05/19/2026
GOVERNMENT: Revenue from Delaware corporate franchise tax sees 1% growth between FY ’25-’26
FROM BAY TO BAY NEWS, DAILY Daily State News at baytobaynews.com
By Kaitlyn Cupelli
NEW CASTLE — An update on the state’s corporate franchise numbers was provided at a Monday, May 18, meeting of the Delaware Economic and Financial Advisory Council.
According to the Department of State, revenue from the tax grew 1% between fiscal years 2025 and ’26, from $1,324,400,000 to $1,338,000,000, as of May.
In the meantime, limited partnerships/limited liability companies and business entity fees both saw larger year-over-year revenue increases, at 10.1% and 7.9%, respectively.
DEFAC chair Alan Levin noted Monday that he had asked the State Department to do a “deeper dive” into LLC formations and other revenue numbers after the council’s last meeting in March.
At said meeting, then-member Mike Houghton questioned how much of the entity formations in Delaware’s franchise were from LLCs (which tend to bring in smaller revenues) and how many were initial public offerings (what the biggest corporations tend to register as, thus bringing in more money), since updated numbers were not being provided at that time.
Mr. Houghton was subsequently removed from the board by Gov. Matt Meyer.
A breakdown of the formation types for calendar year 2025 shows:
A 15.4% increase in new business entities from 2024, with 334,461 more.
1,830,190 total LLCs and LPs created.
425,765 total corporations formed.
31,773 “other” entities developed.
A 6% increase over 2024 in the total number of entities formed, with 2,287,728 more.
For fiscal 2026, the Department of State estimates that $2.1 billion will go toward Delaware’s general fund from the corporate franchise by June 30.
Secretary of state Charuni Patibanda-Sanchez began her presentation Monday by defending the condition of the corporate franchise, as well as the agency’s decision not to update data in March.
“It is critical that, when you speak about the franchise, Delaware speaks in one informed voice,” she said. “As this relates to the last DEFAC meeting, there has been quite a lot of noise. So, let me be crystal clear: … During the last DEFAC meeting, held on March 16, we presented numbers that indicated that, at that time, the Division of Corporations was not changing its forecast from December, except for the (Uniform Commercial Code) line.
“The increases in entity formations in 2025 were initially captured in our December projections. March tax payments were not fully received, refunded or reconciled. Therefore, the division did what it has done in the last several years in a row: It did not change its forecasts in March.”
During DEFAC’s last four March meetings, no changes have been made to the franchise tax projection.
However, in March 2022, there was a $155 million revenue increase from the December 2021 meeting.
Further, council member Wayne Smith, the former president of the Delaware Healthcare Association, noted that a study by the Harvard Law School Forum on Corporate Governance seems to suggest a weakening in the percentage of IPOs that have historically incorporated in Delaware — by up to 7% since 2024.
In response, Ms. Patibanda-Sanchez noted, “We do trust that information, and there was a slight decrease in ideal percentages overall in 2025. However, it is not enough data points for us to show that it is a trend.
“But I can say that the IPO number, so far for this calendar year, has been up from last year. So, I don’t think that it’s a trend based on that.”
She added that most of the IPOs that left Delaware in 2025 went to the Cayman Islands and other territories abroad. Nevada — commonly cited as taking the state’s corporations in a move termed “DExit” — did not acquire any more than it usually does, according to the secretary.
Also Monday, the chair of the Joint Finance Committee, Sen. Trey Paradee, D-Dover, questioned how the 1% increase in revenue from the franchise tax compares to past years, since “it is a low number.” Ms. Patibanda-Sanchez replied that she’s unsure.
She did note, however, that there were massive increases in 2021 and 2022 due to the pandemic.
DEFAC’s last meeting of this fiscal year is June 15.