Delaware — Sales & Use Tax

Delaware is one of five U.S. states that does not impose a state or local sales tax. No sales tax is collected from consumers at the point of sale, and no use tax applies to purchases made outside Delaware and brought into the state for use.

Source: Delaware Division of Revenue — Doing Business in Delaware

Unlike Alaska, which also has no state sales tax but permits local jurisdictions to impose their own, Delaware prohibits sales tax at every level of government. There are no county, municipal, or special-district sales taxes in Delaware.

Source: Delaware Division of Revenue — Doing Business in Delaware

Remote sellers shipping goods to Delaware customers have no obligation to register for, collect, or remit sales tax on those transactions. Delaware has no economic-nexus rule for sales tax because it does not impose a sales tax.

Gross receipts tax is not a sales tax

Delaware does impose a gross receipts tax (GRT) on businesses operating in the state, but GRT is a fundamentally different tax. GRT is levied on the seller's total gross revenues from goods sold or services provided in Delaware, regardless of profitability. It is paid by the business out of its receipts—not collected from customers at checkout.

Source: Delaware Division of Revenue — Step 4: Gross Receipts Taxes

GRT rates range from 0.0945% to 1.9914% (or as high as 2.4218% on petroleum products), depending on business activity. The tax applies to businesses with physical nexus in Delaware—such as an office, employees, inventory, or a warehouse. Purely remote sellers with no physical presence in the state are generally not subject to GRT.

Source: Delaware Division of Revenue — Step 4: Gross Receipts Taxes

The Delaware Code provisions governing business licenses and gross receipts taxes are found in Title 30, Chapters 21, 23, 25, 27, and 29.

Source: Delaware Division of Revenue — Doing Business in Delaware

Delaware imposes a 1.9914% use tax on lessees for the use of leased tangible personal property within the state. The tax is collected and remitted by the lessor. Exemptions apply to motor vehicles, household furniture and furnishings, hospital and medical equipment, and certain agricultural equipment.

Statutory rate

30 Del. C. § 4302(a) imposes the use tax at a rate equal to 1.9914% of the rent under a lease of tangible personal property (other than the enumerated exempt categories). Subsection (b) imposes the same 1.9914% rate on leases of motor vehicles. Although motor vehicles are subject to the tax, they are reported separately from other tangible personal property.

Source: 30 Del. C. § 4302

Agricultural equipment and other exemptions

30 Del. C. § 4302(c) exempts from the use tax rents on leases of equipment, machinery, fixtures, buildings, and nonregistered vehicles used in the business of raising crops or animals in agricultural production, as well as reusable pallets and containers for use by food processors. A reusable pallet or container is defined as any pallet or crate under an arrangement for repeated return to its initial purchaser for long-term reuse. While leases of these exempt items do not generate a lessee use tax collection obligation, the lessor's gross receipts from such leases remain subject to Delaware's lessor gross receipts tax.

Source: 30 Del. C. § 4302

Nature of the tax

This narrow lease tax is Delaware's only use tax; the state does not impose a general use tax on purchases of tangible personal property made outside Delaware and brought into the state for use. The lessee use tax is imposed on the lessee but collected and remitted by the lessor as trustee for the state. The lessor is personally liable for the tax imposed, collected, or required to be collected.

Source: 30 Del. C. §§ 4302, 4303, 4304

Note on Division of Revenue guidance

The Delaware Division of Revenue publication "Tax Tips for Lessors of Tangible Personal Property" contains an internal inconsistency: one section states the lease tax rate as "1.92 percent (0.0192)," while another section of the same document correctly states the rate as "1.9914%." The statutory rate of 1.9914% under 30 Del. C. § 4302 is controlling.

Businesses that engage in business in Delaware by selling goods or providing services in the state are required to pay gross receipts tax. The tax is imposed on the seller, not the consumer, and applies to total receipts without deductions for costs or expenses. Physical presence—such as an office, employees, inventory, or warehouse—creates the obligation. Purely remote sellers with no physical presence in Delaware are generally not subject to gross receipts tax.

Source: Delaware Division of Revenue — Gross Receipts Tax FAQs

Most businesses subject to Delaware's gross receipts tax may exclude a portion of their receipts before calculating tax. Exclusions are applied monthly or quarterly depending on filing frequency. Retailers, contractors, and most occupational and service businesses may exclude $100,000 per month or $300,000 per quarter. Wholesalers may exclude up to $1,250,000 per month or $3,750,000 per quarter. A business operating through multiple branches or entities with common ownership is entitled to only one exclusion per activity, not one per location.

