Thanks in part to the work of a coalition of national local government associations, the so-called three-percent withholding tax has been repealed. 

The federal Tax Increase Prevention and Reconciliation Act of 2005 contained a provision that would have required certain federal agencies and state and local governments (those with total annual expenditures of $100 million or more) to begin withholding three percent of payments to vendors for certain goods and services in 2013.

In November, the House voted 422-0 in favor of the bill repealing the tax. President Obama signed it into law later that month. 

TML member cities may use the material herein for any purpose. No other person or entity may reproduce, duplicate, or distribute any part of this document without the written authorization of the Texas Municipal League.

Back to Legislative Update Index