What it is

A gross receipts tax (GRT) is levied on a business’s total gross revenue, not on individual taxable sales to consumers. It is paid by the business, usually with no deduction for the cost of goods sold, materials, labor, or — critically — purchases for resale. That makes it fundamentally different from a retail sales tax, which is charged to the buyer at checkout, applies only to taxable items, and exempts resale purchases.

Because a gross receipts tax has no resale exemption, it applies at every stage of production and distribution. The same economic value can be taxed when a manufacturer sells to a wholesaler, again when the wholesaler sells to a retailer, and again when the retailer sells to the consumer — an effect economists call tax pyramiding. <!– src: https://taxfoundation.org/data/all/state/state-gross-receipts-taxes-2024/ –> <!– src: https://www.salestaxinstitute.com/resources/gross-receipts-taxes-101 –>

In a few states the line blurs. New Mexico’s gross receipts tax and Hawaii’s general excise tax function much like a sales tax in practice — they are imposed on the seller but are passed through to buyers on the invoice. <!– src: https://www.salestaxinstitute.com/resources/look-at-gross-receipts-taxes-in-no-sales-tax-states –>

Why it matters to a multi-state seller

If you sell into Washington, Ohio, Oregon, Nevada, Texas, Delaware, or Tennessee, you may owe a gross receipts tax on top of, or instead of, sales tax — and its rules don’t track your sales tax registrations. Each of these taxes has its own nexus standard, its own filing form, and its own thresholds, so you can owe a GRT in a state where your sales tax footprint looks settled.

Two traps hit multi-state sellers hardest. First, no resale relief: a wholesaler used to buying and selling tax-free for resale can still owe a gross receipts tax on that same revenue. Second, the economic-nexus parallel — states like Washington and Ohio apply receipts-based thresholds to remote businesses, so you can trip a B&O or CAT obligation purely from sales volume, exactly the way Wayfair-style economic nexus works for sales tax.

State-level nuance

Seven states impose a broad-based, state-level gross receipts tax. Rates are low but apply to a very wide base:

Thresholds matter as much as rates. Nevada’s Commerce Tax exempts the first $4 million of gross revenue; Ohio’s CAT phased its exclusion up to $6 million for tax periods beginning in 2025, removing most small sellers from the tax. Texas’s franchise tax is technically a tax on “margin” but is widely grouped with gross receipts taxes because of its receipts-based structure. Rates, brackets, and thresholds change frequently — confirm the current rule before relying on it. <!– src: https://taxfoundation.org/data/all/state/state-gross-receipts-taxes-2024/ –>

How this connects to staying compliant

A gross receipts tax is a separate compliance track from sales tax, and treating the two as one is a common, costly error. You can be perfectly compliant on sales tax in Washington and still be unregistered for B&O — a tax you owe on your gross revenue regardless of whether individual sales were taxable.

The right approach is to map each state where you have activity against both regimes: does this state have a sales tax, a gross receipts tax, or both, and have I crossed each one’s threshold? Because GRTs offer no resale exemption and apply to your whole revenue line, the dollars at stake scale with your top line, not just your taxable retail sales.

Sources: Tax Foundation — Does Your State Have a Gross Receipts Tax? (2024): https://taxfoundation.org/data/all/state/state-gross-receipts-taxes-2024/ Sales Tax Institute — Gross Receipts Taxes 101: https://www.salestaxinstitute.com/resources/gross-receipts-taxes-101 Sales Tax Institute — Gross Receipts Taxes in No-Sales-Tax States: https://www.salestaxinstitute.com/resources/look-at-gross-receipts-taxes-in-no-sales-tax-states