U.S. Gross Receipt Tax Introduction
A gross receipt tax (GRT) is a state tax on the gross revenues of a business. Gross receipts tax is similar with sales tax, but the two are inherently different.
Sales tax is paid by the consumer based on the amount purchased. This is not an expense to the business owner because the amount owed to the taxing authority is no more than what the customer has paid. On the other hand, the gross receipts tax is a percentage of revenue received. Although some states do not charge sales tax on services rendered, you still must pay gross receipts taxes on the amount that you collect for those services.
Gross receipts tax impact firms with low profit margins and high production volumes, as the tax does not account for a business’ costs of production, as a corporate income tax would.
Each state that has the authority to decide individually what receipts are included or not included in the GRT calculation. The followings are some examples that have a gross receipt or similar tax.