# Are Transportation Services Taxable? NEMT Sales and Gross Receipts Taxes by State (2027)

Canonical URL: https://nemtguide.com/guides/nemt-sales-tax/ · Updated 2026-10-02

It depends on the state. Ohio, South Dakota, and New York charge sales tax on some private rides, and each exempts ambulette or Medicaid-paid trips in its own way. Kentucky and Nevada tax licensed carriers' fares. Hawaii, New Mexico, and Washington tax a ride company's gross receipts, Medicaid trips included. Texas, Ohio, Oregon, and Nevada tax business revenue only above thresholds of $1 million to $6 million.

- A sales tax is added to the rider's bill. A gross receipts tax falls on your company, whoever pays for the ride.
- Hawaii, New Mexico, and Washington tax Medicaid and broker revenue too, so the tax comes out of the rate you are paid.
- Ohio taxes private ambulatory rides but not wheelchair van trips. South Dakota exempts rides Medicaid pays for, and New York exempts ambulette trips.
- Kentucky taxes taxicab fares 6 percent but excludes Medicaid rides, and Nevada taxes passenger carriers 3 percent of the fare.
- Never add a tax to a Medicaid member's ride. You accept the Medicaid payment as payment in full.

Federal income tax questions, such as mileage, depreciation, and quarterly payments, are covered in [NEMT business taxes](https://nemtguide.com/guides/nemt-business-taxes/). State taxes on your revenue are a separate question, and the answer changes at each state line. In some states you collect sales tax from private riders. In others, the state taxes every dollar your company takes in, including what Medicaid and brokers pay you.

## Sales tax or gross receipts tax: why the difference matters

A sales tax is charged to the buyer. You add it to the fare, collect it, and send it to the state, and the state decides which buyers and which services are exempt. Ohio, South Dakota, and New York tax some rides this way.

A gross receipts tax is charged to your company. Hawaii says its general excise tax is a tax on the business, not on the customer. New Mexico imposes its gross receipts tax on businesses, even though many pass it on. Washington's public utility tax, Kentucky's excise tax on taxicab fares, and Nevada's connection tax also fall on the company. Because the tax is on you, it applies whoever pays for the ride, unless the law leaves that payer out.

That matters for Medicaid work. Under [42 CFR 447.15](https://www.ecfr.gov/current/title-42/section-447.15), you accept the Medicaid payment as payment in full, so you cannot add a tax line to a member's ride. The tax comes out of the rate you are paid.

## Which states tax NEMT rides

These are the state taxes most likely to reach a small NEMT company's ride revenue. Each changes over time, so the date of each figure is in the sections below. Taxes that start only above $1 million or more a year have their own section further down.

| State | Tax | What it reaches |
|---|---|---|
| Hawaii | General excise tax, on the business | 4% plus a 0.5% county surcharge, Medicaid rides included |
| New Mexico | Gross receipts tax, on the business | 4.875% state share (2025-26) plus local rates, Medicaid rides included |
| Washington | Public utility tax, instead of B&O tax | 1.926% on most rides, 0.642% on rides within one city area |
| Ohio | Sales tax, from the rider | 5.75% plus county tax on ambulatory rides; not ambulettes or rides sold to government |
| South Dakota | Sales tax, from the rider | 4.2% plus city tax on private rides inside the state, 4.5% from July 1, 2027 |
| New York | Sales tax, from the rider | State and local tax on car service; ambulette trips not taxed |
| Kentucky | Excise tax on taxicab and limousine fares | 6% of private fares; Medicaid and other state program rides excluded |
| Nevada | Transportation connection tax | 3% of the total fare for passenger carriers and taxicabs |

If your state is not on the list, look up its revenue department's list of taxable services and ask in writing whether passenger rides are on it. Keep the answer with your tax records.

## Hawaii, New Mexico, and Washington: taxes on every ride

These three states tax your receipts from Medicaid, brokers, facilities, and riders alike. Budget for the tax before you accept a broker rate.

