Delaware bills annual franchise tax by default using the Authorized Shares Method, which counts a corporation’s authorized share count — not shares actually issued — often overstating the tax for startups.
How it works
Up to 5,000 authorized shares is a flat $175; 5,001-10,000 shares is a flat $250; above 10,000 shares adds $85 for every additional 10,000 shares or part thereof, capped at $200,000.
What this does not include
This does not include Delaware’s alternative Assumed Par Value Capital Method, which uses total gross assets and issued shares instead of authorized shares and often produces a lower bill for startups with a large authorized-but-unissued share pool — a corporation may use whichever method produces the lower tax.
How to use this calculator
- Enter the number of authorized shares.
Frequently asked questions
Why would a startup authorize far more shares than it issues?
To leave room for future equity grants, financing rounds, and option pool expansion without needing to amend the certificate of incorporation each time — but this method can make that convenience costly at tax time.
Is this the same as the annual report fee?
No — Delaware also charges a separate, smaller annual report filing fee alongside the franchise tax itself.
Does an LLC pay this same franchise tax?
No — Delaware LLCs pay a flat annual tax instead, which doesn’t depend on authorized shares at all since an LLC has no share structure.
