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Last Updated: 6/1/2017

Other Government Exemptions

Generally, local governments and other local government entities, qualify for the following exemptions. Local government entities include:

  • local municipalities
  • most local government instrumentalities
  • political subdivisions
  • commissions,
  • special districts
  • government boards

Capital Equipment and Industrial Production Exemptions

Materials used or consumed in producing electricity and treating water for sale at retail are not taxable. Machinery and equipment used for 50 percent or more of its operating time to create a tangible product for retail sale may not be taxable.

For more information, see:

Correctional facilities

Construction materials and supplies used to build or improve an adult or juvenile correctional facility are eligible for a refund of sales tax paid. To qualify for a refund, the project must be required by state or federal law, rule, or regulation. If a contractor or builder buys materials, they must give the local government a statement that lists the cost of materials and the sales tax paid.

The local government must pay tax on the materials and supplies; a purchasing agent agreement is not allowed. For more information, see Revenue Notice 98-01, Materials Used to Construct or Improve Correctional Facilities.

To request a refund of sales tax paid, use Form ST11, Sales and Use Tax Refund Request and Multiple Period Amended Return.

Correctional facility meals and drinks

Meals and drinks furnished, prepared, or served to inmates or persons residing at correctional detention or detoxification facilities are not taxable. However, sales by cafeterias, coffee shops, candy stands, or vending machines are taxable when sold to residents or patients.

Landfills (solid waste disposal facilities)

Machinery and equipment used directly for mixed municipal solid waste management services at the landfill are exempt from sales tax. This exemption does not include motor vehicles.

Wastewater treatment facilities

Equipment designed to process, dewater, and recycle bio-solids for wastewater treatment facilities and the installation of that equipment. For more information, see Revenue Notice 98-17, Biosolids Processing Equipment.

Hospitals and nursing homes

Hospitals and nursing homes owned and operated by a local government entity mentioned above are exempt.

This exemption includes purchases of meals and snacks provided to patients at hospitals, sanitariums, nursing homes, or senior citizen homes as part of their routine care and included in the facility’s charge.

For more information, see Fact Sheet 118, Hospital and Nursing Home Meals.

Lawn care and tree removal services

Mowing or spraying to control or kill weeds under a utility line, in ditches along roads, freeways, and railroad right-of-ways is not taxable unless the area is a lawn or garden.

Tree, bush, shrub, and stump removal services for construction or maintenance of roads, trails, or firebreaks are not taxable. For more information, see Fact Sheet 121A, Lawn and Garden Maintenance, Tree and Shrub Services.

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