What is the difference between gross and taxable retail sales?
Gross income from a retail sale is calculated before any deductions or exemptions. A taxable retail sale equals the retail sale activity less deductions or exemptions and is the amount subject to retail sales tax. A substantial portion of retail sales are not subject to retail sales tax. Examples of deductions or exemptions include food for human consumption, motor vehicle fuel, prescription drugs, medical appliances and lenses, interstate sales, sales to the federal government, and sales of goods to Native Americans for use on the reservation. Statewide, taxable sales may understate the true level of retail activity by as much as 25 to 30 percent; however, this percentage can vary substantially across industries.
