United States

Delaware to shift to single sales factor apportionment


Delaware recently enacted legislation that, among making other changes, will gradually phase in single sales factor apportionment for corporate income tax purposes for tax years beginning on or after Jan. 1, 2017.

In general, for the 2017 tax year, the sales factor will be weighted at 50 percent, increasing to 60 percent for the 2018 tax year, 75 percent for the 2019 tax year, and 100 percent for tax years after 2019, eliminating the payroll and property factors.

However, telecommunications corporations and corporations with worldwide headquarters in Delaware may elect to utilize 100 percent sales factor apportionment starting with the 2017 tax year.

Delaware has historically applied an equally weighted three-factor formula based on property, payroll and sales, and was the last East Coast state to continue to use this formula. This legislation marks an important step in the accelerating trend away from the use of property and payroll factors in apportioning corporate income and should prove to be a boon for Delaware-based manufacturers and retailers with sales outside of the state.

Rob Van Gulick

Senior Director

Rob focuses on multi-state tax consulting and planning for corporations, S corporations, partnerships and executives. Reach him at rob.vangulick@rsmus.com.

Areas of focus: State Income and Franchise TaxSales and Use Tax