### Hawaii general excise tax

As of January 2026, the Department of Taxation taxes most business income at 4 percent. All four counties add a 0.5 percent surcharge through December 31, 2030: Honolulu since 2007, Kauai since 2019, Hawaii County since 2020, and Maui since January 1, 2024. A license costs a one-time $20 on Form BB-1. Periodic returns are due the 20th day of the month after each period, and a late return costs 5 percent of the unpaid tax for each month or part of a month, up to 25 percent.

On $20,000 a month of broker revenue, 4.5 percent is $900 a month, or $10,800 a year. Hawaii's exemption for Medicare, Medicaid, and TRICARE receipts covers hospitals, infirmaries, clinics, health care facilities, pharmacies, and licensed medical or dental practitioners (Hawaii Revised Statutes 237-24.3(12)). It does not name transportation companies, and Med-QUEST's health plan manual (revision 26.3) says plans do not pay the tax as a separate cost, because it is part of the NEMT rate. The [Hawaii guide](https://nemtguide.com/states/hawaii/) covers licensing and brokers.

### New Mexico gross receipts tax

The state's share was 4.875 percent for July 1, 2025 to June 30, 2026 (FYI-105, dated August 11, 2025), and counties and cities add their own rates. For a ride, you use the rate where the rider gets into the vehicle, and the department's rate map lists the current rate for each location. Since July 1, 2025, rates change only in July, except in special cases such as a natural disaster. On $20,000 a month, the state share alone is $975.

The health care deductions in FYI-105 name licensed health care practitioners, hospitals, hospices, nursing homes, home health agencies, clinical labs, dialysis facilities, and medical equipment sellers. None of them names a transportation company. New Mexico's Medicaid rule says its payment to a transportation provider already includes gross receipts and other taxes, and that air ambulance providers are exempt (8.324.7.16 NMAC). When you bill a private rider, state the tax separately or tell the rider the price includes it. See the [New Mexico guide](https://nemtguide.com/states/new-mexico/).

### Washington public utility tax

Washington treats carrying people for a fee as hauling for hire, which pays the public utility tax instead of the business and occupation (B&O) tax. As of October 2026, the Department of Revenue lists two rates:

- **Motor transportation, 1.926 percent.** Every in-state ride that does not qualify as urban.
- **Urban transportation, 0.642 percent.** Rides that start and end within one city's limits or 5 miles of them, or within 5 miles of two cities no more than 5 miles apart, measured in a straight line.

Keep a record of each ride you report as urban, because an audit can move unproven rides to the higher rate. You cannot deduct fuel or other costs. You can deduct rides that start or end outside Washington, and amounts you pay another carrier to run part of a ride you were hired for. The tax does not apply in a month with less than $2,000 of gross income, though you may still have to file (RCW 82.16.040). On $20,000 a month of mostly suburban rides, 1.926 percent is $385.20. Ambulance service is not hauling for hire.

Nonprofits get one more break. Rides for groups of people with special transportation needs, run by a public social service agency or a private nonprofit transportation provider, owe no public utility tax under RCW 82.16.047 and 46.74.010. That exemption is set to expire January 1, 2032. See the [Washington guide](https://nemtguide.com/states/washington/).

## Ohio, South Dakota, and New York: sales tax on some private rides

In these states the tax lands on the rider's bill, and the exemptions decide which of your rides it reaches.

### Ohio

Ohio's sales tax reaches transportation of persons by motor vehicle entirely within the state, except rides by ambulance service, transit bus, or certain air carriers (Ohio Revised Code 5739.01(B)(3)(p)). The Department of Taxation's rule 5703-9-06 (effective July 17, 2020) names taxis, limousines, buses, and shuttles as taxable. It counts an ambulette, a vehicle specially designed and equipped for riders who use a wheelchair, as an ambulance, so wheelchair van trips are not taxed. It also leaves out transportation sold to a county, a city, or a state or federal agency.

