HB 2680 Summary

• Extends the transitional apportionment method for business income through December 31, 2023, allowing taxpayers to choose between a three-factor formula or a sales-factor-only method.

• Requires all taxpayers to use the three-factor apportionment method (property, payroll, and sales) beginning January 1, 2024, eliminating the sales-factor-only option.

• Establishes a new market-based sales sourcing system for non-tangible personal property sales effective January 1, 2024, based on where the customer is located or where the property is used.

• Provides specific market-sourcing rules for real property rentals, loans, investment assets, services, and intangible property, with aircraft deemed used in Arizona based on the fraction of landings in the state.

• Terminates the multistate service provider election for treating service sales under combined income-producing activity and market sales methods after December 31, 2023.