Seven states impose a statewide gross receipts tax: Delaware, Nevada, Ohio, Oregon, Tennessee, Texas, and Washington. Three more (Pennsylvania, Virginia, and West Virginia) let their cities and counties levy local gross receipts taxes even though the state itself does not. Two others (Hawaii and New Mexico) run taxes labeled as gross receipts taxes that operate more like broad sales taxes. Because a gross receipts tax applies to total revenue before expenses, a business can owe it in a year it loses money, so knowing where these taxes exist matters even when profit does not.
The Seven States With a Statewide Gross Receipts Tax
Each state names, structures, and rates its tax differently. What follows is what a business needs to know about each one as of 2025.
Delaware
Delaware’s Gross Receipts Tax reaches nearly all business activity in the state. Rates run from 0.0945% to 1.9914% depending on the type of business. Most filers get a monthly or quarterly exclusion, ranging from $100,000 to $1,250,000 per period based on activity, which can leave smaller operations owing little or nothing.1Division of Revenue – State of Delaware. Gross Receipts Tax FAQs
Nevada
Nevada’s Commerce Tax applies only to businesses with more than $4 million in Nevada gross revenue in a fiscal year. Rates vary by industry, from 0.051% to 0.331%. Anything below the $4 million threshold is exempt. Returns are due 45 days after Nevada’s fiscal year closes on June 30, putting the deadline in mid-August.2State of Nevada. Commerce Tax
Ohio
Ohio’s Commercial Activity Tax has been shrinking. For tax year 2025 and beyond, only businesses with more than $6 million a year in Ohio taxable gross receipts owe the CAT. The threshold was $3 million in 2024 and $1 million before that. The rate is a flat 0.26% on receipts above the exclusion. Ohio eliminated the annual minimum tax starting in 2024, so businesses under the threshold owe nothing at all.3Ohio Department of Taxation. Commercial Activity Tax (CAT)
Oregon
Oregon’s Corporate Activity Tax applies to businesses with more than $1 million in Oregon commercial activity. The tax is $250 plus 0.57% of taxable commercial activity above $1 million. Oregon lets businesses subtract 35% of certain costs (the greater of cost of goods sold or labor costs) from the tax base, giving the CAT a slightly income-tax-like character. Businesses with $750,000 or less in Oregon commercial activity are completely excluded.4State of Oregon. Corporate Activity Tax (CAT)
Tennessee
Tennessee’s Business Tax applies to any business with a physical location in the state. Rates run from 0.02% to 0.1875% for retailers, with lower rates for wholesalers. The state sorts businesses into numbered classes by industry, and each class carries its own rate. Every taxpayer owes at least a $22 minimum. Returns are due on the 15th day of the fourth month after the fiscal year ends.5Tennessee Department of Revenue. Due Dates and Tax Rates
Texas
Texas calls its version the Franchise Tax, though it functions as a modified gross receipts tax. For 2026, businesses with total revenue of $2,650,000 or less owe nothing. Above that, the rate is 0.375% for retail and wholesale businesses and 0.75% for most others. Businesses with total revenue under $20 million can elect a simplified “EZ Computation” at a flat 0.331%. Texas lets businesses deduct either cost of goods sold or compensation when calculating the tax base, which softens the impact for high-cost industries.6Texas Comptroller of Public Accounts. Franchise Tax
Washington
Washington’s Business and Occupation Tax is the country’s oldest gross receipts tax and one of the broadest. Rates are set by business classification: retailing at 0.471%, manufacturing at 0.484%, with the highest rate reaching 3.3% for radioactive waste disposal. A small business credit phases out as B&O liability grows, effectively exempting the smallest operators.7Washington Department of Revenue. Business and Occupation Tax Classifications
States With Local Gross Receipts Taxes
Pennsylvania, Virginia, and West Virginia do not impose a statewide gross receipts tax, but they let cities or counties collect one. Virginia’s version, the Business, Professional, and Occupational License Tax, varies by locality and business type, with rates running from roughly 0.02% to 0.58%. About half of Virginia’s counties do not impose it at all. Because the rules are local, a company operating in more than one jurisdiction inside these states can face different rates from one address to the next.
