Delaware Sales Tax—Everything You Need To Know

Delaware is considered a tax haven due to its numerous tax benefits. Unlike many other states, Delaware doesn't collect state-wide sales taxes. However, it compensates for its lack of sales tax by collecting franchise and other business-related taxes, such as gross receipts and property tax.

In this article, we'll discuss the reasons for the lack of Delaware sales tax, explore the state's source of tax revenue, and go over other tax requirements in the state. We'll also introduce Harbor Compliance and its Tax Manager, which offers a consolidated view of all your tax registration data and helps you manage filings with ease.

Why Does Delaware Have No Sales Tax?

Delaware's lack of sales tax attracts new businesses and creates a favorable economic environment. The state's tax laws and regulations allow businesses to price their products without worrying about factoring in sales tax, which results in competitive pricing. Moreover, the exemption also attracts shoppers from neighboring states.

Even with a no-sales tax policy, Delaware generates revenue by relying on other forms of taxation. For example, the state imposes a gross receipts tax on business revenue, thereby compensating for not collecting sales tax.

Other Tax Obligations in Delaware

According to Delaware state's website, entities must fulfill the following tax obligations:

• Corporations must pay an annual Franchise Tax to the Delaware Division of Corporations. The fee is determined by the number of authorized shares in the corporation.
• Corporations must also file Corporate Income Tax with the Delaware Division of Revenue. This tax is calculated at 8.7% of the federal taxable income allocated and apportioned to Delaware.
• While Delaware doesn't impose any state or local sales tax, all businesses must file an annual business license and gross receipts tax (imposed on sellers of goods and service providers).
• Businesses with physical offices or those paying wages or other compensation to a resident or non-resident of the state must withhold an amount that closely matches the estimated tax owed by the employee.

Partner With Harbor Compliance for Seamless Tax Registration

Despite the exemption of sales tax in Delaware, its tax code system is multi-faceted, and many other forms of taxes are levied on businesses . The rules are more complex for sellers shipping their products outside of Delaware, particularly in states imposing sales tax.

As per the Supreme Court's South Dakota v. Wayfair ruling, many states now require out-of-state retailers to collect sales tax if they exceed specific sales thresholds, e.g., $100,000 in annual sales or 200 transactions in that state.

Keeping up with such varying policies can be challenging, but professional service providers like Harbor Compliance can streamline the process and ensure error-free filing.

At Harbor Compliance, we specialize in managing licensure and helping businesses adhere to tax obligations in their states and localities. Our Sales and Use Tax Registration services help you determine nexus and remit sales taxes in new states timely. We handle your registration applications and even assist in tracking your tax obligations internally and calculating the required tax.

Our Tax Manager module (included in our proprietary Software Suite) provides you with a detailed view of all your tax registrations that you can easily sort and filter through at your convenience. You can also keep track of approaching deadlines by setting one-time or recurring events for tax filings.

How To Order Our Tax Solutions

Follow the below steps to order our Sales and Use Tax Registration services:

1. Visit the Sales and Use Tax Registration page.
2. Select Order Online.
3. Enter your business information in the online form.
4. Click Checkout.

If you want to take advantage of our Tax Manager module and get assistance with handling your taxes, here's all you need to do:

1. Open this form.
2. Provide your business and contact information.
3. Click the Schedule a Demonstration button.

Additional Services Harbor Compliance Offers

Our services extend beyond tax registration and license management solutions. Check out our full range of services in the table below:

Trust Harbor Compliance for Handling Your Tax Registration

Delaware's lack of sales tax offers reduced compliance costs for Delaware-based businesses and attracts shoppers from neighboring states. However, the state has other licensure and tax registration requirements that can be complex to navigate .

Harbor Compliance can take charge of all your tax registration and business licensing requirements with ease. Order our Sales and Use Tax Registration service and let us handle all your sales tax obligations—from preparing and submitting the required filings to receiving your tax identification number from the state. Use our Tax Manager to securely store your tax-related documents and track tax registration and exemptions.

To get started, you can schedule a demo session to explore our Tax Manager and other modules from our Software Suite and order our Sales and Use Tax Registration service.

You can also check out our FREE Harbor Compliance Score™ to understand your standing with the state and browse our Information Center to learn more about tax and other regulations throughout the U.S.

Sales & Use Tax Licensure

This section applies to businesses that are applying for a license in Delaware for the first time.