DE business tax rate  2012, 2013, 2014 Delaware State Corporate Income Tax 2021

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Delaware Corporate Income Tax Brackets

Tax Bracket (gross taxable income) Tax Rate (%)
$0+ 8.700%

Delaware has a flat corporate income tax rate of 8.700% of gross income. The federal corporate income tax, by contrast, has a marginal bracketed corporate income tax.Delaware's maximum marginal corporate income tax rate is the 10th highest in the United States, ranking directly below California's 8.840%.

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Delaware Business Tax

What is the Delaware corporate income tax?

DE corporate income tax

Delaware's corporate income tax is a business tax levied on the gross taxable income of most businesses and corporations registered or doing business in Delaware. The Delaware corporate income tax is the business equivalent of the Delaware personal income tax, and is based on a bracketed tax system. Similar to the personal income tax, businesses must file a yearly tax return and are allowed deductions such as wages paid, cost of goods sold, and other qualifying business expenses.

What kind of businesses have to pay the Delaware corporate income tax?

In general, all businesses operating in Delaware which are not registered as a flow-through entity (like a sole proprietorship, a partnership, or an S-Corporation) must report their income and pay both Delaware and Federal corporate income taxes on their earnings. The most commonly used business structure that is subject to corporate taxes is a C-Corporation.

Because C-Corporations pay corporate taxes on their revenue in addition to the personal income taxes shareholders and owners pay on profits withdrawn from the company, profits received from a C-Corporation are subject to a phenomenon known as double taxation.

S-Corporations and other flow-through entities aren't subject to the double taxation of revenue imposed on a C-Corp, because they aren't required to pay corporate taxes on their revenue. However, the owners or members of the corporation must report their share of the corporation's income on their personal tax returns and pay Delaware and federal income tax.

All incorporated Delaware businesses, regardless of whether or not they are required to pay any taxes, should file at least an informational tax return with the Delaware Department of Revenue as well as a federal business tax return (Form 1120) with the IRS.

In addition to the corporate income tax, Delaware has a gross receipts tax which also applies to most purchases and transactions made by businesses and corporations. Only New Hampshire and Virginia have similar stacked gross receipts taxes.

Delaware Corporate Income Tax Comparison
A home business grossing $55,000 a year pays $4,785.00
A small business earning $500,000 a year pays $4,350.00
A corporation earning $10,000,000 a year pays $870,000.00

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Delaware Nonprofit Tax Exemptions

Certain nonprofit entities registered in Delaware may be able to exempt some or all of their qualifying income from Delaware and federal income taxes. Specifically, certified Delaware 501(c) nonprofit corporations are exempt from the Delaware corporate income tax. Some of the most common 501(c) organizations include:

Tax-Exempt Recreational Organizations
Social clubs and recreational groups may collect dues and other funds as a tax-free organization as long as the primary purpose of the group is not for profit. Covered under § 501(c)(7) of the IRC.
Educational & Scientific Institutions
Nonprofit educational and scientific groups are tax-exempt, including nonprofit schools and colleges and certain research institutions. Covered under § 501(c)(3) of the IRC.
Tax-Exempt Charities
Bona-fide charities are exempt from all corporate income taxes, including both religious and non-religious charities. Covered under § 501(c)(3) of the IRC.
Tax-Exempt Religious Institutions
Bona-fide religious institutions including churches, synagogues, and mosques are exempt from corporate income taxes under § 501(c)(3) of the IRC
Labor Unions
Labor unions and worker's organizations are exempt from taxation on dues and other forms of income. Covered under § 501(c)(4) and § 501(c)(5) of the IRC.

In order to gain Delaware tax-exempt status, a corporation must qualify as a 501(c) and obtain a Nonprofit Tax-Exempt ID Number from the IRS. Delaware may also require nonprofits to file additional paperwork with the Delaware Department of Revenue to gain exemption from Delaware's corporate taxes.

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Federal Corporate Income Tax Brackets 2021

Tax Bracket ($) Marginal Corporate Income Tax Rate
$0 to $50,000 15%
$50,000 to $75,000 $7,500 + 25% Of the amount over 50,000
$75,000 to $100,000 $13,750 + 34% Of the amount over 75,000
$100,000 to $335,000 $22,250 + 39% Of the amount over 100,000
$335,000 to $10,000,000 $113,900 + 34% Of the amount over 335,000
$10,000,000 to $15,000,000 $3,400,000 + 35% Of the amount over 10,000,000
$15,000,000 to $18,333,333 $5,150,000 + 38% Of the amount over $15,000,000
$18,333,333 and up $6,416,667 + 35% of the amount over $18,333,333

In addition to the Delaware corporate income tax, Delaware corporations must also pay the federal corporate income tax. Like the personal income tax the federal business tax is bracketed based on income level, with eight corporate tax brackets.

The federal corporate tax's brackets differ from the personal income tax in that the brackets are not completely progressive (the last tax bracket is not the highest). This allows the corporate tax burden to be spread more evenly among companies with various revenue levels. The current corporate tax rates have been in effect since 1994 (unlike the federal income tax brackets, which are updated yearly for inflation).

All Delaware state taxes are deductible from gross income when calculating federal taxes, so any Delaware corporate income tax paid can be deducted from a business' gross taxable income before calculating your federal taxable income.

1 A printable PDF document of the 2021 state corporate income tax brackets can be downloaded here External Link