diff --git a/.changeset/grumpy-peaches-flow.md b/.changeset/grumpy-peaches-flow.md
new file mode 100644
index 000000000..346e948d9
--- /dev/null
+++ b/.changeset/grumpy-peaches-flow.md
@@ -0,0 +1,5 @@
+---
+'style-dictionary': patch
+---
+
+Fix small issue in type w3c delegate utility type tracking.
diff --git a/.changeset/ninety-geckos-build.md b/.changeset/ninety-geckos-build.md
new file mode 100644
index 000000000..16a3f4768
--- /dev/null
+++ b/.changeset/ninety-geckos-build.md
@@ -0,0 +1,5 @@
+---
+'style-dictionary': patch
+---
+
+Expose typeW3CDelegate utility. Don't take "value" into account anymore to determine that it's a design token, use $value.
diff --git a/__integration__/__snapshots__/w3c-forward-compat.test.snap.js b/__integration__/__snapshots__/w3c-forward-compat.test.snap.js
index 5bc862cdb..38ff8d2f2 100644
--- a/__integration__/__snapshots__/w3c-forward-compat.test.snap.js
+++ b/__integration__/__snapshots__/w3c-forward-compat.test.snap.js
@@ -10,6 +10,7 @@ snapshots["should match snapshot"] =
 :root {
   --colors-black-500: rgb(0, 0, 0);
   --colors-black-dimension: 5px; /* Some description */
+  --colors-foo: rgb(0, 0, 0);
 }
 `;
 /* end snapshot should match snapshot */
diff --git a/__integration__/w3c-forward-compat.test.js b/__integration__/w3c-forward-compat.test.js
index b47add1f4..4d1b02238 100644
--- a/__integration__/w3c-forward-compat.test.js
+++ b/__integration__/w3c-forward-compat.test.js
@@ -48,6 +48,9 @@ describe('integration', () => {
               $description: 'Some description',
             },
           },
+          foo: {
+            $value: '{colors.black.500}',
+          },
         },
       },
       transform: {
diff --git a/__tests__/utils/preprocess.test.js b/__tests__/utils/preprocess.test.js
new file mode 100644
index 000000000..622616c7c
--- /dev/null
+++ b/__tests__/utils/preprocess.test.js
@@ -0,0 +1,96 @@
+/*
+ * Copyright 2017 Amazon.com, Inc. or its affiliates. All Rights Reserved.
+ *
+ * Licensed under the Apache License, Version 2.0 (the "License"). You may not use this file except in compliance with
+ * the License. A copy of the License is located at
+ *
+ * http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * or in the "license" file accompanying this file. This file is distributed on an "AS IS" BASIS, WITHOUT WARRANTIES OR
+ * CONDITIONS OF ANY KIND, either express or implied. See the License for the specific language governing permissions
+ * and limitations under the License.
+ */
+import { expect } from 'chai';
+import { typeW3CDelegate } from '../../lib/utils/preprocess.js';
+
+describe('utils', () => {
+  describe('typeW3CDelegate', () => {
+    it('should correctly let tokens inherit the $type property while respecting local overrides', () => {
+      const tokens = {
+        dimension: {
+          $type: 'dimension',
+          scale: {
+            $value: '2',
+            $type: 'math',
+          },
+          xs: {
+            $value: '4',
+          },
+          nested: {
+            deep: {
+              deeper: {
+                $value: '12',
+              },
+            },
+            deep2: {
+              $type: 'math',
+              deeper: {
+                $type: 'other',
+                evenDeeper: {
+                  $value: '12',
+                  $type: 'math',
+                },
+                evenDeeper2: {
+                  $value: '12',
+                },
+              },
+            },
+          },
+          sm: {
+            $value: '8',
+          },
+        },
+      };
+
+      expect(typeW3CDelegate(tokens)).to.eql({
+        dimension: {
+          $type: 'dimension',
+          scale: {
+            $value: '2',
+            $type: 'math',
+          },
+          xs: {
+            $value: '4',
+            $type: 'dimension',
+          },
+          nested: {
+            deep: {
+              deeper: {
+                $value: '12',
+                $type: 'dimension',
+              },
+            },
+            deep2: {
+              $type: 'math',
+              deeper: {
+                $type: 'other',
+                evenDeeper: {
+                  $value: '12',
+                  $type: 'math',
+                },
+                evenDeeper2: {
+                  $value: '12',
+                  $type: 'other',
+                },
+              },
+            },
+          },
+          sm: {
+            $value: '8',
+            $type: 'dimension',
+          },
+        },
+      });
+    });
+  });
+});
diff --git a/docs/using_reference_utils.md b/docs/using_reference_utils.md
index 0b03e00b0..fd2d74f44 100644
--- a/docs/using_reference_utils.md
+++ b/docs/using_reference_utils.md
@@ -264,3 +264,66 @@ export const ZIndexAboveFold = 1;
 export const SemanticBgPrimary = ColorsBlack;
 export const Border = `solid ${Spacing2} ${SemanticBgPrimary}`;
 ```
+
+### typeW3CDelegate
+
+This function processes your ["W3C Design Token Community Group Draft spec"-compliant](https://design-tokens.github.io/community-group/format/) dictionary of tokens, and ensures that `$type` inheritance is applied.
