Delaware Corporations Now More Attractive than Ever




Delaware has increased the annual tax paid by limited liability companies from $300 to $400. At the same time, the Delaware corporation franchise-tax rates discussed in this article remain unchanged, making corporations more attractive than before in certain straightforward setups.


The increase was introduced through Delaware House Bill 400. Although most of the wider filing and administrative fee changes under the legislation took effect on Aug 1, 2026, the LLC annual-tax change applies from Jan 1, 2026.


This means the new $400 amount applies to the 2026 tax year and will first be payable by Jun 1, 2027.


For existing Delaware LLC owners and founders deciding how to structure a US company, the question is no longer only whether Delaware is still worth it. It is also whether an LLC or a corporation now provides the better foundation.


Delaware remains attractive for its legal framework, flexibility and reputation. What has changed is the annual state-cost comparison between an LLC and certain simple corporation structures.


What exactly has changed?


Delaware LLCs previously paid a flat annual state tax of $300. Under House Bill 400, this has increased to $400 per year.


Unlike a Delaware corporation, an LLC does not need to file an annual report with the Delaware Division of Corporations. It must simply pay the flat annual tax by June 1 for the previous calendar year.


The increase therefore amounts to:



The tax is not prorated. It generally applies if the LLC was active on Delaware’s records at any point during the relevant calendar year.


Late payment can result in a $200 penalty, plus interest of 1.5% per month on the unpaid tax and penalty. Staying ahead of the annual deadline therefore remains important.


Does the increase make Delaware LLCs less attractive?


The increase raises the annual cost of maintaining a Delaware LLC. It also makes the unchanged corporation franchise-tax rates more attractive by comparison in certain simple cases. However, it does not remove the characteristics that made Delaware attractive in the first place.


Founders do not generally choose Delaware simply because its annual tax is the lowest available. They choose it because it offers an established business environment with:




For an international founder building a serious US business, the state of formation is about more than finding the lowest annual fee. Legal predictability, commercial recognition and the long-term suitability of the structure also matter.


Against that wider context, an additional $100 per year is unlikely to change the decision for a founder who already has good reasons to use Delaware.


That does not mean Delaware is automatically the right state for every business. The most suitable state depends on the founder’s activities, physical presence, customers, employees, investment plans and wider legal and tax circumstances. The increase should be considered as one factor rather than the only factor.


Why are Delaware corporations now more attractive?


House Bill 400 did not change the existing domestic corporation franchise-tax rates discussed here. Against the new $400 LLC annual tax, that creates a clearer cost advantage for some simple corporation structures.


Corporation franchise tax is not a single flat amount equivalent to the LLC annual tax. Delaware provides two primary calculation methods:



The assumed par value calculation is based on factors including the corporation’s issued shares and gross assets. It should not be described simply as $400 per $1 million of the company’s market valuation.


Domestic corporations must also file an annual report and pay the applicable filing fee, currently $50 for a non-exempt domestic corporation. The report and franchise tax are generally due by March 1 for the previous year.


For a simple corporation using the Authorized Shares Method, the minimum $175 franchise tax plus the $50 annual report fee may now compare favourably with the new $400 LLC annual tax. From a Delaware state-cost perspective, this can make a corporation more attractive for companies without investors or complex capital structures.


However, the two entity types should not be selected purely by comparing their minimum annual state charges. LLCs and corporations differ in ownership, governance, taxation, investment suitability and compliance requirements.


What should current Delaware LLC owners do?


If you already own a Delaware LLC, there is no special filing required solely because of this increase.


You should:



VALIS clients who use our ongoing compliance services will receive the relevant guidance and reminders before the updated annual tax becomes due.


Which Delaware structure makes sense now?


The annual cost of maintaining a Delaware LLC has increased, while the corporation franchise-tax rates discussed here have remained unchanged. That makes a Delaware corporation worthy of closer consideration than before.


For founders who value Delaware’s established legal system, flexible business structures, predictable framework and international reputation, both LLCs and corporations can still provide a strong foundation. The better choice depends on how the company will be owned, taxed, governed and funded.


The better question is not simply, “Which entity has the lowest annual state charge?”


It is, “Which Delaware structure provides the right foundation for the company I am building?”


For many international founders, the flexibility of an LLC will still make sense. For others, especially companies without investors or complex capital structures, a simple corporation may now offer a more attractive annual state-cost profile.


If you are considering forming a US company, deciding between a Delaware LLC and corporation, or want help understanding how the change affects an existing entity, contact VALIS International for guidance based on your circumstances.


This article is provided for general informational purposes and does not constitute legal or tax advice.




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