Historically, Delaware has been a very popular place to incorporate a company for many reasons. (See here.) Businesses likely aren’t incorporating in Delaware because of taxes though. However, there are some advantageous aspects of Delaware tax law for corporations.
Delaware does not tax the income earned from intangible assets such as trademarks, copyrights and leases. Thus, business or individuals can simply park their intangible assets in their Delaware corporations and not worry about being taxed on any income generated from those assets. These corporations can also use some of these intangible assets as business deductions in other states and further reduce their tax liability outside of Delaware. Delaware does not impose state sales taxes or personal property taxes, so having a physical corporate office in the state is not as expensive as it may be other states with more rigorous tax laws. Delaware also allows the formation S-Corporations which are not typically subject to federal taxes. So, although companies aren’t flocking to Delaware solely for taxes, there are some attractive parts.
Even with all the benefits associated with incorporating in Delaware, you should always consult a legal professional to determine the best jurisdiction to incorporate for your specific business.