As of October 2026, the state rate is 5.75 percent (Ohio Revised Code 5739.02), and counties add their own. A private-pay sedan or ambulatory van ride is taxable, and the rule says you charge the tax on the entire price: on a $30 fare, the state share alone is $1.73. A county job and family services contract is not taxed. For ambulatory rides a managed care plan or broker pays for, ask the department in writing whether tax applies before you bill them. See the [Ohio guide](https://nemtguide.com/states/ohio/).

### South Dakota

South Dakota's January 2026 tax fact says buses, taxis, limousines, and similar passenger rides owe sales tax when the ride is wholly inside the state, unless it is part of a public transit system with regular routes and schedules. The state rate is 4.2 percent, and a 1 to 2 percent city tax applies when the ride stays within one municipality. The 4.2 percent rate ends June 30, 2027, and the state rate returns to 4.5 percent on July 1, 2027 (SDCL 10-45-2). Ground ambulance service is not taxable.

The Medicaid exemption covers rides the state Medicaid program pays for. The department's July 2023 tax fact says Medicaid payments come directly from the state and that products and services paid directly by Medicaid are exempt. The same tax fact lists nonprofit hospitals, approved relief agencies, and government entities as exempt from sales tax. A private-pay rider pays the tax, and a ride from Sioux Falls to a Rapid City clinic owes state tax only. See the [South Dakota guide](https://nemtguide.com/states/south-dakota/).

### New York

Since June 1, 2009, New York has taxed transportation by livery service: a limousine, black car, or other motor vehicle with a driver (Tax Law 1101(b)(34)). The Tax Department's guidance (TSB-M-09(7)S, May 22, 2009) names community cars or vans as examples. The tax does not apply to taxis, buses, scheduled public service, interstate trips, ambulance, ambulette, or emergency service transportation. In New York City, rides in affiliated livery vehicles licensed by the Taxi and Limousine Commission are excluded.

Who buys the ride matters too. New York State, its municipalities, and their agencies buy rides tax free by giving you their letterhead or purchase order, and other exempt organizations do so with an exemption certificate such as Form ST-119.1. If you sell taxable trips, apply for a Certificate of Authority from the Tax Department at least 20 days before your first taxable sale. If you run livery or community car trips, ask the department how the exemption applies to the trips you bill to Medicaid, and get the answer in writing. See the [New York guide](https://nemtguide.com/states/new-york/).

## Kentucky and Nevada: excise taxes on carrier fares

These taxes fall on the fares of licensed passenger carriers, so your license type decides whether you owe them.

### Kentucky

Since January 1, 2023, Kentucky has charged a 6 percent excise tax on the gross receipts of taxicab services, limousine services, and rideshare companies (KRS 138.472). It falls on companies required to hold a taxicab, limousine, or rideshare certificate under KRS 281.630. Receipts from human service transportation delivery are excluded. KRS 281.010 defines that as rides for people eligible for six state programs, including nonemergency medical transportation, work programs for public assistance recipients, adult services, and vocational rehabilitation.

If you hold a taxicab certificate, your private-pay fares owe the tax and your Medicaid broker trips do not. On a $25 private fare, the tax is $1.50. The tax is your company's to pay, but the law lets you charge it to the rider, and returns are due by the 20th of the next month. A Disabled Persons Vehicle certificate is not one of the certificates the tax names. See the [Kentucky guide](https://nemtguide.com/states/kentucky/).

### Nevada

Nevada's transportation connection tax is 3 percent of the total fare, fees and card charges included, for common motor carriers of passengers, taxicabs, and rideshare companies (NRS 372B.140 to 372B.160). The Department of Taxation collects it on a monthly return, and the statute's only exclusion for common motor carriers is airport transfer service.

The Nevada Transportation Authority regulates NEMT, and a NEMT carrier's tariff on file with it (stamped March 16, 2022) adds the 3 percent as a separate line that must be passed to every customer. On a $40 private fare, that is $1.20. Medicaid trips through the state's broker are exempt from the authority's certificate rules, as the [Nevada guide](https://nemtguide.com/states/nevada/) explains, so ask the department in writing whether those trips owe the tax.

## Delaware, Texas, Ohio, Oregon, and Nevada: taxes above a threshold

These taxes reach NEMT revenue too, but only past a level most small companies never hit.

- **Delaware.** The Division of Revenue taxes a business's gross receipts, whatever their source. Its 2018 tax tips list taxi, shuttle, and ambulance services under the general service license, and its current license and rate list taxes general services at 0.3983 percent above $100,000 a month, with a $75 yearly license. A taxicab or bus operator, which carries the general public for hire under a certificate from the Delaware Transportation Authority, pays $45 for the first vehicle and $30 for each more, and no gross receipts tax. Ask the division which license fits your company.
- **Texas.** For 2026 and 2027 reports, franchise tax is zero at or below $2,650,000 of total revenue. You still file a Public Information Report or Ownership Information Report by May 15. Above the threshold, a business that is not retail or wholesale pays 0.75 percent of its taxable margin. See the [Texas guide](https://nemtguide.com/states/texas/).
- **Ohio.** Since 2025, the commercial activity tax excludes the first $6 million of taxable gross receipts each year, and the rate on the rest is 0.26 percent (Ohio Revised Code 5751.01 and 5751.03).
- **Oregon.** A business with more than $750,000 of Oregon commercial activity registers for the corporate activity tax, and one with more than $1 million pays $250 plus 0.57 percent of the amount over $1 million, after a 35 percent subtraction for certain expenses. Oregon's Medicaid exclusion covers residential care facilities and in-home care agencies, not ride companies.
- **Nevada.** The commerce tax applies only above $4 million of Nevada gross revenue in a fiscal year ending June 30. The 2025 to 2026 return was due August 14, 2026.

## How tax works on private-pay fares

You can add a tax only to prices you set yourself, for private riders and facilities, and only where the law allows.

1. **Collect sales tax where it applies.** On Ohio sedan rides, South Dakota rides, and New York livery trips, add the tax to the fare and show it on the receipt.
2. **Decide whether to pass an excise or gross receipts tax on.** Hawaii lets you visibly pass on its tax up to 4.712 percent, county surcharge included, but does not require it. New Mexico requires the tax to be stated separately, or a note that the price includes it. Kentucky lets a taxicab company charge its 6 percent to the rider.
3. **Keep tax outside the all-in price, but show it.** California and Minnesota require advertised prices to include mandatory fees, but both leave government taxes out (Civil Code 1770(a)(29) and Minnesota Statutes 325D.44). The [fuel surcharge guide](https://nemtguide.com/guides/nemt-fuel-surcharge/) covers what those laws mean for your quotes.
4. **Never add tax to a Medicaid member's ride.** The payment you accept is payment in full.

For pricing and receipts that private riders can use, see [private pay NEMT](https://nemtguide.com/guides/private-pay-nemt/).

## What to do next

1. **Register before your first taxable ride.** A Hawaii general excise tax license costs a one-time $20 on Form BB-1. New York wants your Certificate of Authority application at least 20 days before your first taxable sale. Elsewhere, register with the revenue department before you collect or owe the tax.
2. **Put the tax in your cost per trip.** Where Medicaid and broker revenue is taxed, a 4.5 percent tax on a $40 ride is $1.80 that never reaches your margin.
3. **Track receipts by payer, vehicle, and place.** Washington's urban rate and New Mexico's location rates depend on where rides start and end, Ohio's tax on whether the vehicle is an ambulette, and Kentucky's on whether the ride is a state program trip. Set your books up for it, as shown in [NEMT bookkeeping](https://nemtguide.com/guides/nemt-bookkeeping/).
4. **Get rulings in writing.** When your company's category is unclear, as with Delaware's license types, New York's livery rules, or broker trips in Ohio and Nevada, ask the revenue department and keep its answer.
5. **Check the numbers every year.** New Mexico local rates change in July, South Dakota's state rate rises to 4.5 percent on July 1, 2027, and Texas sets its franchise tax threshold two report years at a time, now 2026 and 2027.

## Frequently asked questions

### Do I charge sales tax on NEMT rides?

Only where your state taxes passenger rides. Ohio taxes rides inside the state, but not ambulette trips or rides sold to a county or state agency. South Dakota taxes buses, taxis, limousines, and similar rides that stay inside the state, at 4.2 percent plus city tax as of January 2026 and 4.5 percent from July 1, 2027, but exempts services Medicaid pays for directly. New York taxes car service by limousines, black cars, and vans with a driver, but not ambulette, ambulance, taxi, or bus rides. Ask your state revenue department before your first private ride.

### Do I owe tax on Medicaid and broker payments?

In Hawaii, New Mexico, and Washington, yes, because their taxes fall on a business's gross receipts no matter who pays. New Mexico's Medicaid rule says its payment to a transportation provider already includes gross receipts tax. Hawaii's health plan manual says plans do not pay general excise tax as a separate cost, because it is part of the NEMT rate. Kentucky's 6 percent tax on taxicab fares, by contrast, excludes rides in state programs such as Medicaid.

### Do I charge Ohio sales tax on NEMT rides?

On some of them. As of October 2026, Ohio taxes rides by motor vehicle that stay inside the state at 5.75 percent plus county tax. Department of Taxation rule 5703-9-06 treats an ambulette, a vehicle specially designed and equipped for riders who use a wheelchair, as an ambulance, which is not taxed. It also leaves out rides sold to a county or a state or federal agency. A private-pay sedan or ambulatory van ride is taxable.

### Can I add Hawaii's general excise tax to my invoices?

On private-pay rides, yes, but you do not have to. The Department of Taxation lets a business visibly pass the tax on, up to 4.712 percent including the county surcharge in every county through December 31, 2030. On QUEST health plan work you cannot add it, because Med-QUEST's manual treats it as part of the NEMT rate.

### Is a wheelchair van ride taxable in New York?

Not as an ambulette trip. New York has taxed transportation by livery service since June 1, 2009, which covers limousines, black cars, and community cars or vans with a driver. The Tax Department's guidance says the tax does not apply to ambulance, ambulette, or emergency service transportation, or to taxis and buses.

### Does my NEMT company owe Texas franchise tax?

Only above the no tax due threshold. For 2026 and 2027 reports, a company with total revenue of $2,650,000 or less owes no franchise tax, but it still files its Public Information Report or Ownership Information Report by May 15. Above the threshold, the rate for a business that is not retail or wholesale is 0.75 percent of its taxable margin.

### Does Washington charge NEMT companies B&O tax?

Not on rides. Carrying people for a fee is hauling for hire, which pays Washington's public utility tax instead of the business and occupation tax. The rate is 1.926 percent for most trips and 0.642 percent for trips that start and end within one city and the 5 miles around it. Ambulance service is not hauling for hire.

## Official resources

- [Hawaii Department of Taxation: General Excise Tax information](https://tax.hawaii.gov/geninfo/get/)
- [New Mexico TRD: Gross receipts location code and tax rate map](https://www.tax.newmexico.gov/governments/gross-receipts-location-code-and-tax-rate-map/)
- [Washington Department of Revenue: Motor and urban transportation](https://dor.wa.gov/taxes-rates/other-taxes/public-utility-tax/motor-and-urban-transportation)
- [Ohio Administrative Code 5703-9-06, Tax on transportation services](https://codes.ohio.gov/ohio-administrative-code/rule-5703-9-06)
- [South Dakota Department of Revenue: Shipping and Transportation tax fact](https://dor.sd.gov/media/4ivpeo1d/shipping.pdf)
- [New York Tax Department: TSB-M-09(7)S, sales tax on transportation services](https://www.tax.ny.gov/pdf/memos/sales/m09_7s.pdf)
- [Nevada Department of Taxation: Transportation Connection Tax](https://tax.nv.gov/tax-types/transportation-connection-tax/)
- [Texas Comptroller: Franchise tax](https://comptroller.texas.gov/taxes/franchise/)
- [Oregon Department of Revenue: Corporate Activity Tax](https://www.oregon.gov/dor/programs/businesses/Pages/corporate-activity-tax.aspx)