Delaware charges you, not your customer
Delaware has no sales tax, which is true and is the smaller half of the story. What it has instead is a gross receipts tax — charged to you rather than to your customer, on total revenue, with no deduction for what it cost you to earn it. You also need a $75 state business licence to trade at all, and the annual franchise tax on an LLC rises to $400 from tax year 2026. This page is about operating here; if you are weighing up whether to form in Delaware while living somewhere else, that is a different question and it has its own page.
In a sales tax state, the tax is the customer's and you are the collector. Delaware inverts that. The gross receipts tax is yours: it applies to your total revenue, with no deduction for the cost of the goods or services you sold, and you cannot add a line to the invoice to recover it. A business with thin margins and high turnover feels it far more than one with the opposite shape.
Rates depend on the activity, running from 0.0945% to 1.9914% — petroleum reaches 2.4218% — and a general service business pays 0.3983%.
- Sales tax
- None — nothing to register, collect or file
- Local income tax
- Yes — Wilmington only — a city wage tax and net profits tax, plus a $15 per month head tax per employee above five
- State business licence
- Delaware business licence (Division of Revenue) — $75 for the first location, $25 for each additional location
- Workers' comp from
- 1 employee
- Formation approved in
- Routine filings are processed in the order received; the Division of Corporations publishes expedited tiers rather than a standard turnaround, and no standard service time was confirmed
- First 90 days, all in
- $250–$1,200 · $510 of it to the state
Official portals: Delaware Division of Corporations · Delaware Division of Revenue — Gross Receipts Tax · Delaware Division of Revenue — business licence requirements. Figures checked September 2026; the portal always wins.
Before you reach for a calculator: there is a monthly exclusion large enough that most small firms owe nothing at all. It is the next section, and it is the thing to understand properly.
The first $100,000 a month is excluded
The gross receipts tax has a monthly exclusion: for a general service business the first $100,000 of receipts a month, or $300,000 a quarter, is exempt. Across other activities the exclusions run as high as $1,250,000 a month. Only the receipts above the line are taxed.
For a business turning over $40,000 a month, that means a tax of nothing — and a return, because the return is still filed. All new businesses start as quarterly filers.
| Monthly receipts | Taxable after the exclusion | Tax for the month |
|---|---|---|
| $40,000 | Nothing | $0 |
| $100,000 | Nothing | $0 |
| $150,000 | $50,000 | About $199 |
| $400,000 | $300,000 | About $1,195 |
The figures above use the 0.3983% general service rate. Your own rate depends on the activity code Delaware assigns you, and the exclusion differs by activity too — check the Division of Revenue's tip sheet for your line of work rather than assuming the service numbers apply.
Two habits follow from this. File the zero returns — a quarter with nothing due still needs the filing, and a run of missed returns is how a business that never owed a penny ends up in correspondence with the Division. And price on margin, not on turnover: a tax on gross receipts punishes low-margin resale in a way an income tax does not, which is worth knowing before you set your numbers. The pricing page has that arithmetic.
You need a licence to trade at all
Most states have no general business licence — they licence occupations and leave everyone else alone. Delaware is in the minority that has a real one. You need a Delaware business licence from the Division of Revenue whatever your trade: $75 for the first location and $25 for each additional location, renewed annually on or before 31 December. Multi-year licences are offered at a discount in some categories.
The licence is not just permission. The licence number is what your gross receipts return is filed against, so the two are linked in the state's system: no licence, no clean way to file the return you owe. Get it at the start rather than at the first deadline.
The 31 December renewal date is the one to diary. It is a calendar-year licence, not an anniversary one, so it does not matter when you started — everyone renews in the same December.
Wilmington charges by the head
Wilmington is the only Delaware municipality with taxes of this kind, and it runs them itself through its Earned Income Tax Division rather than through the state. It levies a city wage tax on earned income for work done in the city and a net profits tax on unincorporated businesses. The city publishes the rules for both but not, in the pages we checked, the rate — so ask the Earned Income Tax Division for the current percentages rather than trusting a third-party summary.
