# Delaware Contractor Taxes and Licensing: What Trades Need to Know

Delaware has no sales tax, so you don't charge customers tax on labor or materials. Instead, every contractor pays a gross receipts tax of 0.6472% on construction receipts above $100,000 a month, with no deduction for labor or material costs. You also need a Division of Revenue business license and Department of Labor contractor registration.

## Key takeaways

- No sales tax to collect. The gross receipts tax is levied on you, the seller, not on the customer.
- The contractor rate is 0.6472% of gross receipts, after a $100,000 monthly ($300,000 quarterly) deduction.
- You need two registrations: a $75 Division of Revenue contractor license and a Department of Labor contractor registration ($200 to start).
- Nonresident contractors post a bond of 6% on contracts of $20,000 or more.
- Electricians, plumbers and HVACR contractors are licensed by state boards under the Division of Professional Regulation.

## What's unusual about contracting in Delaware?

You won't add sales tax to an invoice here. Delaware's Tourism Office advertises "tax-free shopping," and the Division of Revenue says its gross receipts tax "is levied on the seller of goods or services, rather than on the consumer." For contractors, that tax hits the top line: the Division's contractor tax tips say gross receipts include "all sums received for any work done or materials supplied" on real property in the state.

Paperwork is the other surprise. A Delaware contractor typically needs a **business license** from the Division of Revenue, a separate **contractor registration** with the Department of Labor, proof of workers' comp for both, and, if based out of state, a **bond**. Crews coming from [Pennsylvania](https://www.brix.so/taxes/pennsylvania), [Maryland](https://www.brix.so/taxes/maryland) or [New Jersey](https://www.brix.so/taxes/new-jersey) face all of these before the first day on site.

## Do you charge tax on labor in Delaware?

No. With no sales tax, neither your labor nor your materials get a tax line on the customer's bill. What you owe instead is the contractor gross receipts tax, set by Title 30, Chapter 25 of the Delaware Code at **0.6472%** of aggregate gross receipts. The Division of Revenue's current rate table lists the same rate for contractors (business code 331), developers, nonresidents and construction transportation contractors.

How the math works, per the statute and the Division's tax tips:

- **Monthly filers** deduct **$100,000** of receipts each month and file by the 20th of the next month.
- **Quarterly filers** deduct **$300,000** a quarter. The statute puts you on quarterly filing if your lookback-period taxable receipts don't exceed $1,500,000, a threshold that's adjusted annually. New licensees start quarterly.
- **Payments to licensed subcontractors** come off your gross receipts when there's a written agreement stating the sums. Report them on **Form 1280**.
- **Nothing else comes off.** The Division says there are no deductions for material or labor costs, equipment rental, hauling or similar expenses.

> **The Division's own example**
>
> Total gross receipts of $180,000, less $15,000 paid to subcontractors, leaves $165,000. Subtract the $100,000 exclusion and $65,000 is taxable. At 0.006472, that's $421 for the month (Delaware rounds to the nearest dollar).

Because it isn't a sales tax, the labor-vs-materials split that drives pricing in other states doesn't apply here. For how other states draw that line, see [sales tax on labor vs. materials](https://www.brix.so/learn/sales-tax-on-labor-vs-materials).

## What about materials you buy in other states?

Delaware has no resale or capital improvement certificate for you to hand a supplier, because there's no sales tax to exempt. The question is the seller's state. Maryland, for example, says in its Business Tax Tip #18 that if you buy materials in Maryland for a real property contract in another state, you pay Maryland's 6% sales tax and may apply for a refund only if the purchase wouldn't have been taxable where you used it. Pennsylvania suppliers follow Pennsylvania's rules. Read [use tax for contractors](https://www.brix.so/learn/use-tax-for-contractors) before you set up supplier accounts across the line.

## Which licenses do Delaware contractors need?

Delaware doesn't test general contractors, but it does make every contractor register twice. Under Title 30, the Division of Revenue issues a contractor business license for a $75 fee, renewed every year, and you need it "prior to, or in conjunction with, the execution of a contract." It won't issue the license without a workers' comp certificate. Separately, Title 19, Chapter 36 says "a contractor must register under this chapter before performing construction services or maintenance" with the Department of Labor's **Office of Contractor Registration**. That law defines construction services broadly, including landscaping and tree cutting.

