Contractor sales tax by state

No, for real property work. Alabama contractors pay sales or use tax on building materials when they buy them.

Alabama's rule says building materials bought by builders and contractors are subject to sales or use tax at the time of purchase.

Builders and contractors include anyone making repairs, alterations or additions to real property, so the rule covers repair work as well as new construction.

The rule does not apply to cook stoves, refrigerators, washing machines and portable heaters. Those are not building materials.

It turns on: whether the item becomes part of the real property; whether the item is a freestanding appliance.

“are subject to either Sales or Use Tax at the time of purchase.”Ala. Admin. Code r. 810-6-1-.27(3)

It depends on the city or borough. Alaska has no state sales tax, but some local governments levy their own.

The State of Alaska does not levy a sales tax. Some municipalities do.

A borough may levy a sales tax on sales, rents and services, grant exemptions by ordinance, and levy a use tax at the same rate. Cities may levy sales and use taxes too, inside or outside a borough, so a city tax and a borough tax can both apply to the same sale.

What is taxable and what is exempt is decided locally. State law spells out some exemptions; the rest are a local matter. So whether construction labor or materials are taxed depends on the code of the municipality where the work is done.

Sales tax forms and returns come from the local municipality where the business was conducted, not from the state.

It turns on: which city or borough the job is in; how that municipality's code treats construction labor and materials.

“The State of Alaska does NOT levy a sales tax.”Alaska DCCED, Office of the State Assessor, Alaska Sales Tax Information

It depends on the kind of job. Arizona taxes new construction and large alterations under prime contracting; repair and maintenance contracts are not taxed.

Arizona taxes contracting through its transaction privilege tax (TPT), under the prime contracting classification. The tax base is 65% of the gross proceeds, and cities following the Model City Tax Code allow the same 35% deduction. The state rate for prime contracting is 5.6%, which includes a 0.6% education increment running through June 30, 2041.

A contract with the property owner for maintenance, repair, replacement or alteration (MRRA) is not taxed under prime contracting if it includes no modification activities. Modification means construction, grading and leveling ground, wreckage or demolition. An alteration becomes a modification when the contract is more than 25% of the property's most recent full cash value for residential property, or more than $750,000 for other property. Related change orders count, and splitting a project to stay under the threshold is not allowed. Maintenance, repair and replacement are never alteration, whatever their size.

On an MRRA job the materials are subject to retail TPT. The contractor pays it when buying them, or pays the MRRA amount at the project location's rate if it bought them tax-free. The Department of Revenue says the contractor should not show tax as a separate line on the invoice for an MRRA project.

On a prime contracting (modification) job, the Department's FAQ says a licensed contractor may, but need not, show the tax as a separate line. The statute says everyone in the business of prime contracting must give the purchaser a written receipt of the gross income from the work and separately state the tax. A subcontractor doing modification work is not taxed if it can show the job was under the control of a prime contractor who is liable for the tax. The Department says the prime contractor gives each subcontractor a Form 5005 for this, and the subcontractor keeps it to show it does not owe the tax.

It turns on: whether the job is modification (new construction, grading, demolition) or maintenance, repair, replacement or alteration; for an alteration, the contract amount against the property's full cash value, or $750,000 for non-residential property; whether the contractor is the prime contractor or a subcontractor; the job site's location, which sets the local rate.

“the contractor should not include tax as a separate line item on the invoice to the customer for MRRA projects.”ADOR, Contracting FAQs

It depends on the work. Arkansas contractors pay tax on materials, but installing or repairing listed items in an existing building is taxed.

Arkansas treats all contractors as consumers of the tangible personal property they buy, and they pay tax at purchase. Materials used in a nontaxable service are not taxed to the customer.

Installing, repairing and replacing listed items, such as flooring, electrical devices and machinery, are taxable services even when the items are affixed to real property. An initial installation in an existing building is taxable, and so are the parts installed. The same installation in new construction is not taxable. Materials used in a taxable service are taxed to the customer.

