CHARLESTON, WV — Gross receipts taxes are a key source of revenue in many parts of the United States, and they originated in West Virginia. On July 1, 1921, West Virginia replaced its corporate excise and gas pipeline taxes with the first gross receipts tax, also known as the business and occupation (B&O) tax, set at 0.4%.
This tax is applied to a company’s total sales without deducting business expenses like the cost of goods sold or employee compensation. According to the West Virginia Tax Division, the B&O tax applies to anyone engaging in public service or utility business, except for certain companies like railroads and motor carriers.
The gross receipts tax spread across the country during the Great Depression of the 1930s and was a major revenue source for West Virginia until it was mostly replaced by a severance tax and a business franchise tax in 1987.