**Delaware state licenses and registrations for common trades**

| Trade | Agency | License or registration | Link |
| --- | --- | --- | --- |
| General contractor / home improvement | Division of Revenue + DOL Office of Contractor Registration | Contractor business license ($75/yr) and contractor registration; no state competency exam | [Division of Revenue contractors](https://revenue.delaware.gov/business-tax/contractors/) |
| Electrical | Board of Electrical Examiners (DPR) | Master, master special, limited, limited special, journeyperson, apprentice | [board page](https://dpr.delaware.gov/boards/electrician/) |
| Plumbing | Board of Plumbing, Heating, Ventilation, Air Conditioning and Refrigeration Examiners (DPR) | Master Plumber | [board page](https://dpr.delaware.gov/boards/plumbers/) |
| HVAC / refrigeration | Same board (DPR) | Master HVACR or Master Restricted HVACR | [board page](https://dpr.delaware.gov/boards/plumbers/) |
| Roofing | Division of Revenue + DOL | No state trade license; business license and contractor registration still apply | [DOL contractor registration](https://onestop.delaware.gov/Operate_Contractors) |

_Checked 2026-10-19 against Division of Revenue, Department of Labor and Division of Professional Regulation pages._

DOL registration costs **$200** for the first year, $200 for the second, then **$300** for a two-year registration once you've had two consecutive years. Contractors with a state contract pay $300, $300 and $500. The application asks for proof of Delaware workers' comp. Knowing violations carry civil penalties of **$5,000 to $85,000** each. Building permits and any local business license come from your city or county, so call before you start. See [contractor licenses](https://www.brix.so/learn/contractor-license) for how this compares nationally.

**Nonresident contractors** have extra steps. Title 30 § 375 requires a bond of **6%** of the contract price on contracts of $20,000 or more, or 6% of the total when two or more contracts in one calendar year add up to $20,000. The bond secures payment of Delaware income taxes, license fees, unemployment contributions and withheld taxes. And anyone who hires a nonresident contractor or sub must report it to the Department of Finance on **Form 5060** within 10 days, or face a civil penalty of up to $10,000.

## How does Delaware tax contractor income?

The Division of Revenue describes personal income tax rates "ranging from 2.2% to 5.55% for income under $60,000, and 6.60% for income of $60,000 or over." A single-member LLC that's disregarded federally reports on Schedule C with the Delaware resident return (Form PIT-RES). Multi-member LLCs are partnerships by default and file Form PRT-RTN.

Corporations pay **8.7%** on federal taxable income apportioned to Delaware. The Division says Delaware "recognizes the federal S election and does not impose corporate income tax on pass-through income," though S corps still file Form SCT-RTN. We found no pass-through entity tax election on the Division's pages, so ask your CPA.

Entity fees are separate. The Division of Corporations says Delaware LLCs, LPs and GPs owe a **$400** annual tax by June 1. Corporations file an annual franchise tax report by March 1, with a minimum tax of $175 (authorized shares method) or $400 (assumed par value capital method) and a $50 report fee for non-exempt domestic corporations. Delaware charges a penalty on late estimated income tax payments; check with the Division for current thresholds and dates. To plan payments, use the [quarterly estimated tax calculator](https://www.brix.so/tools/quarterly-estimated-tax-calculator) and read [quarterly estimated taxes for contractors](https://www.brix.so/learn/quarterly-estimated-taxes-for-contractors).

## When do you need workers' comp in Delaware?

Once you have one employee. Title 19 § 2306 applies the workers' comp law to "any employment in which 1 or more employees are engaged." Sole proprietors and partners aren't covered unless they elect in. Up to 8 stockholder-officers of a corporation, or 8 LLC members, can be exempted by written agreement.

Construction is stricter. Under § 2311, any licensed contractor or subcontractor is deemed an employer, and independent contractors working for licensed contractors are covered. The officer exemption shrinks to **4 executive officers**, and sole proprietors or partners working as independent contractors can't rely on the general exclusion. Collect a certificate of insurance or notice of exemption from every sub and keep it for 3 years. The Office of Workers' Compensation in the Division of Industrial Affairs runs the program and offers an employer coverage lookup. More in [workers' compensation](https://www.brix.so/learn/workers-compensation).