Landscaping of residential and nonresidential property, and lawn care of nonresidential property, are taxable on the total contract, plants included. Pest control, janitorial and cleaning work, parking lot and gutter cleaning, alarm monitoring and locksmith services are also taxable services.

The state rate is 6.5%.

It turns on: whether the building is new construction or an existing building; whether the work is a listed taxable service, such as flooring or electrical installation; for lawn care, whether the property is residential or nonresidential.

“Initial installation in an existing building is taxable.”26 CAR § 30-519

Not on materials, but in California fixtures a contractor furnishes and installs, such as plumbing and lighting fixtures, are taxable sales.

California treats a construction contractor as the consumer of the materials it furnishes and installs. The contractor pays tax when buying them.

Fixtures are different. A contractor is the retailer of fixtures it furnishes and installs, and tax applies to those sales. The state's list includes plumbing fixtures, lighting fixtures, air conditioning units, furnaces and prefabricated cabinets.

If the contract does not state a fixture's price, its sale price is taken to be what the fixture cost the contractor.

Anything a contractor sells without installing it is taxable, and a contractor making such sales must hold a seller's permit.

It turns on: whether each item is a material or a fixture; whether the contract states the fixture's price; whether items are sold without installation.

“Construction contractors are consumers of materials which they furnish and install in the performance of construction contracts.”18 CCR § 1521(b)(2)(A)1

It depends on how the contract is priced. Lump-sum jobs carry no sales tax; time-and-materials jobs carry tax on materials.

On a lump-sum contract, Colorado treats the contractor as the consumer of the building materials. The contractor pays tax when buying them and collects no sales tax from the customer.

On a time-and-materials contract, the contractor collects sales tax from the customer on the marked-up price of the materials. Labor listed separately is not taxed. A contractor using time-and-materials contracts must have a sales tax license.

The Department's guidance defines a time-and-materials contract as one that states the price of building materials separately from the price of labor.

Home-rule cities run their own sales and use taxes, and the Department's guidance sends questions about them to the city.

It turns on: how the contract is priced (lump sum or time and materials); whether materials are priced separately from labor; whether the item is a building material or a non-building item; whether the job is in a home-rule city.

“the contractor must collect sales tax from its customer on the marked up price of the materials”Colorado DOR, FYI Sales 6

It depends on the property. Labor on existing commercial or rental property is taxed; new construction and owner-occupied homes are not.

Connecticut generally taxes services to existing industrial, commercial and income-producing property, unless the purchaser is exempt. Rented homes count as income-producing.

A contractor's labor is not taxed on new construction or on owner-occupied residential property. Owner-occupied means a building of one to three units, used only as a residence, where the owner lives.

On a taxable job, the Department's guide shows two ways to bill: list materials and labor separately and tax the labor, or state that sales tax is included on services. In its example, $600 of labor carries $38.10 of tax and $400 of materials carries none.

It turns on: whether the property is new construction, owner-occupied residential, or commercial or income-producing; what service is performed; whether the customer is exempt.

“Services to existing industrial, commercial, and income-producing property are generally taxable, unless the purchaser is exempt”CT DRS, IP 2018(2)

No. Delaware has no state or local sales tax, so there is no sales tax to add to a contractor's invoice.

Delaware imposes no state or local sales tax. It does impose a gross receipts tax on the seller of goods or the provider of services.

Contractors pay 0.6472% of their gross receipts, after a deduction of $100,000 a month. The Division of Revenue says these fees are imposed on the seller or service provider and may not be passed on to the consumer.

“Delaware does not impose a state or local sales tax”Delaware Division of Revenue, Gross Receipts Taxes

Not confirmed here. The District's contractor regulation could not be read for this review; maintenance and landscaping are taxable services.

D.C. Code treats the sale of materials used to build, repair or alter real property as a retail sale. That is how the District taxes a contractor's purchase of materials.

Real property maintenance and landscaping are taxable services in the District, and so is carpet and upholstery cleaning.

