Texas vs Delaware LLC (2026): Which State Is Better for Your Business?

The main difference is cost and legal system. A Texas LLC costs $300 to form with no annual state tax for most businesses and uses the new Texas Business Court. A Delaware LLC costs $110 but charges a $400 flat annual franchise tax and uses the established Court of Chancery. Texas fits operating businesses wanting low ongoing costs; Delaware fits investor-backed companies wanting settled case law.

Delaware is cheaper to start at $110 versus $300, but Delaware's flat $400 annual tax makes it more expensive over time, while most Texas LLCs owe no yearly tax. Over a few years, Texas usually works out cheaper for a small business.

The new Texas Business Court and 2025 reforms to the Texas Business Organizations Code offer a predictable, code-based legal framework. Tesla, Dell, and Coinbase cite this and a higher bar for shareholder lawsuits as the reason.

The Delaware LLC franchise tax is a flat $400 per year as of August 1, 2026, up from $300. Every Delaware LLC owes it by June 1, regardless of revenue, and there is no annual report for LLCs.

Texas does not charge a flat annual tax. Texas LLCs file a franchise tax report each year, but most owe $0 because revenue stays below the $2.65 million threshold. You only pay once revenue passes that level.

Yes, but it rarely pays off. You would register the Delaware LLC in Texas as a foreign LLC, meaning two registered agents and fees in both states, plus Delaware's $400 annual tax. A Texas LLC is usually simpler and cheaper.

A startup raising venture capital often benefits from a Delaware corporation, since investors prefer it. A bootstrapped business operating in Texas may prefer a Texas LLC for lower ongoing cost and the new Texas Business Court. Match the state to your funding path.

The Texas Business Court began hearing cases in 2024 to handle complex business disputes. Its judges are appointed for experience, and Texas entities can require internal claims be heard there. It is Texas's answer to the Delaware Court of Chancery.

The Court of Chancery is Delaware's specialized business court, over a century old, that resolves corporate disputes without juries. Its deep case law and predictable rulings are the main reason companies have historically incorporated in Delaware.

A Texas LLC costs $300 to file the Certificate of Formation with the Texas Secretary of State. Veterans can file for $0. There is no annual report fee, though LLCs file a franchise tax report each year.

A Delaware LLC costs $110 to file the Certificate of Formation with the Delaware Division of Corporations. The ongoing cost is the flat $400 annual franchise tax, due every June 1.

Yes. Delaware does not list LLC members or managers in public records, giving stronger owner privacy. Texas offers standard privacy, with some ownership details more accessible.

Every LLC needs a registered agent in its state of formation with a physical address there. If you form in one state but operate in another, you will need a registered agent in both, which adds cost.

For most small businesses operating in a single state, no. Delaware's advantages are built for investor-backed companies. A small business usually pays Delaware's $400 tax plus foreign registration at home for no real benefit.

Both have no income tax on out-of-state LLC income. Texas charges franchise tax only above $2.65 million in revenue, so most small LLCs owe nothing. Delaware charges a flat $400 to every LLC regardless of revenue.

Yes. Neither state requires US citizenship or residency to own an LLC. Non-residents can form in either state, though Delaware is often chosen for its familiarity with international and investor structures.

Both states process online filings within a few business days. Delaware is known for fast, same-day expedited options, and Texas typically approves within five to seven business days online.

Yes. Venture capital firms and investors are familiar with Delaware entities and often require a Delaware C-corporation for funding rounds. This investor familiarity is Delaware's strongest advantage for high-growth startups.

You still owe Delaware's $400 annual franchise tax and must maintain a Delaware registered agent. If you operate elsewhere, that state also requires foreign registration, so you pay in two states for one business.

Converting (redomiciling) from Delaware to Texas can make sense if your business operates in Texas and you want to drop Delaware's annual tax and use the Texas Business Court. Many companies did this in 2026. Weigh the conversion cost against the ongoing savings.