S-corp election in Delaware
Delaware follows the federal election. There is no percentage tax on S corporation income, so the decision comes down to federal payroll tax against your compliance costs.
- Breaks even at
- $37,000
- In line with no-tax states
- Top individual rate
- 6.60%
- Applies to wages and distributions alike
- Entity-level tax
- $175 min
- No percentage tax
- Annual filing fee
- $50
- Plus $300 LLC tax
What to know about Delaware
Delaware LLCs owe a flat $300 annual tax; S corporations owe a $175 franchise tax plus a $50 annual report.
What it looks like at four profit levels
Single filer, no other household income, a reasonable salary set by profit level, and $1,860 of annual payroll and filing cost.
| Net profit | Salary used | Sole prop cost | S-corp cost | You save |
|---|---|---|---|---|
| $75,000 | $37,500 | $19,112 | $16,694 | $2,418 |
| $125,000 | $62,500 | $36,644 | $32,957 | $3,687 |
| $200,000 | $80,000 | $64,706 | $55,182 | $9,524 |
| $350,000 | $120,000 | $134,210 | $107,978 | $26,232 |
Run your own numbers for Delaware
Verdict for tax year 2026
Electing looks worth it
On $150,000 of net profit, the S election leaves you $4,423 better off per year after payroll, tax preparation and every state-level tax we can find — about 2.9% of profit.
Net annual saving
$4,423
Breaks even at $37,000 of profit
What your salary choice is worth
Below the §199A threshold this curve only ever rises as salary falls, so the limit is legal rather than mathematical. The best defensible figure here is $45,000, worth $9,861 a year.
Where the election starts to pay
Profit on the horizontal axis, annual saving on the vertical, holding your state, filing status and costs fixed and setting a reasonable salary at each level.
Line by line
| Line item | Sole prop / LLC | S corporation | Difference |
|---|---|---|---|
| Owner W-2 wagesSubject to payroll tax, and the figure the §199A wage limitation is measured against. | $0 | $75,000 | +$75,000 |
| Profit taken as distributionsNot subject to self-employment or payroll tax. | $149,650 | $67,136 | −$82,515 |
| Social Security & Medicare taxSelf-employment tax on the left; both halves of FICA plus FUTA on the right. | $21,145 | $11,517 | −$9,628 |
| §199A deductionA deduction, so more is better. Wages are not qualified business income, but they are what satisfies the wage limitation at higher incomes. | $24,596 | $13,427 | −$11,168 |
| Federal income tax | $16,356 | $19,624 | +$3,268 |
| State income tax | $7,948 | $8,150 | +$202 |
| Entity-level taxCharged to the corporation itself. This is the line most calculators omit entirely. | $0 | $175 | +$175 |
| Compliance costPayroll service, the incremental cost of an 1120-S over a Schedule C, and recurring state fees. | $350 | $1,910 | +$1,560 |
| Total cost of this structure | $45,799 | $41,376 | −$4,423 |
| Kept by you | $104,201 | $108,624 | +$4,423 |
Both columns start from the same $150,000 of profit. See the methodology for every rule and rate used.
What electing actually requires
An S corporation is not a filing you make once. It is a payroll obligation. You must pay yourself as an employee, withhold and remit payroll tax on a schedule, file Form 941 each quarter, issue yourself a W-2 in January, and file an 1120-S with a Schedule K-1 by 15 March. Missing the payroll requirement is what turns the election into a liability.
To elect for a tax year you generally file Form 2553 within two months and fifteen days of the start of that year — 15 March for a calendar-year business — though late relief under Rev. Proc. 2013-30 is routinely granted with a reasonable cause statement.
Runs the payroll an S corporation is required to run, files the 941s and W-2 automatically, and handles the S-corp owner health insurance reporting that trips most people up in December.
From about $55/month for a single owner-employee
Flat-rate payroll with S-corp support included rather than sold as an upgrade. Usually the cheapest credible option for a one-person corporation.
$40/month plus $6 per person
Forms the entity and acts as registered agent without the upsell funnel. They do not sell your data, which is not a given in this category.
$39 plus state fee, registered agent $125/year
Handles LLC formation and will file the Form 2553 S election alongside it, which saves a round trip if you are starting from nothing.
Free formation tier plus state fee; S-corp filing is an add-on
These links pay us a commission if you sign up. It costs you nothing and it has no effect on any number above — the recommendation is driven entirely by your inputs, and when the arithmetic says do not elect, we say do not elect.
Delaware questions
At what profit does an S-corp election pay off in Delaware?
Around $37,000 of annual net profit for a single filer carrying roughly $1,860 of payroll and tax preparation cost. Delaware charges no percentage tax on S corporation income, so the crossover is driven mainly by federal payroll tax and your own compliance costs.
Does Delaware recognise the federal S election?
Yes. Profit passes through to your personal return.
What does Delaware charge an S corporation each year?
- Minimum annual tax of $175
- Annual report or registration fee of $50
- Flat LLC tax of $300, which you owe whether or not you elect