The District's regulation on construction contracts (9 DCMR 438), which sets out how different contract types are treated, could not be read from the official site for this review. This page does not state that rule.

The Office of Tax and Revenue gives the general sales tax rate as 6% through September 30, 2027. The same page says a planned increase has been postponed.

It turns on: how the contract is priced (not confirmed in this review); whether the work is maintenance or landscaping.

“The sale of or charges for the service of real property maintenance and landscaping”D.C. Code § 47-2001(n)(1)(M)

No, for most construction contracts. Florida contractors are the final consumers of their materials, with exceptions for retail-plus-installation contracts and movable items.

Under lump-sum, cost-plus, fixed-fee, guaranteed-price and time-and-materials contracts for real property, the Florida contractor is the final consumer of materials and supplies and should not charge tax to the customer.

A retail sale plus installation contract is the exception. When the materials are listed and priced in advance and the customer takes title as they are delivered, the contractor charges tax on all materials.

Selling and installing items that remain tangible personal property (not attached to the real property) is taxable on the full price, installation included. Hard-wired or permanently installed residential appliances are real property, with no tax on the appliance or the labor; freestanding appliances are taxable.

Nonresidential cleaning and nonresidential building pest control are taxable services at 6%.

It turns on: the type of contract (lump sum, cost plus, time and materials, or retail sale plus installation); whether the item becomes real property or stays tangible personal property; for cleaning and pest control, whether the property is nonresidential.

“the contractor is the final consumer of materials and supplies”FDOR GT-800067

No, for real property work. Georgia contractors who furnish and install materials are the consumers of those materials and pay the tax when buying.

Under O.C.G.A. 48-8-63, a contractor who furnishes materials and performs work on real property is the consumer of the materials it uses. The Department of Revenue says this is true even on contracts for government agencies.

Where goods are sold and installed, the Department says repair and installation labor is exempt when separately stated on the invoice. That applies to sales of goods, not to real property contracts.

The state rate is 4%, plus local taxes.

It turns on: whether the job is a real property contract or a sale of goods with installation; for a sale with installation, whether labor is stated separately.

“deemed to be the consumer of all tangible personal property used or consumed in performing such contract”O.C.G.A. 48-8-63, as quoted in Georgia DOR Contractor FAQs

Yes, as general excise tax rather than sales tax. Contracting income is taxed, and the contractor may pass the tax on if the customer agrees.

Hawaii's general excise tax (GET) applies to contracting at 4% of the gross income of the business, plus a 0.5% county surcharge sourced to where the project is. All four counties levy the surcharge through 2030. Contractors include anyone in the business of erecting, constructing, repairing or improving buildings or structures, or making an installation in them, and anyone practicing architecture, professional engineering, land surveying or landscape architecture, or pest control or fumigation as a pest control operator (HRS § 237-6).

Materials are part of the taxable contracting income, and their cost cannot be deducted. Materials built into the work are bought at the 0.5% wholesale rate on a resale certificate. A contractor may deduct amounts already taxed to a licensed subcontractor, when both are GET-licensed and the subcontractor is reported on Schedule GE; the deduction cannot exceed the project's gross income.

Passing the GET on to the customer is allowed but not required. The business must tell customers it plans to visibly pass it on, customers must agree to pay it, and it cannot exceed the tax actually owed. The maximum visible pass-on rate is 4.712% in each county. A business may not hold out that the tax is not part of the price.

It turns on: whether the contractor chooses to pass the tax on visibly; for a prime contractor, how much of the job went to licensed subcontractors.

“Businesses must tell their customers if they plan to visibly pass on GET and customers must agree to pay it”Hawaii DoTax, Tax Facts 37-1

No, for work that improves real property. Idaho treats the contractor as the consumer of materials, taxed when bought.

Idaho law makes everyone constructing, altering, repairing or improving real estate the consumer of the materials they use. The contractor pays sales tax to the supplier when buying them.

The State Tax Commission's contractor guide says a contractor doesn't charge sales tax to the customer for this work. Labor to improve real property is not taxed.