> **Not tax advice**
>
> This page reflects Delaware statutes and agency guidance checked in October 2026. Gross receipts rules have exceptions, and cities and counties set their own permit rules. Talk to a CPA who knows Delaware contractors before you set prices or file.

BRIX keeps tax lines on quotes and invoices consistent, syncs with QuickBooks, and tracks your business license, DOL registration and trade licenses so renewals don't sneak up on you. BRIX doesn't determine taxability, file returns or give tax advice.

- [Bookkeeping and tax help](https://www.brix.so/features/bookkeeping-taxes): Keeps expenses categorized, tracks 1099 subcontractors and sales tax, and reminds you of quarterly estimated tax dates. BRIX does not file taxes or give tax advice.
- [Invoicing and payments](https://www.brix.so/features/invoicing-payments): Turns finished jobs into invoices and politely chases unpaid ones until the money is in your account.
- [QuickBooks sync](https://www.brix.so/integrations/quickbooks): Syncs customers, invoices and payments with QuickBooks so the books match the jobs.
- [Compliance and permit tracking](https://www.brix.so/#use-cases): Tracks licenses, safety documents and permits and flags renewals before they lapse.

## Frequently asked questions

### Do Delaware contractors charge sales tax?

No. Delaware has no sales tax, so there's nothing to add to the customer's invoice for labor or materials. Instead, you pay the contractor gross receipts tax of 0.6472% on your construction receipts above the $100,000 monthly deduction.

### What is the Delaware gross receipts tax rate for contractors?

Title 30 of the Delaware Code sets it at 0.6472% of aggregate gross receipts. Monthly filers deduct $100,000 a month; quarterly filers deduct $300,000 a quarter. Payments to licensed subcontractors under a written agreement come off first, but material and labor costs don't.

### Do I need a license to be a contractor in Delaware?

Yes, a business license. The Division of Revenue issues a contractor license for $75 a year, and you must also register with the Department of Labor's Office of Contractor Registration before doing construction services or maintenance. Electrical, plumbing and HVACR work also need a license from the right state board.

### What bond do out-of-state contractors need in Delaware?

Title 30 § 375 requires nonresident contractors to post a bond of 6% of the contract price on contracts of $20,000 or more. If two or more contracts in a calendar year total $20,000, the bond is 6% of that total. The Division of Revenue handles the bond forms.

### How much is Delaware contractor registration with the Department of Labor?

Title 19, Chapter 36 sets the fee at $200 for the initial annual registration, $200 for the second year, and $300 for a two-year registration after that. Contractors with a state contract pay $300, $300 and $500. You need proof of Delaware workers' comp to register.

### Are sole proprietors exempt from workers' comp in Delaware?

Generally yes, unless they elect coverage. But on construction jobs for a licensed contractor, sole proprietors and partners working as independent contractors fall under stricter rules in Title 19 § 2311. General contractors should collect a certificate of insurance or exemption notice from every sub.

### What does a Delaware LLC owe the state every year?

The Division of Corporations says Delaware LLCs owe a $400 annual tax by June 1. That's separate from income tax: a single-member LLC's profit usually flows to the owner's personal return, and the contractor gross receipts tax applies regardless of entity type.

## Related

- [Do Contractors Charge Sales Tax on Labor or Materials?](https://www.brix.so/learn/sales-tax-on-labor-vs-materials)
- [What Is Use Tax for Contractors?](https://www.brix.so/learn/use-tax-for-contractors)
- [What Is a Contractor License?](https://www.brix.so/learn/contractor-license)
- [What Is Workers' Compensation Insurance?](https://www.brix.so/learn/workers-compensation)
- [Quarterly Estimated Taxes for Contractors: How They Work in 2026](https://www.brix.so/learn/quarterly-estimated-taxes-for-contractors)
- [Quarterly Estimated Tax Calculator for Self-Employed Contractors (2026)](https://www.brix.so/tools/quarterly-estimated-tax-calculator)
- [Pennsylvania Contractor Taxes and Licensing: What Trades Need to Know](https://www.brix.so/taxes/pennsylvania)
- [Maryland Contractor Taxes and Licensing: A Guide for Trades](https://www.brix.so/taxes/maryland)
- [New Jersey Contractor Taxes and Licensing: A Guide for Trades](https://www.brix.so/taxes/new-jersey)
- [Self-Employment Tax Calculator (2026)](https://www.brix.so/tools/self-employment-tax-calculator)

