How is the PA Gross Receipts Tax (GRT) Calculated?

Utility Bill Audit

Typically, taxes that are collected on your electric bill are kept separate and apart from the revenue on which those taxes are applied. However, in Pennsylvania, the Gross Receipts Tax (GRT) is passed through to the consumer and considered to be part of the revenue base against which the GRT is calculated.

The new total GRT calculation is 5.90%.

It is common practice in Pennsylvania for electricity suppliers to use an adjusted rate to ensure they are billing the appropriate revenue to cover business costs. This practice is called “grossing up.”

The calculation formula is:

Cost = (Taxable Amount)/(1 – GRT)

or  6.27%

Below is an example to demonstrate how the adjusted rate works.

Transaction                                          $1,000.00
PA GRT Adjusted Rate                       6.27%
PA GRT charged to consumer         $62.70
Reportable Gross Receipts              $1,062.70
PA GRT Rate                                        5.90%
PA GRT due to State                           $62.6993
Resulting Revenue                             $1,000.00

Utilities and electricity generation suppliers use varying methods to invoice the Pennsylvania GRT.

Some competitive suppliers presents the GRT as a separate line item, which allows our customers to identify its exact amount.  Other suppliers may embed the tax in their price, making it more difficult to confirm their calculation method (i.e. whether or not they are ‘grossing up’).

When shopping for electricity, understand what you are paying for.  It is common for the price quoted to not include GRT.  Simply add the GRT to this number to compare your price to what you are paying today.