It changes when the contractor sells something that is not installed into real property. The contractor then collects tax on the retail part of the contract. For an item the contractor makes, such as cabinets sold at retail, that includes the labor to make it.

Built-in appliances, such as dishwashers, disposals, water softeners and garage door openers, become part of the building when installed. Free-standing stoves, refrigerators, washers and dryers stay personal property.

It turns on: whether the item becomes part of the building or stays movable; whether the contractor also sells items without installing them.

“A contractor doesn't charge sales tax to the customer”Idaho State Tax Commission, Contractors guide

Usually no. Illinois contractors owe use tax on materials built into real estate and charge the customer none for them.

Illinois makes a construction contractor owe use tax on the cost of property it incorporates into real estate. Built-in items, such as plumbing, heating and ventilation systems, water heaters and cabinets built into the structure, fall under this rule.

Items that stay movable are taxable retail sales: finished appliances such as stoves, refrigerators and washing machines, furniture, curtains and drapes, and floor covering that is not permanently fixed. Anything sold without installation is taxable too.

Voice, data, video, security and telecom systems sold at one contract price carry use tax for the contractor rather than a retail tax on the sale.

It turns on: whether the item is built in or stays movable; whether items are sold without installation.

“The construction contractor incurs Use Tax on the cost price of the tangible personal property”86 Ill. Adm. Code 130.1940(c)

It depends on how the contract is priced. One-price jobs carry no sales tax; with materials and labor stated separately, materials are taxed.

Indiana's Department of Revenue treats a contract that states the cost of materials and the cost of labor separately as a time-and-material contract. On those, the contractor collects sales tax on the materials and must hold a Registered Retail Merchant Certificate.

A contractor working for one price pays tax on materials when buying them and does not charge the customer sales tax.

Installation charges stated separately on an invoice are not taxed. On a time-and-material contract, though, work done on the material before it is handed over, such as shop fabrication or delivery, is taxable. A general labor charge that includes such fabrication can make the whole labor charge taxable.

Refrigerators, stoves, dishwashers, clothes washers and dryers and window air conditioners usually stay personal property, so selling one is taxable.

It turns on: how the contract is priced (one price or materials and labor stated separately); whether labor includes shop fabrication or delivery; whether the repair is to real property or to a free-standing item.

“a contract in which the cost of construction material and the cost of labor or other charges are stated separately”Indiana SIB #60, definition of a Time and Material Contract

It depends on the job. Iowa exempts labor on new construction and remodeling, but taxes repairs, installations and services such as landscaping.

Iowa contractors are generally the final consumers of building materials, supplies and equipment, and pay tax when buying them. Labor that would otherwise be taxable is exempt on new construction, reconstruction, alteration, expansion and remodeling of buildings.

Taxable labor stays taxable in all other cases, such as repairs and installations. Iowa's list of taxable services includes carpentry, electrical, plumbing, roof, shingle and glass repair, excavating, painting, landscaping, lawn care, tree trimming, extermination, and non-residential janitorial and building cleaning.

On a repair job, if the invoice is not itemized, the whole amount is taxed.

The state rate is 6%, plus a 1% local option sales tax where it has been adopted.

It turns on: whether the work is new construction, reconstruction, alteration, expansion or remodeling, or a repair or installation; whether the work is a listed taxable service, such as landscaping or extermination; on a repair, whether the invoice is itemized.

“Taxable labor charges remain subject to sales tax in all other instances, such as repairs and installations.”Iowa DOR, Iowa Contractors Guide

It depends on the job. Kansas exempts labor on original construction and residential work, but taxes labor on commercial remodeling and repair.

Kansas contractors are the final consumers of the materials they install for others. Labor on original construction is exempt. Original construction includes a building's first construction, adding an entire room or floor, finishing an unfinished portion for the first owner, and rebuilding or replacing a building damaged or destroyed by fire, flood, tornado, lightning, explosion, windstorm, ice loading, terrorism or earthquake.