+
+We built this utility because it's cheaper to apply the inheritance once, rather than on every access of a token's "$type" property, checking the ancestor tree to find it.
+
+Input:
+
+```js
+{
+  dimensions: {
+    $type: 'dimension',
+    sm: {
+      $value: '5',
+    },
+    md: {
+      $value: '10',
+    },
+    nested: {
+      deep: {
+        lg: {
+          $value: '15',
+        },
+      },
+    },
+    nope: {
+      $value: '20',
+      $type: 'spacing',
+    },
+  },
+}
+```
+
+Output:
+
+```js
+{
+  dimensions: {
+    $type: 'dimension',
+    sm: {
+      $value: '5',
+      $type: 'dimension',
+    },
+    md: {
+      $value: '10',
+      $type: 'dimension',
+    },
+    nested: {
+      deep: {
+        lg: {
+          $value: '15',
+          $type: 'dimension',
+        },
+      },
+    },
+    nope: {
+      $value: '20',
+      $type: 'spacing',
+    },
+  },
+}
+```
diff --git a/lib/utils/index.js b/lib/utils/index.js
index 1339db360..70607e143 100644
--- a/lib/utils/index.js
+++ b/lib/utils/index.js
@@ -15,6 +15,7 @@ import usesReferences from './references/usesReferences.js';
 import { getReferences } from './references/getReferences.js';
 import { resolveReferences } from './references/resolveReferences.js';
 import flattenTokens from './flattenTokens.js';
+import { typeW3CDelegate } from './preprocess.js';
 
 // Public style-dictionary/utils API
-export { usesReferences, getReferences, resolveReferences, flattenTokens };
+export { usesReferences, getReferences, resolveReferences, flattenTokens, typeW3CDelegate };
diff --git a/lib/utils/preprocess.js b/lib/utils/preprocess.js
index 869a04053..c56129b7f 100644
--- a/lib/utils/preprocess.js
+++ b/lib/utils/preprocess.js
@@ -23,7 +23,7 @@ import isPlainObject from 'is-plain-obj';
  * @param {DesignTokens} tokens
  * @returns
  */
-function typeW3CDelegate(tokens) {
+export function typeW3CDelegate(tokens) {
   const clone = structuredClone(tokens);
 
   /**
@@ -31,15 +31,15 @@ function typeW3CDelegate(tokens) {
    * @param {string} [_type]
    */
   const recurse = (slice, _type) => {
-    let type = _type; // keep track of type through the stack
     Object.values(slice).forEach((prop) => {
+      let type = _type; // keep track of type through the stack
       if (isPlainObject(prop)) {
         if (typeof prop.$type === 'string') {
           type = prop.$type;
         }
         // prop is a design token, but no $type prop currently,
         // so we add it if we know what the type is from our ancestor tree
-        if ((prop.$value || prop.value) && !prop.$type && type) {
+        if (prop.$value && !prop.$type && type) {
           prop.$type = type;
         }
         recurse(prop, type);