Sales tax glossary
What is a gross receipts tax?
A gross receipts tax is a tax on a business's total revenue, with few or no deductions for costs. Unlike sales tax, it's imposed on the business rather than added to the customer's bill, and it can apply to service businesses and companies with thin profit margins.
Example
Washington's business and occupation (B&O) tax and Ohio's commercial activity tax (CAT) are gross receipts taxes. Both are charged on a business's receipts, separately from sales tax.
Why it matters for sellers
A gross receipts tax can apply even where you don't collect sales tax, and some have their own nexus thresholds. Because the business pays it, it cuts directly into margin.
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Related terms
This definition is general information, not tax or legal advice. Rules vary by jurisdiction and change over time.
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