Are transportation services taxable? Sales, excise, and gross receipts taxes on medical rides

Whether a ride fare is taxed depends on your state and on who pays for the ride. Some states tax passenger rides but carve out medical ones, some swap the sales tax for a small per-trip tax, and some tax the ride company’s gross receipts, Medicaid payments included. This page covers taxes on the ride and on the company’s revenue. Federal income and payroll tax are in the business tax guide, and tax on buying a van is in buying a wheelchair van in another state.

The examples come from each state’s statute, rule or revenue department as of October 2026. Rates and rules change, so use them to learn which questions to ask, then confirm the answer with your own state.

Is a medical ride fare subject to sales tax?

In states that tax rides, medical rides are often carved out, but each state draws the line differently: by the purpose of the trip, by the vehicle, or by who runs the service. Three states show the range.

• Iowa. Iowa taxes “personal transportation service,” which its revenue department says includes taxis, driver service, rides for hire and limousine service (Iowa Code section 423.2(6)(ac)). Section 423.3(106) exempts public transit, paratransit and medical transportation. The rule defines medical transportation as a personal transportation service for an individual to travel to a health care provider for the individual’s medical care, and says it is not limited to life-threatening trips (701 Iowa Administrative Code 211.33(4), effective August 28, 2024). The definition turns on why the person is traveling, not on the vehicle.
• Ohio. Section 5739.01(B)(3)(p) taxes the transportation of persons by motor vehicle when it is entirely within Ohio, except transportation by an ambulance service or a transit bus. Rule 5703-9-06 defines ambulance as a vehicle specially designed and equipped to provide medical transportation, and says that includes ambulettes built for riders who use a wheelchair. It also excludes transportation sold to or provided by a political subdivision or a state or federal agency. The exclusion describes a vehicle, not a destination, so a company that carries ambulatory riders in a standard vehicle should ask the Ohio Department of Taxation how that ride is treated.
• New York. Since June 1, 2009, New York has taxed livery service, which covers limousines, black cars and other motor vehicles such as vans with up to 14 passengers. Taxicabs and buses are outside the tax, and so is “ambulance, ambulette, or emergency service transportation.” Sales of transportation by a charity, school or health maintenance organization described in Tax Law section 1116(a)(4), (5) or (7) are exempt, but sales by a state or local government are taxable.

What happens when Medicaid or a facility pays the fare?

A Medicaid ride is paid at the program’s rate, and no tax can be added for the rider. Under 42 CFR 447.15, a provider accepts the agency’s payment plus any required copay as payment in full. Three states show what that does to the tax.

• South Dakota. The revenue department taxes buses, taxis, limousines and similar passenger transportation when it is wholly within the state, unless it is part of a public or rural transit system. Its July 2023 health services guidance says Medicaid payments are payments direct from the state and that services paid directly by Medicaid are exempt from sales tax.
• New Mexico. Section 16 of 8.324.7 NMAC says the Medicaid program’s reimbursement to a transportation provider is inclusive of gross-receipts taxes and other applicable taxes. The company owes the tax on that money, and the rate has to cover it.
• Hawaii. Med-QUEST’s QUEST Integration health plan manual tells plans not to pay general excise tax as a separate, additional cost on NEMT, because it is included in the NEMT and taxi meter rates.

When a tax-exempt buyer such as a nonprofit hospital or a nursing home pays your invoice, hold its exemption certificate before you leave tax off. South Dakota says nonprofit hospitals should give suppliers a certificate and that a government buyer must give a certificate or the seller must keep a purchase order or check stub showing government funds. New York requires an exempt organization to submit the right certificate, such as Form ST-119.1, and requires a state or local government buyer to use its letterhead or a purchase order. Georgia’s per-trip tax, covered next, does not apply to entities exempt from sales tax on purchases of services.

Which states charge a per-trip or fare tax instead of sales tax?

Georgia and Nevada tax the trip itself through a separate excise tax, and Georgia takes the ride out of sales tax in exchange.

Georgia charges a per-trip tax on each for-hire ground transport trip, in place of sales tax. From April 1, 2026 through March 31, 2027 the rate is $0.64 per trip and $0.32 per shared trip. The Department of Revenue resets it every April 1 for inflation under O.C.G.A. 48-13-141, so check its annual bulletin each spring. Policy Bulletin FET-2020-01 says that from August 5, 2020 such trips are exempt from state and local sales tax, and that no-show fees, cancellation fees and waiting fees are not subject to the tax. Limousine carriers, taxi services, ride share networks and transportation referral services collect it. Rule 560-13-3-.01 says a transportation referral service does not include emergency or nonemergency medical transports. That line sits in the definition of the referral category, so a company that runs its own licensed limousine or taxi should ask the Department of Revenue how it treats the company’s medical trips.

