Delaware LLC Taxes: The Complete Filing Guide (2025)
Running an LLC in Delaware means dealing with taxes at federal, state, and sometimes local levels. This guide simplifies everything you need to know to stay compliant and avoid surprises, from income tax and sales tax to city-specific requirements.
Recommended: Schedule a free consultation with 1-800Accountant to stay on top of your taxes.

Delaware LLC Tax Basics
Navigating your Delaware LLC tax obligations doesn’t have to be complicated. We’ll walk you through the essentials of pass-through taxation, explain Delaware’s specific requirements, and highlight strategies to stay compliant and organized. This guide covers everything from federal income taxes to city-specific requirements and filing deadlines.
Use the links below to jump directly to the section you need:
- Delaware LLC Taxes at a Glance
- Understanding LLC Taxation Basics
- Federal Tax Obligations
- Delaware State Taxes
- Local Tax Considerations
- Tax Calendar and Filing Tips
- Tax Strategies for Delaware LLCs
- Forms and Resources
Delaware LLC Taxes at a Glance
Tax Type | Rate | Filing Deadline | Forms Required |
---|---|---|---|
Federal Income Tax | 10-37% (personal brackets) | April 15, 2025 | Form 1040 + Schedule C or Schedule E/K-1 |
Self-Employment Tax | 15.3% | April 15, 2025 | Schedule SE |
Delaware Income Tax | 0%-6.6% | April 30, 2025 | Form PIT-RES |
Delaware Corporate Income Tax | 8.7% | April 15, 2025 | Form CIT-TAX |
Federal Payroll Taxes (If Employees) | 7.65% employer + 7.65% employee (FICA) | Quarterly (April 30, July 31, October 31, January 31) | Form 941 |
Delaware Unemployment Tax (If Employees) | 0.6%-5.6% (new employers: 1.2%) | Quarterly | Form UC-8 |
Federal Unemployment (FUTA) | 6% on first $7,000 per employee (0.6% after credits) | January 31, 2026 (annual) | Form 940 |
Gross Receipts Tax | 0.0945%-1.9914% | Monthly or quarterly | Filed online |
City Wage Tax | 1.25% | Monthly or quarterly | Form WCWT-5 |
Annual Franchise Tax | $300 | June 1, 2025 | Filed online |
Understanding LLC Taxation Basics
How Delaware LLCs Are Taxed By Default
Your Delaware LLC doesn’t pay taxes itself. Instead, profits flow through to you and your members, who report them on personal tax returns. This is called pass-through taxation.
Here’s how it works:
- Your LLC earns income from business activities
- The LLC itself files no tax return (unless you elect otherwise)
- Profits “pass through” to members based on ownership percentage
- Each member reports their share on their personal tax return
- Members pay tax at their individual income tax rates
What this means for you: Unlike corporations, your business profits are only taxed once, which typically saves money.
Time-Saving Tip: If you’re uncertain about your LLC’s tax classification, a tax professional can review your LLC’s tax setup in 30 minutes and help you choose the most tax-efficient option.
Tax Classification Options
While pass-through taxation is the default, your Delaware LLC can choose alternative tax treatments:
Default LLC Tax Status:
- Single-member LLC: Taxed as a sole proprietorship
- Multi-member LLC: Taxed as a partnership
Optional Tax Classifications:
- S Corporation: Can reduce self-employment taxes by paying “reasonable salaries”
- C Corporation: LLC pays corporate tax on profits, members pay personal tax on distributions (creates double taxation)
Not sure which tax classification is right for your business? Schedule a free consultation with 1-800Accountant.
Federal Tax Obligations
Income Tax
As a Delaware LLC owner, you’ll report your share of business profits on your personal tax return using:
- Form 1040 + Schedule C (single-member LLCs)
- Form 1040 + Schedule E + Schedule K-1 (multi-member LLCs)
Federal income tax rates range from 10% to 37% based on your tax bracket (actual brackets will depend on inflation adjustments and any tax law changes).
Simply Put: Whatever money your business makes (after expenses) gets added to your personal tax return, just like income from a job.
Self-Employment Tax
LLC members actively involved in the business must pay self-employment tax of 15.3% (covering Social Security and Medicare) on their share of LLC profits.
Key points:
- Applies to net earnings of $400 or more
- Calculated on Schedule SE
- You can deduct 50% of the self-employment tax as an “above-the-line” deduction, which lowers your adjusted gross income
What happens if I miss this payment? The IRS charges penalties of 0.5% per month plus interest. However, first-time mistakes can often qualify for penalty abatement if you have a clean compliance history.
Employment Taxes
If your LLC has employees, you must:
- Withhold federal income tax
- Pay and withhold FICA taxes (7.65% each for employer and employee)
- Pay federal unemployment tax (FUTA)
- File quarterly employment tax returns (Form 941)
- Provide W-2 forms annually
Estimated completion time: 2-3 hours per quarter (significantly less with payroll software or professional help)
Estimated Tax Payments
Because no tax is withheld from your LLC profits, you’ll likely need to make quarterly estimated tax payments using Form 1040-ES. These payments cover both income and self-employment taxes on your share of the business income. Missing deadlines or underpaying can lead to IRS penalties, even if you pay in full later.
Working with an accountant can help ensure accurate calculations, on-time payments, and a smarter overall tax strategy.
Key deadlines:
- April 15
- June 16
- September 15
- January 15
Pro Tip: Set calendar reminders 15 days before each deadline. This gives you time to prepare without the last-minute rush that leads to mistakes.
Delaware State Taxes
Delaware Income Tax
Delaware has a personal income tax rate of 0%-6.6% that applies to your LLC’s profits on your personal return.
