The development of stress-state dependent failure criteria for advanced high strength steel (AHSS) and aluminum alloys requires the accurate determination of failure under proportional loading conditions. Traditionally, the onset of localization or instability in proportional strain paths is performed under predominantly stretching conditions using Marciniak or Nakazima tests to construct a forming limit diagram (FLD). The FLD can then be converted into stress-space as a stress-based FLD for reduced strain path dependence or into plastic strain-stress triaxiality space for use with a phenomenological damage model. However, the onset of localization is strongly influenced by the presence of through-thickness stress and strain gradients as in bending operations or complex stretch-bending that occurs during the forming of complex components or during an automotive crash event. Through-thickness strain gradients can delay or entirely suppress the onset of localization so that the fracture limit becomes the effective forming limit and this behavior is not captured in failure models calibrated from stretch-based test data. To characterize the fracture strain in tight-radius bending, the VDA238-100 standard is becoming widely adopted but defines failure in terms of a bend angle that is only a relative indicator of formability that depends upon the ratio of the sheet thickness and bend radius. In this study, a novel inverted-VDA bend apparatus that uses digital image correlation (DIC) to measure the local failure strain was employed for several grades of AHSS to characterize failure using punch tip radii of 0.2, 0.4 and 1.0 mm. The optimal setup of DIC analysis for each punch tip has proposed in the aspect of virtual strain gauge length (VSGL). The onset of cracking and choice of detection algorithm for local fracture was also investigated as a function of the bending severity. Finally, the influence of a through-thickness strain gradient on identification of the biaxial failure strain was investigated with recommendations on the appropriate punch radius-to-sheet thickness and DIC settings to use for fracture characterization in plane strain and equal-biaxial tension.