Source: Delaware Division of Revenue — Gross Receipts Tax FAQs

Delaware's gross receipts tax rates range from 0.0945% to 1.9914% depending on the business activity, with petroleum products taxed at composite rates as high as 2.4218%. General retailers pay 0.7468%, wholesalers pay 0.3983%, restaurants pay 0.6472%, and grocery supermarkets pay 0.3267%. Each business activity has a specific rate established in Title 30, Chapters 20 through 29, and Chapter 43 of the Delaware Code. The Division of Revenue publishes a detailed rate schedule listing all business categories and their corresponding rates.

Source: Delaware Division of Revenue — Detailed List of Licenses and Tax Rates

Delaware businesses subject to gross receipts tax file returns either monthly or quarterly, depending on their gross receipts during a "look-back period." The Division of Revenue determines filing frequency annually by reviewing each taxpayer's historic receipts during the 12-month period between July 1 and June 30 immediately preceding the taxable year. Businesses with higher receipts during the look-back period file monthly; businesses with lower receipts file quarterly. All new businesses are automatically assigned quarterly filing status when they first register.

Monthly filers must file and pay gross receipts tax on or before the 20th day of each month for the receipts of the immediately preceding month. For example, a monthly filer's January receipts are due on or before February 20.

Quarterly filers must file and pay on or before the last day of the first month following the close of the quarter. Quarter 1 (January–March) is due April 30; Quarter 2 (April–June) is due July 31; Quarter 3 (July–September) is due October 31; Quarter 4 (October–December) is due January 31 of the following year.

Source: Delaware Division of Revenue — Gross Receipts Tax FAQs

The look-back period is defined at 30 Del. C. § 2122. The statute provides that the Director may waive quarterly filing for taxpayers with no taxable gross receipts in the quarter, but in no event may a taxpayer file less frequently than annually.

Source: 30 Del. C. § 2122

Mandatory electronic filing

Effective January 1, 2021, Delaware mandates online filing for all gross receipts tax returns through the Delaware Taxpayer Portal at tax.delaware.gov. Taxpayers file and pay electronically using a credit or debit card or bank transfer. To register in the portal, businesses need their Federal Employer Identification Number (or Social Security Number for sole proprietors) and their Delaware Business License Number. The Division of Revenue may permit paper filing only in rare cases involving specific technical or accessibility issues, and such exceptions must be approved by the Division.

Source: Delaware Division of Revenue — Gross Receipts Tax FAQs

Penalties and interest

Returns filed late are subject to a penalty of 5% per month, plus interest of 0.5% per month from the original due date until paid. Additionally, failure to pay (in whole or in part) the tax liability shown on a timely filed return triggers a separate penalty of 1% per month, not to exceed 25%. These penalties are codified at 30 Del. C. §§ 533 and 534.

Source: Delaware Division of Revenue — Gross Receipts Tax FAQs

Delaware determines whether a business files gross receipts tax returns monthly or quarterly by comparing the business's taxable gross receipts during a lookback period (the 12-month period from July 1 through June 30 immediately preceding the taxable year) to a threshold amount that varies by business activity classification. Businesses with lookback-period receipts exceeding the applicable threshold file monthly; businesses at or below the threshold file quarterly.

The threshold dollar amounts are set by statute for each business activity and are adjusted annually for inflation. The baseline thresholds established in Title 30 of the Delaware Code are then recalculated each year using a threshold adjustment factor tied to the Consumer Price Index for All Urban Consumers (CPI-U, U.S. city average, all items). The Department of Finance publishes the inflation-adjusted thresholds by November 15 each year on the Division of Revenue website, and the adjusted thresholds take effect for tax periods beginning after December 31 of that year.

Baseline statutory thresholds by business activity

The following thresholds are codified in Title 30 (as enacted; all are subject to annual CPI adjustment under 30 Del. C. § 515):

• Retailers — $1,500,000 (30 Del. C. § 2301(d)(2))
• Contractors — $1,500,000 (30 Del. C. § 2502(c)(2))
• Wholesalers — $1,500,000 (30 Del. C. § 2702(b)(3))
• Manufacturers — $1,500,000 (30 Del. C. § 2702(b)(3))
• Occupational, professional, and general service providers — $1,500,000 (30 Del. C. § 2902(c)(2))

Some business activity subcategories within these chapters have different thresholds. For example, 30 Del. C. § 2904(c)(2) establishes a $3,000,000 baseline threshold for certain manufacturing classifications, and 30 Del. C. § 2702(b)(2) establishes a $90,000 baseline threshold for specific wholesale subcategories. Each chapter of Part III of Title 30 should be consulted for the threshold applicable to a particular licensed activity.

