Delaware offers a vibrant environment for business with over 111,000 small businesses, employing about 50% of the state’s workforce. Whether you’re an established business owner or planning to start a new venture, understanding the tax landscape in Delaware is crucial. This guide provides an overview of the various taxes small businesses in Delaware must navigate, including tax rates, filing requirements, and deadlines.
Types of Business Taxes in Delaware
Business owners in Delaware may be subject to various taxes depending on their business structure, activities, and revenue. Here’s a breakdown of the main types of taxes:
Corporate Income Tax
Applicable Entities: C corporations, LLCs filing as corporations
Tax Rate:8.7%
Filing Requirements: File Form CIT-TAX by the 15th day of the fourth month following the close of the tax year.
Estimated Payments: Payments are due by the first day of the fourth month of the tax year (50%), the 15th day of the sixth month of the tax year (20%), the 15th day of the ninth month of the tax year (20%), and the 15th day of the 12th month of the tax year (10%).
Gross Receipts Tax
Applicable Entities: Businesses that sell goods or provide services
Tax Rate: .0945% to .7468%, depending on the type of business
Filing Requirements: File online monthly (by the 20th day of the month for the prior month) or quarterly (by the last day of the first month following the close of the quarter) based on total gross receipts.
Withholding Tax
Applicable Entities: Employers with employees
Tax Rate: Ranges from 2.6 to 6.6%
Filing Requirements: File (Form WTH-TAX)quarterly, monthly, or eighth/monthly based on withholding amounts.
Unemployment Insurance Tax
Applicable Entities: Employers with employees
Tax Rate: Varies based on business’s experience rating
Wage Base: $12,500 per employee per year
Filing Requirements: File quarterly reports (Forms UC-8 and UC-8A) by the last day of the month following the quarter.
Nonresident Withholding Tax
Applicable Entities: Pass-through entities with nonresident members
Tax Rate: 6.6% on distributive share income
Filing Requirements: File Form SCT-TAX by the 15th day of the fourth month following the close of the tax year.
Franchise Tax
Applicable Entities: C corps, S corps, LLCs, general partnerships, and limited partnerships
Tax Rate: Varies for corporations based on authorized shares or assumed par value capital ($175-$200,000); LLCs, general partnerships, and limited partnerships pay a flat fee of $300.
Filing Requirements: Corporations must file annual reports and submit payment by March 1. LLCs, general partnerships, and limited partnerships must pay by June 1.
Estimated Payments: Required if liability is $5,000 or more. Payments are due quarterly on June 1 (40%), Sept. 1 (20%), Dec. 1 (20%), and March 1 (remainder).
How to File and Pay Delaware Business Taxes
Business taxes in Delaware can be filed and paid through various methods:
Online Filing and Payment: Use the Delaware Taxpayer Portal for electronic submissions and payments.
Mail: Send forms and payments to the address indicated on the form.
Important Deadlines
Keep track of these key dates to avoid penalties:
Corporate Income Tax Returns: Due by the 15th day of the fourth month after the tax year ends
Estimated Tax Payments: Due quarterly by the first day of the fourth month of the tax year (50%), the 15th day of the sixth month of the tax year (20%), the 15th day of the ninth month of the tax year (20%), and the 15th day of the 12th month of the tax year (10%)
Gross Receipts Tax: Monthly or quarterly based on total gross receipts.
Withholding Tax Returns: Due quarterly, monthly, or eighth/monthly based on the amount withheld.
Unemployment Insurance Reports: Due quarterly by the last day of the month following the quarter.
Franchise Tax Returns: Due by March 1 for corporations and June 1 for LLCs, general partnerships, and limited partnerships.
Tax Credits and Incentives
Delaware offers several tax credits and incentives for small businesses, including:
New Business Facility Tax Credit: When you place a qualified facility in service, you receive a corporate income tax credit of $500 per qualified employee hired (with a minimum of five jobs created) and $500 for each $100,000 capital investment on a qualified activity (with a minimum $200,000 investment).
