Water Mitigation

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Starting July 1, 2026, certain charges related to water mitigation services are not taxable.

Water mitigation is the process of stopping the spread of water damage from an event, such as a flood or leak.

Water mitigation may be considered taxable maintenance or nontaxable repair:

Maintenance is keeping the area in its existing state, to preserve from failure or decline, or prevent from damage.
Repair restores or replaces what was damaged or broken, restoring the area back to its original state. This includes fixing, rebuilding, reconstructing, or renovating the damage that was caused. See Contractors and Other Property Installers.

Taxable Maintenance or Nontaxable Repair

Determining whether water mitigation services are taxable maintenance or nontaxable repair will depend on the following factors:

Factor	Maintenance	repair
Work required	Working on what currently exists and the same building materials remain in the area after the actions are complete.	The affected area needs complete replacement.
Primary purpose of the actions taken	Done to prevent future damage.	Done to fix damage that already occurred.
Building materials used	Not left in the space after the service is complete.	Left in the space after the service is complete.

Examples of taxable water mitigation services (taxable maintenance), include but are not limited to:

Removing water without any additional services
Removing water and bringing in fans, without any additional services
Pulling baseboards, trim vanities, etc. to allow access for drying, and putting those same materials back after drying
Pulling back carpeting and carpet padding to allow for drying, and putting the same materials back after drying
Using air movers and dehumidifiers to bring down the moisture levels to normal and drying out structures
Applying anti-microbial agents or disinfectants to affected areas
Carpet cleaning – floor cleaning, vacuuming, waxing
Ceiling tile cleaning
HEPA vacuuming

Examples of exempt water mitigation services (nontaxable repair), include but are not limited to:

Removing water and making improvements to real property
Bringing in fans to dry out an area, while also making improvements to real property
Installing new flooring, carpeting, drywall, or insulation due to water damage
Removing baseboards, trim, vanities, etc. and replacing them with brand new materials after drying
Tearing out and disposing of wet dry wall and insulation
Removing and disposing of wet carpeting, carpet pads, flooring
Painting walls

There must be clear documentation to support what was done on the invoice.