Updated February 2021

Businesses that are taxable in Washington and another state may use our apportionment formula to determine how much of their apportionable income is subject to business and occupation (B&O) tax in Washington (RCW 82.04.462).

Apportionable income means gross income from engaging in apportionable activities after taking exemptions and deductions (other than the interstate and foreign sales – apportionment deduction) (RCW 82.04.460).

Starting Jan. 1, 2020, taxable in another state means the business meets any of the following requirements in the current or prior calendar year:

  • Is subject to a business activities tax by another state or country on income received from engaging in apportionable activity.
  • Has a physical presence nexus in the other state or country.
  • Has more than $100,000 in gross receipts sourced or attributed to the other state or country.
  • Is organized or commercially domiciled in the other state or country.

In determining whether a business has exceeded the receipts threshold, apportionable income attributed to another state or country is included along with its retail and wholesale sales sourced to the same state or country.

If you do not meet any of the above requirements then your gross income is taxable in Washington and is not eligible to be apportioned to other states or countries.

For requirements before Jan. 1, 2020, see our Out of state businesses reporting thresholds and nexus.

Apportionment formula

Taxable income is determined by multiplying a taxpayer’s apportionable income from each apportionable activity by the receipts factor for that apportionable activity.

This formula is:

B&O taxable income = Apportionable income X Receipts factor

The receipts factor is a fraction.

  • The numerator is the total gross apportionable income attributed to Washington during the current tax year.
  • The denominator is the total gross apportionable worldwide income during the current tax year minus throwout income.

Receipts factor = Washington income / (Worldwide income – Throwout income)

Throwout income

Gross income from engaging in an apportionable activity is excluded from the denominator of the receipts factor if both of the following are true:

  • The income is attributed to a state where the taxpayer is not “taxable in another state.”
  • At least some of the activity is performed in Washington.

Attributing income

For information regarding how to attribute your income, see our webpage regarding Attributing income.


If you are eligible to apportion your income, you may be able to take an Apportionment (Interstate and Foreign sales) deduction.

Reconciling your apportionable income

Once you have the information necessary to determine the receipts factor for an entire calendar year, you must file a reconciliation and either obtain a refund or pay any additional tax due. The reconciliation is due by Oct. 31 of the following year. A reconciliation can be filed electronically through My DOR. Learn how to file an apportionment reconciliation in My DOR.

If you are unable to complete the online form, you may complete the paper form.

Amend a return originally filed with no business

If you file a tax return reporting no business activity and later discover that you did have business activity to report for that period, you should amend that return. Do not adjust a later return for the additional revenue to report. If you amend to report activity on a return that was previously reported with no activity, penalties will apply.


Attributing service income

B&O classifications subject to apportionment

Annual Reconciliation of Apportionable Income