Understanding Delaware Sales Tax: An Overview

Do You Need to Collect and Remit Sales Tax in Delaware?

Delaware is one of few U.S. states with no state or local sales tax. As a result, goods and services sold in Delaware are not subject to traditional sales tax, and businesses do not collect a percentage of sales from customers as in they would in other states.

However, Delaware does impose other business taxes—most notably the Gross Receipts Tax (GRT)—and requires certain registrations, filings, and ongoing compliance.

Do You Have Sales Tax Nexus in Delaware?

Because Delaware does not impose a state or local sales tax, sales tax nexus does not apply. This is true for both brick-and-mortar businesses and remote or online sellers.

That said, businesses operating in Delaware—including in-state retailers—are responsible for Gross Receipts Tax and are required to obtain an annual Delaware business license.

Are Marketplace Facilitators Required to Collect and Remit Sales Tax in Delaware?

No. Since Delaware does not have a sales tax, marketplace facilitators (such as Amazon, eBay, Etsy, or Walmart Marketplace) are not required to collect or remit sales tax on behalf of third-party sellers.

However, as with any business operating in Delaware, a marketplace facilitator that has a physical presence in the state may have a Delaware Gross Receipts Tax obligation.

What Platforms Are Marketplace Facilitators?

Common examples include:

• Amazon   
• eBay  
• Shopify Shop App
• Etsy   
• Walmart (online)

What Is a Marketplace Facilitator?

A marketplace facilitator is an online platform that enables third-party sellers to offer goods or services. In sales tax states, these platforms may be responsible for collecting and remitting tax on behalf of sellers; in Delaware, because there’s no sales tax, this responsibility doesn’t apply.

Filing Delaware Gross Receipts Tax

Delaware does not require sales tax returns because no sales tax exists. Instead, businesses with taxable activity in the state need to register for and file Gross Receipts Tax returns.

Gross Receipts Tax Licensing

All businesses in Delaware must register and obtain a Delaware business license, which establishes the business’s Gross Receipt Tax accounts. Delaware offers an online registration system to apply for a license.

Most Delaware business licenses must be renewed annually.

Collecting Gross Receipts Tax

Unlike sales tax, Gross Receipts Tax is not collected from the consumer. It is a business-level tax levied directly on the seller and is based on total gross revenue from goods sold or services provided in Delaware.

Gross Receipts Tax rates vary by industry and type of activity, ranging from 0.0945% to 1.9914%. If a business earns revenue from more than one type of activity, separate Gross Receipts Tax reporting is required for each classification.

Also unlike sales tax, Delaware does not allow deductions for business expenses such as materials, labor, or overhead. However, some businesses may qualify for Gross Receipts Tax exclusions based on business activity and revenue thresholds.

When Are Gross Receipts Tax Returns Due in Delaware?

Delaware assigns businesses either a monthly or quarterly Gross Receipts Tax filing schedule. New businesses are assigned a quarterly filing schedule initially. The state later applies a “look-back period” to determine whether the business should switch to monthly filing based on revenue levels.

Gross Receipts Tax filing deadlines are:

• Monthly filers: Due by the 20th of each month
• Quarterly filers: Due by the last day of the month following the end of the quarter

As of January 1, 2021, online filing is required for gross receipts taxes. Returns must be filed through the Delaware Division of Revenue’s online portal at tax.delaware.gov.