Labor on residential work, including remodeling and repair of a residence, is exempt, and repairs to a residence are exempt whatever caused the damage. That is not automatic, though: repairing appliances or installing retail items at a home is taxable. Labor on commercial remodels, meaning installing, applying, servicing, repairing or altering, is taxable. Repair of tangible personal property is taxed on the total charge.

On a taxable job, a contractor may bill a lump sum that includes the tax, or bill the labor with the tax stated separately. It may not charge tax on the whole contract when the materials were already taxed at purchase.

The state rate is 6.5%, and local rates range from 0.10% to 3%. Taxable labor is charged at the job site's rate.

It turns on: whether the project is original construction; whether the property is residential or commercial; whether the work is on real property or on tangible personal property such as an appliance.

“Labor services are not automatically exempt simply because they are performed at a residential property.”KDOR Pub. KS-1525

No, for construction work. Kentucky contractors pay tax on materials when buying them and may not bill sales tax separately.

Kentucky's regulation makes a construction contractor pay tax on materials and fixtures when buying them, whatever the contract type: lump sum, cost plus, time and materials or other.

The contractor shall not bill sales tax as a separate charge to the customer on a construction contract. The regulation names trades such as carpentry, bricklaying, wall-to-wall carpeting, cement work, roofing, electrical work, plumbing, central heating and air conditioning, and painting.

A contractor engaged only in construction is not required to hold a retail sales tax permit.

Some services are taxable whoever provides them, including landscaping and lawn care, janitorial and cleaning services, and extended warranties. The statute also taxes interior decorating and design, although the contractor regulation lists interior decorating as a contractor trade.

It turns on: what trade the work is; whether the job is construction or a taxable service such as landscaping or cleaning; whether a free-standing item is sold.

“The contractor shall not bill sales tax as a separate charge to the customer”103 KAR 26:070 § 8(2)

No, for work on real property. Louisiana contractors are presumed to buy materials as consumers, and labor on immovable property is generally untaxed.

Materials sold to a Louisiana contractor for building, altering or repairing immovable (real) property are presumed to be sales to the contractor as consumer, so the contractor is liable for the tax. A signed writing showing that title passed first can rebut that presumption.

Labor to construct, install, remodel or repair immovable property is generally not taxable; labor on movables is. Repairs and maintenance to a home are not taxable, but repairs to movables in a home are.

The state rate rose to 5% on January 1, 2025, until December 31, 2029. Contracts bid before December 4, 2024 may claim the old rate on Form R-1075 under R.S. 47:305.11. Each parish has one local collector, and the state's lookup covers any Louisiana address.

It turns on: whether the work is on immovable property or on movables; whether title to materials passed to the customer before installation, shown in a signed writing.

“Repairs and maintenance to immovable property, such as a residence, are not taxable.”LDR Tax Reform FAQs (9.23.25), Q7

Usually no. Maine treats the contractor as the last user of materials, so no sales tax is added on lump-sum jobs.

Maine Revenue Services treats a contractor as the last user of the materials, who pays sales or use tax when buying them. No sales tax is added to a lump-sum job.

The bulletin's example of an electrician who is not a registered retailer and bills time and materials also adds no sales tax to the customer's charge.

It changes for a registered retailer whose practice is to invoice every customer for time, materials and sales tax, or whose contract passes title to the materials before installation. That contractor charges sales tax on the sale price of the materials.

A contractor who builds and sells items such as cabinets or furniture without building them in must get a retailer's certificate and collect sales tax.

It turns on: whether the contractor is a registered retailer that invoices sales tax; whether the item is built in or sold as a separate item; whether fabrication uses materials the customer provides.

“pays tax on its purchase of the materials and does not add sales tax to the charge to the customer”Maine IB 4 § 1, electrician example

No, for real property work. Maryland contractors pay tax on materials when buying them, and no tax is charged to the customer.

The Comptroller says a contractor's purchase of materials is taxable to the contractor and no tax is charged to the customer for real property work. Contract wording such as 'tax included', and the form of payment, do not change this.

