Gross Assets and Delaware Franchise Tax: Shares and Par Value Methods

Delaware franchise tax calculation runs on two formulas, the Authorized Shares Method and the Assumed Par Value Capital Method, and the Division of Corporations bills you the lower of the two. That only happens automatically if your annual report includes the numbers both formulas need. Leave the gross assets and issued shares fields blank and the state defaults to the Authorized Shares Method alone, which for most companies with a large authorized share count produces a much larger bill.¹

How the Two Methods Work Together

Every domestic stock corporation is entitled to both calculations. You don’t elect one on the filing. The Division runs both and charges the lesser figure, provided the report contains total gross assets and total issued shares. If those fields are empty, only the Authorized Shares Method runs, and you pay whatever it produces.² Supplying both figures is the single most consequential thing you do on the report.

Authorized Shares Method

This method looks only at how many shares your certificate of incorporation authorizes. Actual issuance, revenue, and asset value are irrelevant. The rate schedule:

5,000 shares or fewer: $175 (the minimum under this method)
5,001 to 10,000 shares: $250
Each additional 10,000 shares or portion of that: add $85

The cap under this method is $200,000.² A startup that authorized 10 million shares of common stock at incorporation, which is standard for venture-backed companies, would owe roughly $85,000 under this formula. The same company can often pay $400 under the other method.

Assumed Par Value Capital Method

This method ties the tax to the relationship between gross assets, issued shares, and authorized shares. You must report both total gross assets and all issued shares (including treasury shares) on the report. Total gross assets must match the “total assets” line on Schedule L of your federal Form 1120 for the fiscal year ending in the calendar year of the report.²

The calculation runs in stages:

Divide total gross assets by total issued shares, carrying the result to six decimal places. That figure is your assumed par value per share.
For any class of authorized shares whose actual stated par value is less than the assumed par value, multiply those authorized shares by the assumed par value.
For any class of authorized shares whose stated par value is higher than the assumed par value, multiply those shares by their actual stated par value instead.
Add the products together. That sum is your assumed par value capital.
Apply the rate: $400 per $1,000,000 of assumed par value capital, rounded up to the next whole million. The minimum tax is $400.

The Division’s own worked example: a company with $1,000,000 in gross assets and 485,000 issued shares has an assumed par value of $2.061856. With 1,000,000 authorized shares at $1.00 par (below the assumed par), that class produces $2,061,856. With another 250,000 authorized shares at $5.00 par (above the assumed par), that class is multiplied by its actual par and produces $1,250,000. The assumed par value capital totals $3,311,856, which rounds up to $4,000,000, giving a tax of $1,600.²

For assumed par value capital under $1,000,000, divide the figure by $1,000,000 and multiply by $400, but the result cannot fall below the $400 minimum.

Getting the Gross Assets Figure Right

Gross assets drive the entire result, so the number has to come from the correct place. Use Schedule L of your federal Form 1120 for the fiscal year ending in the calendar year of the report. Not an internal balance sheet. Not a management estimate. Not last year’s number. Companies that file consolidated federal returns but are separate Delaware entities need to pull the entity-level figures, not the consolidated ones. Report the number too high and you overpay; report it too low and you’re exposed to penalties for underreporting.

Which Method Wins

The Authorized Shares Method is usually cheaper only for corporations with very small authorized share counts and relatively large asset bases. A holding company with $50 million in assets but 1,000 authorized shares would owe just $175 under Authorized Shares, while the Assumed Par Value Capital calculation on those numbers would produce more. The Assumed Par Value Capital Method wins the far more common scenario: millions of authorized shares with modest assets relative to the share count. Most venture-backed startups end up at the $400 minimum under this method.

The Maximum Tax and Large Corporate Filers

For most corporations, the franchise tax under either method is capped at $200,000. A separate tier applies to “large corporate filers.” A corporation qualifies if its stock is listed on a national securities exchange and its most recent SEC filing shows consolidated annual gross revenues or consolidated assets of at least $750,000,000, with neither figure falling below $250,000,000. Corporations that meet that definition pay a flat $250,000. This two-tier structure has been in place since 2017.³

What Doesn’t Use These Methods

Neither calculation applies to Delaware LLCs, LPs, or GPs. Those entities pay a flat $300 annual tax with no annual report, and the deadline is June 1. There’s no proration; if the entity was active in the Division’s records at any point during the year, the full $300 is due.⁴

Non-stock corporations that qualify as exempt (tax-exempt under IRC Section 501(c), organized primarily for religious or charitable purposes, or nonprofits where no earnings benefit any member or individual, and not authorized to issue capital stock) pay no franchise tax. They still file an annual report and a $25 filing fee.⁵⁶

Filing, Fees, and Payment

Domestic stock corporations file the annual franchise tax report and pay by March 1 each year. Filings are online only through the Division of Corporations portal; paper is not accepted. On top of the franchise tax, the annual report itself carries a $50 filing fee. The report requires your registered office address, registered agent, principal place of business, director names and addresses, nature of business, and share structure.⁷

To pay under the Assumed Par Value Capital Method, enter total gross assets and issued shares. Skip those and the system will only run the Authorized Shares Method. Payments over $5,000 must go through ACH debit; smaller amounts can go on a credit card. The online system runs from 8:00 AM to 11:45 PM Eastern time.⁸

Late Payment and Charter Voiding

Missing March 1 triggers a $200 penalty plus 1.5% monthly interest on the unpaid tax and the penalty itself, compounding.⁹ More seriously, a full year of nonpayment or incomplete reporting lets the Secretary of State void the corporation’s charter. Once the charter is void, corporate powers become inoperative, so the company can’t legally conduct business, enter contracts, or file suit. By November 30 each year, the Secretary of State notifies delinquent corporations that their charters will become void unless the taxes are paid and reports are filed by March 1 of the following year.¹⁰

Disputing an Assessment

If the tax, penalty, or interest looks wrong, you can petition the Secretary of State for a reduction or refund. The window closes on March 1 of the second calendar year after the year at issue, so a 2026 assessment can be challenged through March 1, 2028. If the office finds the amount excessive or incorrect, it will adjust and refund. A denial can be appealed to the Court of Chancery in the county where your registered office sits within 60 days, and that court conducts a fresh review rather than deferring to the agency.¹¹

1
Justia. Delaware Code Title 8 503 – Rates and Computation of Franchise Taxes
2
Delaware Division of Corporations. How to Calculate Franchise Taxes
3
State of Delaware Division of Corporations. Corporate Franchise Tax
4
Delaware Division of Corporations. LLC/LP/GP Franchise Tax Instructions
5
Delaware Division of Corporations. Exempt Corporation Definition
6
Delaware Division of Corporations. Annual Report and Tax Information
7
Justia. Delaware Code Title 8 502 – Annual Franchise Tax Report
8
Delaware Division of Corporations. Annual Report and Tax Instructions
9
State of Delaware Division of Revenue. Franchise Taxes
10
Justia. Delaware Code Title 8 510 – Failure to Pay Tax or File a Complete Annual Report for 1 Year
11
Justia. Delaware Code Title 8 505 – Review and Refund; Jurisdiction and Power of the Secretary of State; Appeal