Labor and services used to construct and repair federal government structures

From the 2024 DOR Tax Exemption Study

82.04.050(12) - Labor and services used to construct and repair federal government structures Description Charges made for labor and services in connection with building, repairing or improving new or existing structures for the federal government or a local housing authority is not subject to sales and use taxes. Also excluded are charges for moving earth and clearing land for these jurisdictions. The contractor must pay sales and use taxes on materials incorporated into these projects. Purpose The state cannot directly tax the federal government, but it can tax contractors who do work for the federal government on the value of the materials they incorporate into the project. The federal government indirectly pays the sales and use taxes through increased costs from contractors. The exemption for labor and services for local housing authorities helps reduce the cost for local jurisdictions. Taxpayer ($ in millions): savings FY 2024 FY 2025 FY 2026 FY 2027 State Taxes $96.100 $96.100 $96.100 $96.100 Local Taxes $34.500 $34.500 $34.500 $34.500 Repeal of Repealing this exemption would not increase revenues. Most of the impact exemption represents federal construction which is constit