Delaware Franchise Tax Increases Under HB 400
Delaware House Bill 400 has been signed into law, bringing changes to certain annual franchise taxes and an increase in certain filing fees that may affect Delaware business entities.
Franchise Tax Increases
For many Delaware business owners, the most important change is the increase to the annual franchise tax for Delaware limited liability companies. Delaware LLCs have traditionally paid a $300 annual franchise tax. Under HB 400, that amount increases to $400.
The same increase applies to Delaware limited partnerships. Their annual franchise tax will also increase from $300 to $400. Registered series will also see an increase, with the annual franchise tax rising from $75 to $100 per registered series. HB 400 also increases the annual tax for Delaware limited liability partnerships and limited liability limited partnerships from $200 to $300 per partner. It is also worth noting that the increased fee per partner for LLPs and LLLPs will also apply to the filing fees due at the time of formation.
Are Delaware Corporations Affected by HB 400?
These changes to annual franchise tax DO NOT affect Delaware corporations. Delaware corporations will continue to calculate and pay franchise tax under the preexisting franchise tax structure.
These changes are important for business owners to understand because the annual franchise tax is part of maintaining a Delaware entity in good standing. Clients who own a Delaware LLC, LP, LLP, LLLP, or registered series should be aware of the new amounts and plan accordingly.
When New Franchise Tax Amounts Take Effect
The annual franchise tax changes apply beginning with the 2026 tax year. However, the Delaware Secretary of State’s office has confirmed to Harvard Business Services that the updated amounts will not be implemented until August 1, 2026. Affected entities should plan for the new annual franchise tax amounts for the 2026 tax year, while also keeping the August 1, 2026 implementation date in mind when planning filings or cancellations.
Timing may also matter for clients who are considering whether to keep or cancel an entity. Generally, a Delaware LLC must be brought current with the State before it can be properly canceled. As a result, clients who wait to cancel an entity may need to account for any annual franchise tax that becomes due before the cancellation is completed.
Help With Delaware Franchise Taxes
For most clients, the key takeaway is simple: Delaware annual franchise taxes are increasing for several types of alternative entities, including LLCs, LPs, LLPs, LLLPs and registered series. Businesses should plan for the updated amounts, keep track of applicable due dates, and consider the timing of any upcoming filings, cancellations, or renewals.
Harvard Business Services can assist with Delaware franchise tax payments, cancellations, renewals, and many other Delaware filings. If you have questions about keeping your Delaware entity in good standing, our team is happy to assist.
*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such source’s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.