What the city does publish plainly is the head tax: $15 a month for every employee in excess of five employed by a licensee within the city. Twelve employees means seven chargeable heads, which is $105 a month, or $1,260 a year — small, fixed, and entirely invisible until someone sends you a bill.
- Inside Wilmington
- State business licence, plus a Wilmington city business licence (fee not confirmed — the city directs applicants to its Wage and Business Licence Division), plus the wage tax, the net profits tax on unincorporated businesses, and $15 a month per employee above five.
- Anywhere else in Delaware
- State business licence and the gross receipts tax. No local income tax at all.
Hiring, and the number that changed for 2026
Delaware's employer registrations run on a short clock. You become liable as a regular employer on having one or more employees for any portion of a day, and you must file Form UC-1 with the Division of Unemployment Insurance no later than 20 days after the first day of business. Agricultural employers become liable at $20,000 of quarterly payroll or ten employees in twenty weeks; domestic employers at $1,000 of quarterly payroll.
Workers' compensation is required for almost every employer with one or more employees, and it must be in force before work begins — full-time, part-time, seasonal and temporary staff all count. The Division of Industrial Affairs describes only limited exceptions in state law, at 19 Del. C. §2306 and §2372, and we did not confirm the detail of those, so ask before assuming an owner or officer sits outside them.
Delaware Paid Leave is separate and sized by headcount: employers with 10 to 24 employees participate for parental leave only, and 25 and above for all leave types. Payroll deductions began on 1 January 2025 and claims opened on 1 January 2026. The Department of Labor describes the funding as less than 1% of an employee's weekly salary, with employers able to require employees to contribute up to half the cost — the precise per-leave-type percentages could not be confirmed in our last check, so take them from the Department's own employer pages before you configure payroll.
Filing itself is fast if you pay for it: the Division of Corporations publishes expedited tiers rather than a standard turnaround — one hour for $1,000, two hours for $500, same day for $100 to $200, next business day for $50 to $100, each on top of the filing fee. Routine filings are processed in the order received, with no standard service time published.
Common questions
Does Delaware really have no sales tax?
Yes — there is no sales tax at state or local level, so there is nothing to register for, no rate to look up, no exemption certificates and nothing to collect on a sale. The state raises the equivalent revenue from the seller instead, through the gross receipts tax.
What is the Delaware gross receipts tax and who pays it?
A tax on your business's total revenue, with no deduction for the cost of goods or services sold, paid by the seller rather than the customer. Rates run from 0.0945% to 1.9914% depending on activity, with petroleum at 2.4218%; a general service business pays 0.3983%.
How much can I earn before I owe gross receipts tax?
For a general service business the first $100,000 of receipts a month — $300,000 a quarter — is excluded, and exclusions across other activities run as high as $1,250,000 a month. Only the receipts above the exclusion are taxed. All new businesses start as quarterly filers, and the return is filed even when nothing is due.
Do I need a Delaware business licence?
Yes. Delaware is one of the minority of states with a genuine general business licence — you need one to conduct business at all, whatever the trade. It costs $75 for the first location and $25 for each additional location, renewed annually on or before 31 December, and the licence number is what your gross receipts return is filed against.
How much is the Delaware LLC franchise tax now?
$400 a year from tax year 2026, up from $300 through 2025, due on 1 June — so the first $400 payment falls due on 1 June 2027. There is no report to file with it. Late payment costs a $200 penalty plus 1.5% interest a month.
What does Wilmington charge that the rest of Delaware doesn't?
Wilmington levies a city wage tax on work done in the city and a net profits tax on unincorporated businesses, both run by the city's Earned Income Tax Division — the rates are not published on the pages we checked, so ask the city. It also charges a head tax of $15 a month for every employee in excess of five, and requires its own city business licence on top of the state one.
When do I have to register as an employer in Delaware?
You become liable on having one or more employees for any portion of a day, and Form UC-1 must be filed with the Division of Unemployment Insurance no later than 20 days after the first day of business. Workers' compensation must be in force before work begins, and Delaware Paid Leave applies to employers with 10 or more employees — parental leave only from 10 to 24, all leave types at 25 and above.
No sales tax to collect. One return to remember anyway.
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