Hawaii and New Mexico Are Different
Hawaii and New Mexico both label their taxes gross receipts taxes, but in practice each functions more like a broad-based sales tax. They are worth knowing about because a business operating in either state will encounter them, but they do not work like the seven above.
Hawaii’s General Excise Tax applies to nearly all business activity. The base rate is 4% for most retail and service transactions and 0.5% for wholesaling. Every county now adds a 0.5% surcharge on top of the 4% rate, bringing the effective retail rate to 4.5% statewide. Businesses routinely pass the GET on to customers as a visible line item, and Hawaii publishes official pass-on rates that account for the tax-on-tax effect. In Honolulu, a business passing on the full GET shows customers 4.712% on the receipt.8Department of Taxation. General Excise Tax (GET) Information
New Mexico’s Gross Receipts Tax also works like a sales tax in practice. The combined state and local rate varies by location, and businesses are required to separately state the tax on invoices when they pass it on to customers.9NM Taxation & Revenue Department. Gross Receipts Tax Overview
How a Gross Receipts Tax Differs From Income and Sales Tax
The tax base is what makes gross receipts tax different. A corporate income tax applies to profit, so a business subtracts costs from revenue and pays tax on what remains. A gross receipts tax applies to total revenue with few or no deductions. A company with $10 million in revenue and $9.5 million in expenses would owe corporate income tax on $500,000 of profit, but it could owe gross receipts tax on the full $10 million.
This gap matters most for thin-margin businesses. A grocery store operating on a 2% margin pays corporate income tax on that 2%. Under a gross receipts tax, the same store pays on 100% of sales. The effective rate relative to profit can be much higher than the nominal rate suggests.
Sales tax is a different animal. It is a consumer tax that businesses collect and forward to the state. A gross receipts tax is the business’s own obligation, calculated on its revenue whether or not any part is passed to customers. Some businesses do build the cost into their prices, and a few states like New Mexico explicitly allow it as a line item, but the legal liability sits with the business.
Tax Pyramiding: Why Low Rates Can Mean High Costs
Gross receipts tax rates look small on paper. Ohio’s 0.26% or Oregon’s 0.57% seem trivial next to a 5% or 6% sales tax. But gross receipts taxes compound in a way economists call tax pyramiding, and the actual burden can run well above the headline rate.
A well-designed sales tax hits only the final sale to a consumer. A gross receipts tax hits every transaction in the supply chain. A manufacturer selling raw materials to a fabricator pays gross receipts tax on that sale. The fabricator selling finished components to an assembler pays again. The assembler selling to a retailer pays a third time. The retailer selling to a consumer pays a fourth. Each business builds its tax cost into the next price, so the tax compounds at every stage.
The longer the supply chain, the worse the pyramiding. Manufacturing and construction, with many production steps, carry a heavier effective burden than service businesses that sell directly to consumers. This uneven impact is one of the most common criticisms of gross receipts taxes, and one reason some economists argue they push businesses toward making components in-house rather than buying from suppliers.
States That Stack Gross Receipts Tax on Top of Corporate Income Tax
Most gross receipts tax states use it in place of a corporate income tax. Three do not: Delaware, Oregon, and Tennessee impose both, so businesses there face two layers of state-level tax on their activity.10Tax Foundation. State Corporate Income Tax Rates and Brackets, 2026
Washington, Nevada, and Texas have no corporate income tax, which is part of why they lean on a gross receipts tax for revenue. Ohio phased out its corporate franchise tax when it introduced the CAT. For businesses picking where to locate or expand, the difference between a state using gross receipts tax as a substitute for income tax and one stacking both matters. The combined burden in Oregon, Delaware, or Tennessee can run meaningfully higher than the gross receipts rate alone suggests.