search your LLC in the Division's online business entity database at https://icis.corp.delaware.gov/Ecorp/EntitySearch/NameSearch.aspx to verify that your LLC remains in good standing.
  8. Act Promptly If You Miss a Payment. If you realize you have missed the deadline, pay immediately to minimize interest charges.

Important Disclaimer

This guide provides informational content about Delaware LLC annual tax requirements based on Delaware Code Section 18-1107 and Division of Corporations guidance. It is not legal advice, tax advice, or accounting advice. The specific facts of your LLC, your personal tax situation, and your business goals may create obligations or opportunities not addressed in this overview.

For legal or tax guidance, consult a qualified Delaware attorney or CPA. For questions about your specific filing status or payment obligations, contact the Delaware Division of Corporations directly at https://corp.delaware.gov/.

Resources

Your Delaware LLC's good standing status is essential to its legal rights and credibility. The $400 annual tax is a modest cost for maintaining a compliant business entity. Missing this single deadline triggers penalties, interest, loss of court access, and potential cancellation. Set a reminder, pay on time, and keep your business protected.

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