Filing requirements:
- Use Delaware Form PIT-RES
- Due April 30, 2025
Delaware Corporate Income Tax
If your LLC has elected to be taxed as a C corp, you will be required to pay an 8.7% corporate income tax.
Filing Requirements:
- Use Delaware Form CIT-TAX
- Due April 15, 2025
Gross Receipts Tax
Delaware does not impose a sales and use tax but does impose a gross receipts tax on sellers of goods and services’ business revenue.
If your LLC sells goods or provides services in the state, it is subject to this tax.
- Rate varies by business type
- Register through the Delaware Taxpayer Portal
- Gross receipts tax must be filed online
- Due monthly or quarterly depending on business’ total gross receipts
Payroll Taxes
If you have employees in Delaware, you will be responsible for two types of payroll taxes.
Unemployment Insurance (UI) Tax
- Register through the Delaware Department of Labor
- Rate is 1.2% for new employers (0.6%-5.6% afterwards)
- Due quarterly
- File using Delaware Form UC-8
Withholding Tax
- Register using the Delaware One Stop
- Rate ranges from 0%-6.6% depending on employee income
- Due online semi-weekly, monthly, or quarterly
Annual Franchise Tax Filing
While LLCs are not required to file a full annual report in Delaware, your LLC must pay an annual franchise tax:
- Due June 1 each year
- $300 filing fee
- Filed with Delaware Division of Corporations
Calendar Alert: Set a reminder for May 1 to ensure you don’t miss this easy but required filing.
Local Tax Considerations
City Wage Tax
Delaware allows cities to impose a 1.25% city wage tax. This currently only applies to businesses in Wilmington, Delaware.
Filing requirements:
- Use Delaware Form WC-WT-5
- Due monthly or quarterly
Property Taxes
If your LLC owns real property in Delaware:
- Rates vary by county (average rate is 0.53%)
- May qualify for various exemptions based on business type
- Personal property such as vehicles, furniture, or equipment is not taxable
- Use the Incorporated Municipalities Directory to contact your local governing body for more information
Tax Calendar and Filing Tips
Key Deadlines for Delaware LLCs
January:
- January 15: Final estimated tax payment for previous year
- January 31: Issue W-2s/1099s to employees/contractors
- January 31: Fourth quarter payroll tax payment due (state and federal)
April:
- April 15: Corporate income tax returns due
- April 15: Federal income and self-employment tax returns due
- April 15: First quarter estimated tax payment due
- April 30: First quarter payroll tax payment due (state and federal)
- April 30: Personal income tax return due
June:
- June 1: Annual franchise tax due
- June 16: Second quarter estimated tax due
July:
- July 31: Second quarter payroll tax payment due (state and federal)
September:
- September 15: Third quarter estimated tax payment due
October:
- October 31: Third quarter payroll tax payment due (state and federal)
Record-Keeping Checklist
Keep these records for at least 7 years:
- Business income records (invoices, receipts)
- Expense receipts and documentation
- Bank and credit card statements
- Asset purchase and improvement records
- Vehicle mileage logs
- Home office documentation
- Payroll records
- Previous tax returns
Tax Strategies for Delaware LLCs
S Corporation Election Benefits
Converting your LLC to an S Corporation for tax purposes can save on self-employment taxes:
- File Form 2553 with the IRS
- Pay yourself a “reasonable salary” subject to employment taxes
- Take remaining profits as distributions exempt from self-employment tax
Example: An LLC making $100,000 in profit pays 15.3% self-employment tax on the entire amount. As an S Corp, if $60,000 is a reasonable salary and $40,000 is taken as distributions, only the $60,000 is subject to employment taxes.
Potential Savings: In this example, you’d save about $6,120 in self-employment taxes.
Business Expense Deductions
Common deductions Delaware LLC owners often overlook:
- Home office deduction
- Business mileage (70¢ per mile for 2025)
- Health insurance premiums
- Retirement plan contributions
- Professional development expenses
- Business meals (50% deductible)
Forms and Resources
Federal Tax Forms
- Schedule C: Profit or Loss From Business (sole proprietors)
- Form 1065: U.S. Return of Partnership Income
- Schedule K-1: Partner’s Share of Income, Deductions, Credits
- Form 1120-S: U.S. Income Tax Return for an S Corporation
- Form 2553: Election by a Small Business Corporation (S Corp)
- Form 8832: Entity Classification Election
Delaware Tax Forms
- Form PIT-RES: Delaware Individual Income Tax Return
- Form CIT-TAX: Delaware Corporate Income Tax Return
- Form UC-8: Delaware Unemployment Insurance Tax Return
Helpful Resources
Delaware LLC Taxes FAQs
While not exclusive to LLCs, the Delaware tax loophole refers to the strategy by which companies use Delaware’s lack of a state corporate income tax on income earned outside of the state to legally avoid higher taxes where they actually operate.
Failing to pay Delaware LLC tax can lead to penalties, interest on the unpaid tax balance, and potential legal action. The state may also place a lien on your LLC’s assets or dissolve your LLC entirely, which can obviously negatively impact your business’s operations and credit.
Find out more about this in our LLC Taxes article.
Delaware is popular for LLCs due to its business-friendly legal environment, including a dedicated Court of Chancery handling business disputes, favorable tax laws, and strong protections for business owners.
To find out how you can get your business up and running in this state, see our Delaware LLC formation article.
Your business’s Delaware tax can vary due to a number of factors, including where it’s based, the business activities it engages in, the amount of revenue it generates, and how you pay your tax.
Need Professional Help? While this guide covers the essentials, tax laws are complex and constantly changing. Schedule a free consultation with 1-800Accountant to ensure your Delaware LLC remains fully compliant while minimizing your tax burden.