Nevada imposes an excise tax of 3 percent of the total fare, including fees, surcharges and card convenience charges, on the connection made by a common motor carrier of passengers or a taxicab certificate holder (NRS 372B.150 and 372B.160). The only exclusion for common motor carriers is airport transfer service. A NEMT carrier’s tariff on file with the Nevada Transportation Authority, stamped March 16, 2022, shows the 3 percent as a recovery charge that must be passed to all customers and shown apart from the fare.

Which taxes fall on the ride company’s gross receipts?

Hawaii, New Mexico and Washington tax what the company takes in, whoever pays. The tax belongs to the company, not the rider, and New Mexico’s Medicaid rule treats its rate as covering it.

• Hawaii. There is no sales tax. The general excise tax is 4 percent for most business activity, plus a 0.5 percent county surcharge in Honolulu, Kauai, Maui and Hawaii County through December 31, 2030. Hawaii Revised Statutes 237-24.3(12) exempts amounts received by a hospital, clinic, health care facility, pharmacy or medical or dental practitioner for health care goods or services bought under Medicare, Medicaid or TRICARE. It does not name transportation companies, so ask the Department of Taxation whether your Medicaid trips qualify.
• New Mexico. The gross receipts tax applies to services performed in the state. For transportation of persons, the receipt belongs to the place where the passenger enters the vehicle (FYI-105). A company that runs trips in several counties may owe a different local rate on each.
• Washington. A business that hauls people for a fee pays Washington’s public utility tax in place of the business and occupation tax. The rate is 1.926 percent for motor transportation and 0.642 percent for urban transportation, which means pickup and drop-off in the same city or within five miles of its limits, measured in a straight line. Fuel and other costs are not deductible. The Department of Revenue says hauling for hire does not include ambulances or school buses, so a wheelchair van is not on that list. A company with less than $2,000 in gross income in a month owes nothing for that month under RCW 82.16.040, but at $2,000 or more no exemption applies. RCW 82.16.047 exempts ride sharing for people with special transportation needs only when a public social service agency or a private nonprofit provider runs it.

Which revenue taxes start only above a certain size?

Four states tax revenue above a threshold, so a one-van company may owe nothing while a fleet with broker contracts does.

Texas still wants a Public Information Report or Ownership Information Report from a company under the threshold, and its annual report is due May 15. Oregon’s tax allows a 35 percent subtraction for certain business expenses. Each state defines revenue its own way and excludes some items, so read the definition, then add broker, Medicaid, facility and private-pay income together before comparing your company to the line.

How should tax appear on a private-pay invoice?

Show it the way your state’s rule asks, and quote riders the total they will pay. The rules differ.

• New Mexico. Since July 1, 2019, the gross receipts tax must be separately stated, or the customer must be told it is included in the billed amount.
• Hawaii. A seller may pass on the general excise tax visibly but does not have to. The most it may pass on is 4.7120 percent in Honolulu, Kauai, Maui and Hawaii County, because those rates include the county surcharge.
• Ohio. A provider of a taxable transportation service charges the tax on the entire price paid by the consumer.
• Iowa. For a taxable ride, the sales price includes reservation, service and cancellation fees and non-refundable payments.
• Georgia. The per-trip tax does not apply to no-show, cancellation or waiting fees.

Your quote is a separate question from the tax line. The all-in pricing guide covers which fees a quote has to include in states that require total prices, and how to price NEMT trips covers building the base price.

How do you find out what your state does?

Ask the revenue department, in writing, with your vehicle and payer in the question.

1. Find the taxable services list. Search your revenue department’s site for passenger transportation, taxi, limousine, ambulance and ambulette.
2. Separate your payers. Medicaid and broker trips, facility contracts and private-pay riders can each be taxed differently, so list your trips under those three headings.
3. Check the layers. Cities and counties can add their own tax on top of the state rate.
4. Register before you collect. New York asks a seller of a taxable transportation service to apply for a Certificate of Authority at least 20 days before the first taxable sale.
5. Ask in writing. Describe the vehicle, the rider and who pays, and keep the department’s reply with your tax records.

Keeping private-pay and Medicaid revenue apart in HealthRide

Every tax above depends on who paid for the trip, so keep each payer’s money separate from the first booking. HealthRide’s invoicing builds each facility or payer invoice from the trips you actually ran, and the payer summary in reports shows completed trips and revenue billed per payer over any period. That gives you the totals to hand an accountant when a threshold or a return asks for them.