Thinking about starting or relocating a business? Delaware’s tax structure deserves a close look. Here’s a plain-English breakdown.

No sales tax — Zero. This applies to retail goods, online sales, services, and food. No collection burden and competitive pricing.

No tax on out-of-state income — If your Delaware-incorporated business earns revenue outside the state, Delaware doesn’t tax it.

No personal property tax — No taxes on equipment, machinery, or business vehicles.

Favorable corporate franchise tax — LLCs pay a flat $300/year. Corporation minimum is $175 using the Authorized Shares method.

What to watch out for — Delaware’s gross receipts tax (0.096% to 1.92% depending on industry) applies to total revenue, not profit. It’s small but can add up for high-revenue, low-margin businesses. Corporate income tax rate is 8.7% for businesses physically in Delaware.

The bottom line: for most small businesses, Delaware’s combined tax burden is significantly lower than NJ, PA, and MD. Consult a Delaware-based CPA — several firms offer free initial consultations.

Delaware’s reputation as a business-friendly state isn’t just hype — it’s backed by real advantages that make a measurable difference for entrepreneurs. Here are five reasons why the First State should be your first choice.

1. No Sales Tax — Delaware is one of only five states with zero sales tax. For retailers and service businesses, this means lower prices that attract customers from neighboring states and simplified bookkeeping.

2. The Court of Chancery — Delaware’s specialized business court with expert judges (not juries) resolves disputes faster and more predictably than any other state. It’s why over 60% of Fortune 500 companies are incorporated here.

3. Low Business Formation Costs — Filing an LLC costs as little as $90, and annual franchise taxes for small businesses are among the lowest in the country. Same-day filings are available.

4. Strategic Mid-Atlantic Location — Between New York, Philadelphia, Baltimore, and D.C., Delaware offers access to 40% of the U.S. population within a four-hour drive.

5. Strong Support Ecosystem — From Delaware SBDC to SCORE mentoring, the Delaware Prosperity Partnership, and programs like the Delaware Innovation Space, founders have deep resources.