Sales and Use Taxes in Delaware

April 13, 2006

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Delaware has no general sales tax. Instead, the state imposes a tax called a manufacturers' and merchants' license tax. This is similar to a sales tax because it is assessed against gross sales. However, it applies to only the following types of businesses:

contractors
manufacturers
wholesalers
food processors
commercial feed dealers
retailers
restaurant retailers
grocery supermarkets
farm machinery dealers

If your business falls into one of these categories, then you're going to need to know how to figure out this tax. There is no provision in the law for passing the tax directly on to consumers.

The manufacturers' and merchants' license tax is determined by taking the manufacturers' and merchants' license tax rate and multiplying it by the gross receipts. We recommend that you carefully assess the type of business you do. The rates will vary considerably depending on the industry you're in.

The applicable rates are as follows:

contractors — $75, plus 0.624 percent of the aggregate gross receipts less a monthly deduction of $50,000
manufacturers — $75, plus 0.18 percent of aggregate gross receipts less a monthly deduction of $1 million
wholesalers — $75 plus 0.384 percent of aggregate gross receipts (less a $50,000 monthly deduction)
food processors — $75, plus 0.192 percent of aggregate gross receipts less a monthly deduction of $50,000
commercial feed dealers — $75, plus 0.096 percent of aggregate gross receipts less a monthly deduction of $50,000
retailers — $75 plus $25 per business location, plus 0.72 percent of aggregate gross receipts from goods sold or services rendered less a monthly deduction of $50,000. Transient retailers pay $25 plus 0.72 percent of aggregate gross receipts over $3,000.
restaurant retailers — $75 plus $25 per business location, plus 0.624 percent of aggregate gross receipts less monthly deduction of $50,000
farm machinery, supplies or materials retailers — $75, plus 0.096 percent of aggregate gross receipts less a monthly deduction of $50,000
grocery supermarkets — $75 plus $25 per branch plus 0.384 percent of the first $2 million per month and 0.72 percent thereafter, less monthly deduction of $50,000