Utility Taxes Law and Legal Definition

A utility tax is a tax on public service businesses, including businesses that engage in transportation, communications, and the supply of energy, natural gas, and water. The tax may exist in lieu of a business and occupation (B&O) tax. Such taxes are governed by state laws, which vary by state. In some instances, a portion, however, provides financial assistance to local governments for maintenance of public works facilities.

The following is an example of a state law providing for utility taxes:
"Public utility tax imposed -- Additional tax imposed -- Deposit of moneys.

  1. There is levied and there shall be collected from every person a tax for the act or privilege of engaging within this state in any one or more of the businesses herein mentioned. The tax shall be equal to the gross income of the business, multiplied by the rate set out after the business, as follows:
  2. Express, sewerage collection, and telegraph businesses: Three and six-tenths percent;
  3. Light and power business: Three and sixty-two one-hundredths percent;
  4. Gas distribution business: Three and six-tenths percent;
  5. Urban transportation business: Six-tenths of one percent;
  6. Vessels under sixty-five feet in length, except tugboats, operating upon the waters within the state: Six-tenths of one percent;
  7. Motor transportation, railroad, railroad car, and tugboat businesses, and all public service businesses other than ones mentioned above: One and eight-tenths of one percent;
  8. Water distribution business: Four and seven-tenths percent.

An additional tax is imposed equal to the rate specified in RCW 82.02.030 multiplied by the tax payable under subsection (1) of this section.

Twenty percent of the moneys collected under subsection (1) of this section on water distribution businesses and sixty percent of the moneys collected under subsection (1) of this section on sewerage collection businesses shall be deposited in the public works assistance account created in RCW 43.155.050."