Virginia Code

Va. Code Ann. § 58.1-408 (2026)

What income apportioned and how

✓ current as of May 2026

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A. The Virginia taxable income of any corporation, except those subject to the provisions of § 58.1-417, 58.1-418, 58.1-419, 58.1-420, 58.1-422, 58.1-422.1, 58.1-422.2, or 58.1-422.3, excluding income allocable under § 58.1-407, shall be apportioned to the Commonwealth by multiplying such income by a fraction, the numerator of which is the property factor plus the payroll factor, plus twice the sales factor, and the denominator of which is four; however, where the sales factor does not exist, the denominator of the fraction shall be the number of existing factors and where the sales factor exists but the payroll factor or the property factor does not exist, the denominator of the fraction shall be the number of existing factors plus one.

B. Any eligible company, as defined in § 58.1-405.1, may subtract from the numerator of the corresponding factor the value of its (i) property acquired in any qualified locality or qualified localities, as defined in § 58.1-405.1, on or after January 1, 2018, but before January 1, 2025; (ii) payroll attributable to jobs created on or after January 1, 2018, but before January 1, 2025, in any qualified locality or qualified localities; and (iii) sales in the Commonwealth during the taxable year. Such eligible company may make such modification for the taxable year in which it first becomes eligible and for the six subsequent, consecutive taxable years, except for any year in which the eligible company's (a) total, cumulative new capital investment falls below the applicable initial threshold or (b) number of new jobs falls below the applicable initial threshold.

Code 1950, § 58-151.041; 1971, Ex. Sess., c. 171; 1981, c. 402; 1984, c. 675; 1999, cc. 158, 186; 2009, c. 821; 2012, cc. 86, 666; 2015, cc. 92, 237; 2018, cc. 801, 802, 807.

Notes of Decisions

Cited in 6 cases (3 in the last 5 years), 1988–2024 · leading case: Com., Dept. of Taxation v. Delta Air Lines, 513 S.E.2d 130 (Va. 1999).

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Com., Dept. of Taxation v. Delta Air Lines, 513 S.E.2d 130 (Va. 1999). · cites it 4× “See Code § 58.1-408. The three factors used were a property factor, payroll factor, and sales factor.”

Dep't of Taxation v. Westmoreland Coal Co., 366 S.E.2d 78 (Va. 1988). · cites it 2× “049 (now Code §§ 58.1-408 through -416). 4 The parties represented to the Court that they have been able to agree to the precise amount of the assessment.”

Virginia Dep't of Taxation v. R.J. Reynolds Tobacco (Va. 2022). · cites it 6× “3 Code §§ 58.1-408–409. For all tax years relevant to this appeal, on its original Virginia corporation income tax returns, Lorillard included the value of its entire leaf tobacco inventory which was aging in its Danville Facilities, in calculating its Virginia property factor.”

The Corp. Exec. Bd. Co. v. Dept. of Taxation (Va. 2019). · cites it 4× “Code § 58.1-408. Many States employ a similar approach.”

Commonwealth of Virginia, Dep't of Taxation v. 1887 Holdings, Inc. etc. (Va. Ct. App. 2023). · cites it 4× “See Code § 58.1-408. However, manufacturers that meet certain requirements may utilize an alternative apportionment method to determine taxable income.”

Commonwealth of Virginia, Dep't of Taxation v. FJ Mgmt., Inc., d/b/a FJI, Inc. (Va. Ct. App. 2024). · cites it 2× “Code §§ 58.1-408, -409, -412, -414. Here, FJM argues that the Department, by requiring FJM to combine PTC’s apportionment factors with FJM’s apportionment factors for the Tax Years, imposed unconstitutional taxation on FJM’s income earned from its independent business operations…”

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