# Gross Receipts Explained: Definitions and State Examples for Businesses

![Gross Receipts](https://www.investopedia.com/thmb/RzuR_IN7mtRIRA43HN5uoB6I15w=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/Gross-receipts_final-f14fcbf7fed046bf855261d9e1e8b846.png)

*— Investopedia / Michela Buttignol*

## What Are Gross Receipts?

Gross receipts encompass the total amount of all receipts a business earns in cash or property, which can include sales, tax refunds, and other income—excluding expenses and adjustments. These values are pivotal for corporate taxation in select states, affecting financial decisions and tax obligations. Examples from Texas and Ohio illustrate how different jurisdictions define and apply gross receipts for taxation purposes.

### Key Takeaways

*   Gross receipts are the total sales and other non-business income of a company, without deductions for expenses.
*   They differ from gross sales as they include items like tax refunds, donations, and dividend income.
*   Some states and local tax authorities levy taxes on gross receipts instead of corporate income or sales tax.
*   Definitions of gross receipts vary by state, with specific examples from Texas and Ohio's tax codes.  
    

## Detailed Analysis of Gross Receipts

Gross receipts are the total of all cash or property received, without deducting expenses or other items. Unlike [gross sales](https://www.investopedia.com/terms/g/grosssales.asp), gross receipts capture anything that is not related to the normal business activity of an entity—[tax refunds](https://www.investopedia.com/terms/t/tax-refund.asp), donations, interest and dividend income, and others. Also, gross receipts do not account for discounts or price adjustments. Some states and local tax authorities tax gross receipts instead of corporate income tax or sales tax.

## Examples of Gross Receipts in Different States

Texas Tax Code Section 171.103 says gross receipts for a business include:

1.  Each sale of [tangible personal property](https://www.investopedia.com/terms/t/tangible-personal-property.asp), if the property is delivered or shipped to a buyer in this state, regardless of the [FOB point](https://www.investopedia.com/terms/f/fob.asp) or any other condition of the sale
2.  Each service performed in this state, except that receipts derived from servicing loans secured by real property are in this state if the real property is located in this state
3.  Each rental of property situated in this state
4.  The use of a patent, copyright, trademark, franchise, or license in this state
5.  Each sale of property located in this state, including royalties from oil, gas, or other mineral interests
6.  Other business transacted in this state

Ohio Revised Code Section 5751.01 defines gross receipts for the purposes of Commercial Activity Tax ("CAT") as "the total amount realized by a person, without deduction for the cost of goods sold or other expenses incurred, that contributes to the production of gross income of the person, including the [fair market value](https://www.investopedia.com/terms/f/fairmarketvalue.asp) of any property and any services received, and any debt transferred or forgiven as consideration."

Other tax authorities also define "gross receipts" to use them for taxing businesses. Detailed lists of exclusions to gross receipts are also provided.

## The Bottom Line

Gross receipts represent a vital financial metric for businesses, serving as the basis for corporate taxation in certain states and localities. Unlike gross sales, gross receipts encompass all earnings, including non-operating income such as tax refunds or interest.

Various states, such as Texas and Ohio, define gross receipts uniquely, reflecting local tax obligations. Understanding these distinctions is crucial for businesses navigating state tax codes and ensuring compliance. By grasping the nuances of gross receipts, businesses can better manage their tax liabilities and financial reporting.  

> **Article Sources**
>
> 1.  Tax Foundation. "[Resisting the Allure of Gross Receipts Taxes: An Assessment of Their Costs and Consequences](https://taxfoundation.org/gross-receipts-tax/)."
>     
> 2.  Texas Public Law. "[Texas Tax Code Sec. 171.103 Determination of Gross Receipts From Business Done in This State for Margin](https://texas.public.law/statutes/tex._tax_code_section_171.103#:~:text=A%20combined%20group%20shall%20include,for%20the%20purpose%20of%20taxation.)."
>     
> 3.  Ohio Laws and Rules. "[Chapter 5751: Commercial Activity Tax](http://codes.ohio.gov/orc/5751)."