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Frequently Asked Questions about Residential Water Service

This guidance document is advisory in nature but is binding on the Nebraska Department of Revenue (DOR) until amended. A guidance document does not include internal procedural documents that only affect the internal operations of DOR and does not impose additional requirements or penalties on regulated parties or include confidential information or rules and regulations made in accordance with the Administrative Procedure Act. If you believe that this guidance document imposes additional requirements or penalties on regulated parties, you may request a review of the document.

This guidance document may change with updated information or added examples. DOR recommends you do not print this document. Instead, sign up for the subscription service at revenue.nebraska.gov to get updates on your topics of interest.

When is the sales tax exemption for residential water service effective?

The residential water exemption will apply to residential water bills prepared on or after October 1, 2021. There is not a proration of the bill, even though the bill may include water services provided prior to October 1, 2021.

Are mandatory charges billed for residential water service exempt?

Mandatory fees that are part of the gross receipts for providing residential water service are not subject to sales tax.

Does a separately metered sprinkling/irrigation system at a residential apartment building complex qualify as a residential water service?

A separately metered sprinkling/irrigation system at a residential apartment building complex is exempt.

If a residential apartment complex or assisted living facility has a separate meter for a laundry room, is the water service billed for that meter exempt as residential water service?

Water services billed through a separate meter for a laundry room at a residential apartment complex or assisted living facility are exempt if the laundry room is restricted to residents of the complex or facility and is not available for public use. 

Does a residential apartment complex or assisted living facility with a small business office qualify for the exemption?

A residential apartment complex or assisted living facility with a small business office is exempt if the small business office performs functions related to the operations of the residential apartment complex or assisted living facility.  Water services for a building with a single meter that has a commercial operation on the first floor, such as ice cream shop and apartments on the second floor would not be exempt.

Does a residence with an in-home daycare qualify for the residential water exemption?

A residence with an in-home daycare would qualify for the residential water service exemption.

Do mobile home parks qualify for the residential water exemption?

A mobile home park with a single meter where all cabin trailers and mobile homes have been permanently annexed to the land with permanent foundation would qualify for the exemption. Travel trailers and recreational vehicles are not generally considered residential, because they are not usually used as permanent places of abode. A mobile home park with a single meter that includes travel trailers and recreational vehicles would not qualify for the exemption. If the mobile home park has a separate meter for each lot, then a lot with a residential structure permanently annexed to the land would qualify for the exemption.

Does a building previously used as a residence converted to a nonresidential use, such as a restaurant or museum, qualify for the residential water exemption?

A residential building that has been converted to nonresidential use would not qualify for the residential water service exemption.

Does a residential building in the process of being built qualify for the residential water exemption?

A residential building in the process of being built would qualify for the residential water service exemption.

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