| State income tax | 2.2% - 6.6% |
| Pass-through entity tax election (SALT workaround) | Available |
| 1099-K state threshold below federal $20,000 | Federal floor only |
| Sales tax economic nexus | No sales tax |
Delaware imposes a state personal income tax that flows through to pass-through business owners (sole-prop Schedule C income, partnership / S-Corp K-1 income, LLC pass-through). Rate range: 2.2% - 6.6%. C-Corps are subject to a separate state corporate income tax (rate often near or above the top individual rate). Verify current brackets and any recent rate changes against the Delaware Department of Revenue.
This state offers a Pass-Through Entity (PTE) tax election as a workaround to the federal $10,000 SALT cap imposed by the Tax Cuts and Jobs Act (2017). Eligible pass-through entities (partnerships, S-Corps, LLCs taxed as one of those) may elect to pay state income tax at the entity level on owner shares; the entity-level state tax is then deductible as a federal business expense, bypassing the SALT cap at the individual level. Owners receive a state-level credit equal to their share of the entity-level tax paid. Election is annual; deadlines, computation, and credit mechanics vary by state. Consult a state-licensed CPA before electing.
This state has not enacted a 1099-K reporting threshold lower than the federal floor. The IRS applies the federal threshold ($20,000 in gross payments AND more than 200 transactions through a third-party settlement organization, subject to ongoing IRS transition relief). Sellers under that floor will not receive a 1099-K from platforms like PayPal, Venmo Business, eBay, Etsy, or Stripe. Note: receipt of a 1099-K does not change the underlying tax obligation; all business income is reportable regardless of whether a 1099-K is issued.
Delaware imposes no general statewide sales tax. Sellers shipping into Delaware do not collect state sales tax; however, some local taxes or specialty excise taxes (lodging, fuel, etc.) may apply on specific transactions. Sellers based in Delaware shipping into OTHER states must still comply with destination-state economic nexus rules.
Delaware LLC formation: $110 Certificate of Formation filing fee, plus the $300 annual Delaware LLC franchise tax (due June 1 each year, no annual report). Delaware does not require LLCs to file an annual report; the $300 franchise tax IS the annual obligation. Delaware's favorable corporate law (Chancery Court precedent, broad statutory privacy) drives its dominant share of out-of-state LLC formations.
Delaware generally follows a state version of the federal estimated-tax safe-harbor framework. Most states allow individuals and pass-through owners to avoid an underpayment penalty by paying either (a) 100% of the prior year's state tax liability (110% if prior-year AGI exceeded a threshold, typically $150,000) or (b) 90% of the current year's state tax liability, through a combination of withholding and quarterly estimated payments. Quarterly estimated due dates align with federal (April 15 / June 15 / September 15 / January 15) in most states. Specific safe-harbor percentages, AGI thresholds, and underpayment-penalty rates vary by state; verify against the current state Department of Revenue instructions.
Once the threshold facts are clear, the next question is what they mean for your specific income mix. Use the S-Corp Election Calculator to test whether the salary/distribution split clears the federal break-even given Delaware rates, the Income Tax Pipeline to model federal + Delaware liabilities together, and the Reseller Profit Calculator for 1099-K-affected resale operations.
No. Delaware has not enacted a 1099-K reporting threshold lower than the federal floor. Sellers will receive a 1099-K only if they exceed the federal threshold (current IRS transition rules apply). All business income remains reportable on the federal and state return regardless of whether a 1099-K is issued.
Yes. Delaware offers a PTE tax election. Eligible pass-through entities elect to pay state income tax at the entity level on owners' shares; the entity-level state tax is then deductible as a federal business expense, bypassing the $10,000 individual SALT cap. Owners receive a state credit equal to their share. Election timing, computation, and credit rules vary; consult a Delaware-licensed CPA before electing.
Delaware imposes no general statewide sales tax. Sellers shipping into Delaware do not collect state sales tax. Sellers based in Delaware shipping into OTHER states still must comply with destination-state economic nexus rules.
Delaware LLCs owe a $300 annual franchise tax due June 1; no separate annual report required.