On April 24, Maryland Governor Larry Hogan signed Senate Bill 1090 and House Bill 1794, which adds Maryland to the growing list of states that are moving towards a single sales factor formula to apportion corporate net income.
- Under prior Maryland law, most corporations generally used a three-factor formula based on in-state property, payroll and a double-weighted sales factor.
- The newly enacted Bills provide a four-year phase-in period to transition from Maryland’s current three-factor formula to a single sales factor formula by tax year 2022.
- Interestingly, the Bills also allow certain “Worldwide Headquartered Companies” to elect to use the current three-factor formula rather than the new single sales factor formula.