The Tennessee Works Tax Act, Public Chapter 377 (2023), transitions Tennessee from a three-factor apportionment formula to a single sales factor apportionment formula over a three-year period. Single sales factor apportionment will be mandatory for taxpayers who use the standard apportionment formula.

Single sales factor apportionment will be phased in over a three-year period by gradually increasing the weighting of the sales factor in the three-factor apportionment formula as follows:

- For tax years ending on or after December 31, 2023, but before December 31, 2024, the sales factor of the standard, three-factor apportionment formula will be weighted five (5) times, and the total of the property, payroll, and sales factors will be divided by seven (7).
- For tax years ending on or after December 31, 2024, but before December 31, 2025, the sales factor of the standard, three-factor apportionment formula will be weighted eleven (11) times, and the total of the property, payroll, and sales factors will be divided by thirteen (13).
- For tax years ending on or after December 31, 2025, the standard apportionment formula will consist of the sales factor only.

**Note: This article was updated on May 16, 2023, as a result of a law change. The previous version of F&E Apportionment-9 is available here.**

Reference: Tenn. Code Ann. §§ 67-4-2012(a)(2); 67-4-2111(a)(2).

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