## Sources

- [Delaware Code — Title 30, Chapter 25, Contractors](https://delcode.delaware.gov/title30/c025/index.html) (checked 2026-10-19)
- [Delaware Code — Title 30, Chapter 3, Subchapter V (§ 375 nonresident contractor bond)](https://delcode.delaware.gov/title30/c003/sc05/index.html) (checked 2026-10-19)
- [Delaware Division of Revenue — Contractors](https://revenue.delaware.gov/business-tax/contractors/) (checked 2026-10-19)
- [Delaware Division of Revenue — Contractors (Resident and Non-Resident) forms](https://revenue.delaware.gov/business-tax-forms/contractors-resident-and-non-resident) (checked 2026-10-19)
- [Delaware Division of Revenue — Tax Tips for Contractors and Real Estate Developers](https://revenuefiles.delaware.gov/TaxTips/tt-contractor2018.pdf) (checked 2026-10-19)
- [Delaware Division of Revenue — Gross Receipts Tax rate table](https://revenuefiles.delaware.gov/docs/gr_rates.pdf) (checked 2026-10-19)
- [Delaware Division of Revenue — Gross Receipts Tax FAQs](https://revenue.delaware.gov/frequently-asked-questions/gross-receipts-tax-faqs/) (checked 2026-10-19)
- [Delaware Tourism Office — Shopping](https://www.visitdelaware.com/things-to-do/shopping/) (checked 2026-10-19)
- [Delaware Code — Title 19, Chapter 36, Contractor Registration](https://delcode.delaware.gov/title19/c036/index.html) (checked 2026-10-19)
- [Delaware Division of Industrial Affairs — Home](https://industrialaffairs.delaware.gov/en-us/) (checked 2026-10-19)
- [Delaware Division of Professional Regulation — Board of Electrical Examiners](https://dpr.delaware.gov/boards/electrician/) (checked 2026-10-19)
- [Delaware Division of Professional Regulation — Board of Plumbing, HVACR Examiners](https://dpr.delaware.gov/boards/plumbers/) (checked 2026-10-19)
- [Delaware Division of Revenue — Personal Income Tax FAQs](https://revenue.delaware.gov/frequently-asked-questions/personal-income-tax-faqs/) (checked 2026-10-19)
- [Delaware Division of Revenue — Corporate Income Tax FAQs](https://revenue.delaware.gov/frequently-asked-questions/corporate-income-tax-faqs/) (checked 2026-10-19)
- [Delaware Division of Revenue — Limited Liability Company FAQs](https://revenue.delaware.gov/frequently-asked-questions/limited-liability-company-faqs/) (checked 2026-10-19)
- [Delaware Division of Corporations — LLC/LP/GP Annual Tax](https://corp.delaware.gov/alt-entitytaxinstructions/) (checked 2026-10-19)
- [Delaware Division of Corporations — Franchise Taxes](https://corp.delaware.gov/paytaxes/) (checked 2026-10-19)
- [Delaware Code — Title 19, Chapter 23, Workers' Compensation](https://delcode.delaware.gov/title19/c023/sc01/index.html) (checked 2026-10-19)
- [Delaware Office of Workers' Compensation](https://industrialaffairs.delaware.gov/workers-compensation-v1?hsLang=en-us) (checked 2026-10-19)
- [Comptroller of Maryland — Business Tax Tip #18, Real Property Contractors](https://www.marylandcomptroller.gov/content/dam/mdcomp/tax/legal-publications/tips/business/bustip18.pdf) (checked 2026-10-19)

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Written by BRIX Editorial Team. Last updated 2026-10-19. General information, not tax, legal or financial advice.
Canonical: https://www.brix.so/taxes/delaware