Key takeaways
- Delaware recognizes the federal S election, but every S corporation with Delaware-source income files Form SCT-RTN.
- For tax year 2026 the return is due March 15, 2027, and the nonresident shareholder tax is computed at 6.60%.
- A federal extension extends the Delaware filing date, but it does not extend the time to pay.
- The last 2026 estimated payment for a calendar-year corporation is due December 15, 2026.
- Franchise tax and the annual report are due March 1, separate from the income tax return.
What Delaware requires from an S corporation
Under 30 Del. C. section 1621(a), a pass-through entity as such is not subject to the Delaware income tax. The Division of Revenue states that every S corporation deriving income from sources within Delaware must still file Form SCT-RTN, the S Corporation Reconciliation and Shareholders Information Return. By that wording, a Delaware-incorporated company with no Delaware-source income has no SCT-RTN, but it still owes franchise tax.
The return starts from the federal Form 1120-S, apportions income to Delaware, adjusts it, and taxes the nonresident shareholders' share. The Delaware instructions require a copy of the federal Form 1120-S with every schedule, including Schedule K and Schedule K-1, and say that Form SCT-SSR is needed for each resident and nonresident shareholder because federal Schedule K-1 cannot replace it.
The Division accepts MeF e-filing for S corporation returns but says returns with attachments must be filed on paper. Check what your software does before promising an e-file confirmation.
Due dates for tax year 2026
Form SCT-RTN is due on the 15th day of the third month after year end. For a calendar-year corporation that is March 15, 2027, the same day as the federal Form 1120-S. A due date falling on a weekend or holiday moves to the next business day.
The Division's corporate income tax page says a federal extension automatically extends the Delaware due date, and the instructions say to attach a copy of the federal extension (Form 7004) to the final return. The Division's 2026 due date table shows SCT-EXT, the Delaware extension form, due March 15, 2027 and extending the filing date to September 15, 2027.
The payment side is where firms get caught. The instructions say a timely extension does not extend the time to pay and that the nonresident shareholder tax must be remitted with the request for extension. My rule: if the corporation has nonresident shareholders and a balance on SCT-RTN line 14 is possible, send the SCT-EXT with payment by March 15 even when the federal Form 7004 is already filed.
For tax year 2025 the federal Form 1120-S was due March 16, 2026, so do not reuse that date.
Nonresident shareholder tax, with a worked example
The corporation pays the tax for its nonresident shareholders. Under title 30 section 1158(a), the amount equals the highest personal income tax rate applied to the nonresident's share of distributive income apportioned to Delaware, which the instructions state as 6.60%. On the 2025 form, line 6 is the percentage of stock owned by nonresidents, line 7 is distributive income attributable to them, and line 8 is line 7 multiplied by 6.60%.
Apportionment is the average of three factors: property, wages and gross receipts. Rented property is valued at 8 times annual rent, and wages of general executive officers come out of the wage factor.
Illustrative example, simplified. Federal Schedule K line 1 ordinary income is $240,000. The property factor is 40%, wages 60% and receipts 50%, so the apportionment percentage is 50% and Delaware ordinary income is $120,000. Add back $10,000 of interest on another state's bonds, and line 5 is the sum of the two. One of two shareholders, owning 40%, lives in Virginia, so line 7 is 40% of line 5 and line 8 is 6.60% of line 7. Estimated payments already made through SCT-TAX come off on line 9.
A refund is not paid to the corporation. Nonresident shareholders claim any overpayment on their own Delaware returns, with Delaware Schedule A-1 attached.
Estimated payments: the December 15, 2026 installment
A corporation with nonresident shareholders declares and pays estimated tax on Form SCT-TAX. The Division's table lists the calendar-year 2026 dates as April 15, 2026, June 15, 2026, September 15, 2026 and December 15, 2026. That last date is five weeks away.
Under the tax year 2024 instructions, a regular corporation pays 50% in the fourth month, then 20%, 20% and 10%. A small corporation, meaning aggregate gross receipts not over $20,000,000 in any of the three preceding years, pays 25% each time. The declaration is due even at zero.
The underpayment penalty is 1.5% per month. The instructions say there is no penalty when payments equal at least 80% of the current year's tax or 100% of the preceding year's tax. A client whose payments add up to last year's full tax clears the 100% test however 2026 turns out.
These installment percentages come from the 2024 instructions, so confirm them before December.
Composite returns and the election that does not exist
Instead of filing individual returns, qualifying nonresidents can be included in a composite return on Form CMP-TAX. The instructions require that each one is a nonresident for the full year, has no other Delaware-source income including the spouse's, and has the same tax year end.
Ask each nonresident: 'Did you or your spouse have any other income from Delaware sources in 2026, such as rent, wages for work done in Delaware, or another business?' If yes, the shareholder files a Delaware nonresident return instead.
I found no elective entity-level pass-through tax in Delaware's code or on the Division's pages as of November 2026. Section 1621(a) says a pass-through entity is not subject to the income tax. So Delaware offers no entity-level workaround for the federal SALT limit.
Franchise tax and gross receipts tax
A Delaware corporation that elected S status still owes franchise tax and an annual report to the Division of Corporations, due on or before March 1. The Authorized Shares Method has a minimum of $175 and the Assumed Par Value Capital Method has a minimum of $400. The annual report fee for a non-exempt domestic corporation is $50. A late filing carries a $200 penalty plus 1.5% interest per month.
The Authorized Shares Method can produce a large bill when the charter authorizes many shares, so compare both methods before the client pays.
If the corporation sells goods or services in Delaware, it also needs a Delaware business license and pays gross receipts tax. Rates run from .0945% to 1.9914% with no deduction for costs, and new businesses start as quarterly filers. Monthly filers pay by the 20th day of the following month, and quarterly filers by the last day of the month after quarter end.
Penalties
Delaware charges 5% of the tax per month for a late SCT-RTN, up to 50%, plus interest of 1/2% per month, and a further 1% per month for failure to pay, capped at 25%.
The federal late-filing penalty is separate. For returns required to be filed in 2026, which means tax year 2025, it is $255 per shareholder per month or part of a month. Check the 2026 instructions for the tax year 2026 amount before you quote a figure.
Documents to collect from the client
Delaware needs facts the federal return does not carry. Ask for: a shareholder list with each person's state of residence for the full year and the percentage held on every day; any shareholder's other Delaware income; payroll by state; property owned and annual rent paid by state; gross receipts by state; interest from non-Delaware state and municipal bonds; and copies of every SCT-TAX payment confirmation.
Exact wording that works: 'For each shareholder, please upload the home address they lived at on December 31, 2026 and tell us whether they moved states during the year.' A move mid-year breaks the full-year nonresident test for the composite return.
Usual can hold this as one request with a file field for each document and a not applicable answer for items that do not apply, such as Delaware rented property, with reminders that continue until the items are in.