New Economy Jobs Tax Credit: Eligible companies earn withholding tax credits for creating new jobs that pay within a certain range, worth up to 40% of your withholding taxes paid on behalf of your employees. Companies must create at least 50 new jobs in the state and pay the employees a specified amount ($100,000 multiplied by the inflation adjustment factor).
Neighborhood Assistance Tax Credit: Businesses that invest in qualified entities can receive a corporate income tax credit of 50% of their approved investment amount, up to $100,000 per year.
Business Finder’s Fee Tax Credit: The credit rewards Delaware companies for convincing one of their customers, suppliers, or service providers to relocate to the state. Both the sponsoring business and the new business receive a $500 credit for each new employee hired by the relocated business.
Research and Development Tax Credit: The credit amount is 1) 10% of the excess of your total qualified R&D expenditures over a base amount or 2) 50% of Delaware’s apportioned share of your federal R&D tax credits.
Check out our guide to Delaware’s Tax Credits for more information.
Delaware’s business tax breakdown by business type
Business taxes can get complicated, so below, we’ve included a chart that breaks down which taxes different business structures usually pay.
Keep in mind that pass-through entities don’t pay federal income taxes themselves—the obligation is passed on to their business owners or shareholders, who pay them through their personal income tax returns.
Business type | Personal income tax | Corporate income tax | Franchise tax | Gross receipts tax | Withholding tax | Unemployment tax | Federal income taxes |
C corporation | No | Yes | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes |
S corporation | Yes (pass-through) | No | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
LLC | Yes (pass-through) | Depends on how it’s structured | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
Partnership | Yes (pass-through) | No | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
Sole proprietorship | Yes (pass-through) | No | No | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes, by way of individual income tax |
File your Delaware small business taxes with Gusto
As a business owner, your time and energy are valuable, finite resources. So instead of managing your taxes manually, let Gusto give you a hand. Our easy-to-use software automatically files all your payroll taxes each time you run payroll—freeing up your bandwidth for the work that matters most.
Learn how else Gusto can simplify the operations of your small business by creating an account today.
Delaware Small Business Taxes: The Employer’s 2024 Guide
Delaware offers a vibrant environment for business with over 93,000 small businesses, employing about 47% of the state’s workforce. Whether you’re an established business owner or planning to start a new venture, understanding the tax landscape in Delaware is crucial. This guide provides an overview of the various taxes small businesses in Delaware must navigate, including tax rates, filing requirements, and deadlines.
Types of Business Taxes in Delaware
Business owners in Delaware may be subject to various taxes depending on their business structure, activities, and revenue. Here’s a breakdown of the main types of taxes:
Corporate Income Tax
Applicable Entities: C corporations, LLCs filing as corporations
Tax Rate:8.7%
Filing Requirements: File Form CIT-TAX by the 15th day of the fourth month following the close of the tax year.
Estimated Payments: Payments are due by the first day of the fourth month of the tax year (50%), the 15th day of the sixth month of the tax year (20%), the 15th day of the ninth month of the tax year (20%), and the 15th day of the 12th month of the tax year (10%).
Gross Receipts Tax
Applicable Entities: Businesses that sell goods or provide services
Tax Rate: .0945% to .7468%, depending on the type of business
Filing Requirements: File online monthly (by the 20th day of the month for the prior month) or quarterly (by the last day of the first month following the close of the quarter) based on total gross receipts.
Withholding Tax
Applicable Entities: Employers with employees
Tax Rate: Ranges from 2.6 to 6.6%
Filing Requirements: File (Form WTH-TAX) quarterly, monthly, or eighth/monthly based on withholding amounts.
Unemployment Insurance Tax
Applicable Entities: Employers with employees
Tax Rate: Varies based on business’s experience rating
Wage Base: $10,500 per employee per year
Filing Requirements: File quarterly reports (Forms UC-8 and UC-8A) by the last day of the month following the quarter.
Nonresident Withholding Tax
Applicable Entities: Pass-through entities with nonresident members
Tax Rate: 6.6% on distributive share income
Filing Requirements: File Form SCT-TAX by the 15th day of the fourth month following the close of the tax year.
