Other Government 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:

• Capital Equipment
• Industrial Production

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.

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.

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.

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 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 Hospital and Nursing Home Meals.

Starting July 1, 2021, supplies and materials used in and equipment incorporated into the construction, remodeling, improvement, or expansion of fire and police stations, including their related facilities, owned by a local government are exempt from sales tax.

Local governments must pay sales tax on qualifying items at the time of purchase and request a refund on Form ST11, Sales and Use Tax Refund Request.

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 Lawn and Garden Maintenance, Tree and Shrub Services.