Oct 24 2011
Why incorporate in Delaware?
The fact that a large portion of the Fortune 500 companies incorporating in Delaware may attract great sums of business people. Like Connecticut, Delaware is one of the smallest states in the nation, however, their population density ranks in the top 10. Many people incorporate in Delaware due to the advantageous tax system, which may be the perfect opportunity for many potential business owners.
- Delaware ranks 1st on the Work Environment Index. (2005)
- Delaware ranks 1st on the “Decent Work in America” study (UMass Amherst’s Political Economy Research Institute, 2005)
- Delaware ranked 18th for Friendly Business Tax Climate (The Tax Foundation, 2005)
- Delaware’s State/Local Tax Burden in 3rd lowest in the U.S. (The Tax Foundation).
Fees & Taxes
Business Inventory Tax
Delaware does not tax business inventory.
Corporate Franchise Tax
All corporations incorporated in the State of Delaware are required to file an Annual Franchise Tax report and to pay a franchise tax. The minimum tax is $35.00 with a maximum tax of $165,000.00.
Corporate Income Tax
The general corporation rate is 8.7%.
Gross Receipt Tax
Delaware assesses a gross receipts tax on the seller of goods (tangible or otherwise) or provider of services. Business and occupational gross receipts tax rates range from 0.096% to 1.92%, depending on the business activity.
Personal Income Tax
Variable. The income tax rate starts at 2.2% for income starting at $2,000 and going up to $5,000. Income over $60,000 is assessed at 5.95%.
Personal Property Tax
Delaware does not assess a state-level tax on real or personal property. Real estate is subject to county property taxes, school district property taxes, vocational school district taxes, and if located within an incorporated area, municipal property taxes.
State Sales and Use Tax
Delaware does not levy a general sale or use tax.