Annual inflation adjustment mechanism

Under 30 Del. C. § 515, the Department of Finance calculates a threshold adjustment factor each year by dividing the June CPI-U figure for the current year by the June 2016 CPI-U figure. Each statutory threshold is then multiplied by this factor. For thresholds under $1,000,000, the product is rounded to the nearest $10; for thresholds $1,000,000 and above, it is rounded to the nearest $1,000. The Department publishes the adjusted thresholds no later than November 15, and the new thresholds apply to filing-frequency determinations for the following calendar year.

Source: 30 Del. C. § 515

Lookback-period definition and filing-frequency assignment

The lookback period is defined at 30 Del. C. § 2122 as the 12-month period between July 1 and June 30 immediately preceding the taxable year for which filing frequency is determined. The Division of Revenue reviews each taxpayer's gross receipts during this period and assigns either monthly or quarterly filing for the upcoming calendar year. Taxpayers do not elect their filing frequency. A business that was not required to be licensed under a specific chapter during the entire lookback period is deemed to have had no taxable gross receipts for that chapter during that period and will be assigned quarterly filing.

The Director of Revenue may, by regulation or by instructions accompanying returns, waive quarterly filing in the case of taxpayers who have had no taxable gross receipts within a quarter. In no event may a taxpayer required to report gross receipts file less frequently than annually.

Source: 30 Del. C. § 2122

New businesses

All new businesses are automatically assigned quarterly filing status when they first register. The Division performs its first lookback analysis after the business has completed its first full lookback period (July 1 – June 30), and filing frequency is adjusted (if warranted) beginning with the following calendar year.

Source: Delaware Division of Revenue — Gross Receipts Tax FAQs

Aggregation and exclusions

When a business operates through multiple branches or entities with common ownership or common direction and control, those entities are treated as a single enterprise for purposes of the filing-frequency threshold and the gross receipts exclusion. The lookback receipts are aggregated across all locations, and the enterprise is entitled to only one monthly or quarterly exclusion per business activity, not one per location.

Source: Delaware Division of Revenue — Gross Receipts Tax FAQs

Businesses that become subject to Delaware's gross receipts tax must obtain a Delaware business license from the Division of Revenue before engaging in or carrying on any trade or business in the state. The license is required at the time business commences in Delaware, and the license fee must be paid in conjunction with the registration.

License registration process

Businesses register online through Delaware's One Stop Business Licensing and Registration Service, which allows simultaneous registration with the Division of Revenue and other state and federal entities. The One Stop system generates a temporary business license that may be printed immediately upon completion of the registration. A permanent license certificate is then mailed within 10 working days. Businesses may also obtain a temporary license in person at a Division of Revenue Public Service Office.

Source: Delaware Division of Revenue — Business Licenses FAQs

License fees

The annual license fee for most business activities is $75 for a first location. License fees are set by statute in Title 30, Chapter 23 of the Delaware Code (which enumerates fees by specific business activity classification). The fee is pro-ratable for the first year of activity based on the number of full calendar months remaining in the year. A separate license is required for each separate business activity at a location, and additional locations require additional licenses.

Source: Delaware Division of Revenue — Step 2: Requirements for Delaware Businesses

The statutory fees for specific business classifications are codified in 30 Del. C. § 2301 (occupational licenses), § 2502 (contractors), § 2702 (wholesalers and manufacturers), and related sections.

Source: 30 Del. C. § 2301

License term and renewal

All Delaware business licenses are issued for a term of one year and expire on December 31, regardless of the date of initial issuance. After the first year, businesses may renew for either one year or, at their option, three years. The cost of a three-year license is not discounted; businesses pay three times their regular annual fee.

Source: 30 Del. C. § 2106

The Division of Revenue sends renewal notices annually (or every three years for three-year licenses), but licensees are responsible for renewing by December 31 whether or not they receive a notice. Renewals may be completed online through the Division of Revenue portal at tax.delaware.gov.

