What is Apportionment (state income tax)?
In short
Apportionment divides a multistate business's income among the states where it has nexus, using a formula based on factors such as property, payroll and sales in each state.
Key takeaways
- Many states now use a single sales factor, which shifts tax toward the states where customers are.
- Throwback rules assign sales to states where the seller isn't taxable back to the state they were shipped from.
- Nonbusiness income, such as some investment income, may be allocated to one state instead.
Where it's tested
TCP: Multi-Jurisdictional & International Basics — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
In state apportionment, the sales factor generally measures: