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FAR and DFARS › FAR Part 29: Taxes › Subpart 29.3

FAR 29.305 State and local tax exemptions.

The codified text (eCFR, as of 2026-10-02). Under the Revolutionary FAR Overhaul ↗, agencies follow class deviations with new text for many parts while the formal rules go through the Federal Register: check the solicitation and your contract's clauses, which rule.

In plain English

This section explains how contractors can establish and provide evidence of exemption from State or local taxes when the U.S. Government is the buyer. It matters because it tells you what documents may prove the exemption and when the Government will furnish that proof to you.

Applies to: Government contractors seeking State or local tax exemptions on purchases for the U.S. Government

What it requires

  • If a reasonable basis for a claimed exemption exists, the seller will be furnished evidence of exemption as described in the section
  • Under a contract or purchase order with no tax provision, the contractor must either have a contract price that does not include the tax or consent to a reduction in the contract price if the transaction or property is tax exempt

Key terms: State and local tax exemptions · evidence of exemption · U.S. Tax Exemption Form (SF 1094) · cost-reimbursement contract · contracting officer

Written by AI from this section's text. A guide, not legal advice: the text below rules.

The text

(a) Evidence of exemption. Evidence needed to establish exemption from State or local taxes depends on the grounds for the exemption claimed, the parties to the transaction, and the requirements of the taxing jurisdiction. Such evidence may include the following:

(1) A copy of the contract or relevant portion.

(2) Copies of purchase orders, shipping documents, credit-card-imprinted sales slips, paid or acknowledged invoices, or similar documents that identify an agency or instrumentality of the United States as the buyer.

(3) A U.S. Tax Exemption Form (SF 1094).

(4) A State or local form indicating that the supplies or services are for the exclusive use of the United States.

(5) Any other State or locally required document for establishing general or specific exemption.

(6) Shipping documents indicating that shipments are in interstate or foreign commerce.

(b) Furnishing proof of exemption. If a reasonable basis to sustain a claimed exemption exists, the seller will be furnished evidence of exemption, as follows:

(1) Under a contract containing the clause at 52.229-3, Federal, State, and Local Taxes, or at 52.229-4, Federal, State, and Local Taxes (State and Local Adjustments), in accordance with the terms of those clauses.

(2) Under a cost-reimbursement contract, if requested by the contractor and approved by the contracting officer or at the discretion of the contracting officer.

(3) Under a contract or purchase order that contains no tax provision, if—

(i) Requested by the contractor and approved by the contracting officer or at the discretion of the contracting officer; and

(ii) Either the contract price does not include the tax or, if the transaction or property is tax exempt, the contractor consents to a reduction in the contract price.

Sections it refers to

  • 52.229-3 Federal, State, and Local Taxes.
  • 52.229-4 Federal, State, and Local Taxes (State and Local Adjustments).

Sections that refer to it

  • 29.302 Application of State and local taxes to the Government.

← 29.304 Matters requiring special consideration. · 29.401 Domestic contracts. →

Rule changes for FAR Part 29

Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.

FAR 29.305 State and local tax exemptions · SpendQuery