Source: Delaware Division of Revenue — Business Licenses FAQs

Statutory licensing requirement

30 Del. C. § 2101 provides: "No person shall engage in or carry on any trade or business for which a license is required by this part without first having obtained a license therefor from the Department of Finance and paid therefor the fee or tax prescribed in this part." The license requirement is separate from and in addition to the obligation to file gross receipts tax returns and remit tax.

Source: 30 Del. C. § 2101

Registration information required

To complete the One Stop registration, businesses must provide their Federal Employer Identification Number (FEIN) or, for sole proprietors with no employees, their Social Security Number. If the business is a corporation, limited liability company, limited partnership, or other entity formed under Delaware law (or a foreign entity authorized to transact business in Delaware), the business must first register with the Delaware Division of Corporations and obtain entity authorization before applying for a business license from the Division of Revenue.

Source: Delaware Division of Revenue — Step 2: Requirements for Delaware Businesses

Delaware does not distinguish between temporary and permanent physical presence for gross receipts tax nexus purposes. The Division of Revenue has confirmed that "temporary or permanent presence" of employees or property creates nexus, and Delaware statutes require any person engaging in business in the state to obtain a license before commencing that activity, without regard to duration. Delaware has published no de minimis threshold, minimum-duration requirement, or safe harbor for short-term physical presence.

Statutory licensing requirement

30 Del. C. § 2101 provides: "No person shall engage in or carry on any trade or business for which a license is required by this part without first having obtained a license therefor from the Department of Finance and paid therefor the fee or tax prescribed in this part." The statute does not differentiate between temporary and permanent activity. Any person who "engage[s] in or carry[ies] on" a trade or business in Delaware must obtain a license before beginning that activity.

Source: 30 Del. C. § 2101

Division of Revenue guidance on temporary presence

The Delaware Division of Revenue has explicitly addressed temporary presence in its Vapor Products FAQs. The Division states: "Nexus is created if your company or any of its affiliates maintain a temporary or permanent presence of employees or property (inventory, offices, warehouses) in Delaware." The Division's use of the disjunctive—"temporary or permanent"—indicates that the temporal nature of the presence does not limit nexus. This guidance, while published in the context of vapor product excise tax and business licensing for vapor product dealers, is consistent with the general licensing requirement in 30 Del. C. § 2101 and the Division's broader position that physical presence, not duration or sales volume, determines gross receipts tax nexus.

Source: Delaware Division of Revenue — Vapor Products FAQs

Examples in Division guidance

The Vapor Products FAQ identifies "temporary or permanent presence of employees or property (inventory, offices, warehouses)" as nexus-creating activities. The Division does not enumerate every scenario or provide bright-line rules for what constitutes "engaging in" business for temporary-presence purposes. Businesses uncertain whether a specific temporary activity—such as attending a trade show, performing a short-term installation or service project, or storing inventory on a seasonal basis—creates nexus should consult the Division's Nexus Questionnaire, which allows businesses to submit their fact pattern for a Division determination.

The Division's Business Licenses FAQ advises: "If you are unsure of whether or not you have substantial presence in Delaware to be subject to licensing and taxation, complete and submit our Nexus Questionnaire and the Delaware Division of Revenue will provide guidance." The FAQ uses the term "substantial presence" but does not define it or quantify it. The Vapor Products FAQ's explicit inclusion of "temporary" presence suggests that "substantial" does not impose a temporal floor.

Source: Delaware Division of Revenue — Business Licenses FAQs

No economic nexus for gross receipts tax

Delaware has not adopted an economic nexus standard for gross receipts tax. Purely remote sellers with no physical presence in Delaware are not subject to the tax, regardless of their Delaware-sourced sales volume. Physical presence—temporary or permanent—remains the sole nexus trigger. An out-of-state business with substantial Delaware sales but no employees, property, or other presence in the state has no gross receipts tax obligation. Conversely, a business with even brief physical presence in Delaware during a tax period must evaluate its licensing and gross receipts tax filing obligations for that period.

Retroactive compliance and penalties

Delaware business licenses must be obtained before commencing business in the state. A business that discovers it had physical presence in Delaware during a prior period without a license should register with the Division of Revenue, file any required gross receipts tax returns for the period of nexus, and pay applicable license fees, tax, penalties, and interest. 30 Del. C. § 2119 authorizes fines up to $3,000 and imprisonment up to two years for carrying on a licensed occupation without a license, although the statute does not specify how the Division applies these penalties in practice.

Source: 30 Del. C. § 2119