What Is HB 400?
Delaware House Bill 400 (HB 400) is a new law, passed through the Delaware General Assembly and signed by the Governor, that increases the annual Franchise Tax paid by all Limited Liability Companies (LLCs) formed in Delaware. The increase took effect on August 1, 2026.
For many business owners and entrepreneurs, the most significant change is the increase in the Delaware LLC annual tax, which increases from $300 to $400. As a result of HB400, Delaware LLCs can expect higher costs to maintain their entities.
The purpose of Delaware HB 400 is to generate additional state revenue by updating a fee schedule that had remained largely unchanged for years. While Delaware continues to be the nation’s leading state for business formation, the new law increases the ongoing cost of maintaining a Delaware entity. The filing fee to form a Delaware LLC remains unchanged.
Why Is the Delaware LLC Franchise Tax Increasing?
Here are the Key reasons for the HB 400 Franchise Tax increase:
- Generating additional state revenue for Delaware’s operating budget.
- Updating fees that had not kept pace with inflation and administrative costs.
- Supporting Delaware’s business infrastructure, including the systems and services used to process about 360,000 new business filings each year.
Although the increase raises the cost of maintaining a Delaware LLC, the state remains the preferred jurisdiction for LLCs because of its business-friendly laws, predictable legal system, and supreme asset protection offered by the Delaware LLC compared to LLCs formed in other states and nations.
What Is the New Delaware LLC Franchise Tax?
Under Delaware House Bill 400 (HB 400), the Delaware LLC Franchise Tax will increase from $300 to $400 per year, effective August 1, 2026. The tax is a flat annual fee that applies to Delaware LLCs, regardless of income or business activity.
New Delaware LLC franchise tax at a glance:
- Previous annual Franchise Tax: $300
- New annual Franchise Tax: $400
- Increase: $100 (33%)
- Applies to: All Delaware LLCs
To keep your LLC in good standing, the annual franchise tax must be paid by the state deadline. Failure to pay can result in penalties, interest, and the loss of good standing. Whether you own one Delaware LLC or several, the higher annual tax is an important compliance cost to include in your budget.
When Is the New Delaware LLC Franchise Tax Due?
The Delaware LLC franchise tax is due June 1 every year. While Delaware HB 400 increases the annual tax from $300 to $400, the payment deadline remains the same.
Delaware LLC franchise tax is paid in arrears:
- 2025 tax year: $300 was due by June 1, 2026
- 2026 tax year and beyond: $400 is due by June 1, 2027
Paying on time helps maintain your LLC’s good standing with the Delaware Division of Corporations and avoids potential penalties and interest.
Will the Delaware Corporation Franchise Tax Increase, Too?
No. Under Delaware HB 400, the Delaware corporation franchise tax did not increase. Unlike Delaware LLCs, which pay a flat annual tax, corporations calculate franchise tax based on factors such as authorized shares or the assumed par value method.
The impact of the increase will not impact corporations no matter how they are structured.
Less popular alternative entities, such as Delaware Limited Partnerships also saw an increase in Franchise Tax from $300 to $400.