Exempting construction services from Georgia’s sales tax reduced state revenue by nearly $2.9 billion in fiscal 2024, an analysis found.
University of Georgia’s Carl Vinson Institute of Government provided the estimate and concluded a 7.4% increase in the cost of construction services and a 3.7% reduction in total construction sector output had a construction tax been implemented.
Using IMPLAN, a regional input-output model that analyzes economic activity, the Institute estimated that the sales tax exemption resulted in nearly 27,000 total jobs and $2.83 billion in value added to the state economy in fiscal 2024. The additional economic activity would lead to state taxes of $201.6 million, offsetting roughly 7% of the sales tax exemption.
In Georgia law, construction services are not explicitly cited as exempt from sales and use tax, but they are part of a larger group of nontaxable services. Georgia’s sales tax generally applies to tangible personal property and only certain services listed as taxable.
Construction materials are subject to sales tax.