Franchise Tax
Applicable Entities: C corps, S corps, LLCs, general partnerships, and limited partnerships
Tax Rate: Varies for corporations based on authorized shares or assumed par value capital ($175-$200,000); LLCs, general partnerships, and limited partnerships pay a flat fee of $300.
Filing Requirements: Corporations must file annual reports and submit payment by March 1. LLCs, general partnerships, and limited partnerships must pay by June 1.
Estimated Payments: Required if liability is $5,000 or more. Payments are due quarterly on June 1 (40%), Sept. 1 (20%), Dec. 1 (20%), and March 1 (remainder).
How to File and Pay Delaware Business Taxes
Business taxes in Delaware can be filed and paid through various methods:
Online Filing and Payment: Use the Delaware Taxpayer Portal for electronic submissions and payments.
Mail: Send forms and payments to the address indicated on the form.
Important Deadlines
Keep track of these key dates to avoid penalties:
Corporate Income Tax Returns: Due by the 15th day of the fourth month after the tax year ends
Estimated Tax Payments: Due quarterly by the first day of the fourth month of the tax year (50%), the 15th day of the sixth month of the tax year (20%), the 15th day of the ninth month of the tax year (20%), and the 15th day of the 12th month of the tax year (10%)
Gross Receipts Tax: Monthly or quarterly based on total gross receipts.
Withholding Tax Returns: Due quarterly, monthly, or eighth/monthly based on the amount withheld.
Unemployment Insurance Reports: Due quarterly by the last day of the month following the quarter.
Franchise Tax Returns: Due by March 1 for corporations and June 1 for LLCs, general partnerships, and limited partnerships.
Tax Credits and Incentives
Delaware offers several tax credits and incentives for small businesses, including:
New Business Facility Tax Credit: When you place a qualified facility in service, you receive a corporate income tax credit of $500 per qualified employee hired (with a minimum of five jobs created) and $500 for each $100,000 capital investment on a qualified activity (with a minimum $200,000 investment).
New Economy Jobs Tax Credit: Eligible companies earn withholding tax credits for creating new jobs that pay within a certain range, worth up to 40% of your withholding taxes paid on behalf of your employees. Companies must create at least 50 new jobs in the state and pay the employees a specified amount ($100,000 multiplied by the inflation adjustment factor).
Neighborhood Assistance Tax Credit: Businesses that invest in qualified entities can receive a corporate income tax credit of 50% of their approved investment amount, up to $100,000 per year.
Business Finder’s Fee Tax Credit: The credit rewards Delaware companies for convincing one of their customers, suppliers, or service providers to relocate to the state. Both the sponsoring business and the new business receive a $500 credit for each new employee hired by the relocated business.
Research and Development Tax Credit: The credit amount is 1) 10% of the excess of your total qualified R&D expenditures over a base amount or 2) 50% of Delaware’s apportioned share of your federal R&D tax credits.
Check out our guide to Delaware’s Tax Credits for more information.
Delaware’s business tax breakdown by business type
Business taxes can get complicated, so below, we’ve included a chart that breaks down which taxes different business structures usually pay.
Keep in mind that pass-through entities don’t pay federal income taxes themselves—the obligation is passed on to their business owners or shareholders, who pay them through their personal income tax returns.
Business type | Personal income tax | Corporate income tax | Franchise tax | Gross receipts tax | Withholding tax | Unemployment tax | Federal income taxes |
C corporation | No | Yes | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes |
S corporation | Yes (pass-through) | No | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
LLC | Yes (pass-through) | Depends on how it’s structured | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
Partnership | Yes (pass-through) | No | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
Sole proprietorship | Yes (pass-through) | No | No | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes, by way of individual income tax |
File your Delaware small business taxes with Gusto
As a business owner, your time and energy are valuable, finite resources. So instead of managing your taxes manually, let Gusto give you a hand. Our easy-to-use software automatically files all your payroll taxes each time you run payroll—freeing up your bandwidth for the work that matters most.
Learn how else Gusto can simplify the operations of your small business by creating an account today.
