Every state – with the exception of three states – has a form of business income tax including corporate income tax, franchise tax, or gross receipts tax.  The extent (if any) that a Company will need to pay additional State business income tax will depend on three factors.  These factors include the percentage of sales, property, or payroll the Company has in a particular state.  States have different policies for how a Company’s net income is allocated across these three factors.  For example, Alabama has a 3-factor formula where it equally weights sales, property, and payroll in the State.  On the other hand, Nebraska has allocates 100% into sales.  States with an extra weighting on sales are attractive to capital intensive industries.  These industries tend to have a lot of payroll and property in a state with most of their sales generated from other states.