Labor and services used to construct and repair public roads

From the 2024 DOR Tax Exemption Study

82.04.050(10) - Labor and services used to construct and repair public roads Description The definition of retail sales excludes charges for labor and services performed on public roads and transportation facilities owned by local jurisdictions or the federal government. A contractor for the federal government or a local jurisdiction must pay sales and use taxes on materials incorporated into the project. The exclusion does not extend to roads owned by the state. Sales and use taxes are due on 100% of road construction on state roads. Purpose The state cannot directly tax the federal government, but it can tax contractors who work for the federal government on the value of the materials they incorporate into the project. The impact of the sales and use taxes on materials is indirectly passed on to the federal government. The exemption for labor and services for local road construction helps reduce local jurisdictions’ costs. Taxpayer ($ in millions): savings FY 2024 FY 2025 FY 2026 FY 2027 State Taxes $54.310 $54.610 $56.110 $57.010 Local Taxes $30.100 $30.300 $31.100 $31.600 Repeal of Repealing this exemption would increase revenues. Most of the impact is from local exemption gove