Labor to install, erect, assemble or repair real property is not taxable, whether it is listed separately or billed in a lump sum.

Personal property is different. Separately stated labor to install personal property is not taxable, but when the installation charge is not stated separately, the entire sales price is taxable. Labor to fabricate tangible personal property is taxable either way.

Kitchen cabinets are real property in homes and businesses alike. Other counters and cabinetry installed in commercial spaces are treated as personal property.

It turns on: whether the item becomes real property or stays personal property; whether installation of personal property is stated separately; who the customer is.

“The purchase of the materials is taxable to the contractor and no tax is charged to the customer.”Comptroller of Maryland, Business Tax Tip #18

Usually no. Massachusetts treats construction contractors as consumers of their materials, and labor is not taxed.

Massachusetts treats construction contractors as the consumers of the materials they buy for their contracts. Labor is not taxed, and a lump-sum job carries no sales tax.

It changes when a contractor installs a complete unit of a standard item that needs no further fabrication. The contractor then acts as a vendor and collects tax on the item, while separately stated installation charges are not taxable. The Department's electricians guide gives a ceiling fan as an example.

The electricians guide also says an electrician who agrees to sell material and provide installation for a separate price acts as a vendor. Its own vendor section limits this to simply installing a complete unit of standard equipment without substantial fabrication, or a sale where the customer's real object is the material.

How the vendor rule applies to a full remodel with materials priced separately is not settled in the Department's published guidance.

It turns on: whether a line is a complete standard item that is simply installed; whether materials are priced separately on a remodel (not settled).

“the contractors are the consumers of tangible personal property purchased by them for the performance of their contracts”Massachusetts DOR, Directive 14-2

Usually no. Michigan treats contractors as consumers of materials, who may not charge sales or use tax directly to the customer.

Michigan treats contractors as consumers of the materials they use in constructing, altering, repairing or improving the real estate of others.

A contractor that pays sales or use tax on what it uses may not charge sales or use tax directly to its customer. It may include the tax in the total contract price as an overhead cost.

Property that stays tangible personal property, such as a free-standing appliance, a window air conditioner or window treatments, is a retail sale. A contractor making retail sales must be licensed under the General Sales Tax Act.

It turns on: whether the item becomes part of the real estate or stays movable; whether the contractor consistently operates as a retailer.

“may not charge sales or use tax directly to its customer.”Michigan RAB 2025-18

No, for construction contracts. Minnesota contractors pay tax on materials when buying them, but retail sales and some services are taxed.

In Minnesota, materials are taxable to the contractor at the time of purchase, and the contractor does not charge sales tax on construction contracts. A kitchen remodel, for example, is an improvement to real property, and no sales tax is charged to the customer.

A contractor does charge tax when it makes a retail sale, such as a freestanding appliance or materials sold without installation. Repair labor on tangible personal property, such as equipment repair, is not taxed when it is separately stated; labor to install an item that stays tangible personal property is taxed.

Building cleaning and maintenance, interior and exterior, residential and commercial, is taxable, and so is pest control. Lawn services are taxable, even under maintenance contracts, unless they are part of an initial landscaping project; a landscape construction contract is not taxable.

The state rate is 6.875%, plus local taxes.

It turns on: whether the job is an improvement to real property or a retail sale; whether the work is a taxable service such as cleaning, pest control or lawn care.

“Do not charge sales tax on construction contracts.”MN DOR, General Contractors and Subcontractors

It depends on whether the job is residential, its size and the trade. Large commercial jobs carry a 3.5% contractor's tax instead.

On non-residential jobs whose total contract price is over $10,000, Mississippi levies a 3.5% contractor's tax on the contract price. It replaces sales tax on component materials rather than adding to it. Apartments and condominiums are not residential for this tax.

The $10,000 threshold is the whole contract, not one invoice; continuing work orders and invoices count as one project. The contractor must get a Material Purchase Certificate before work begins, and contracts over $75,000 must be prepaid or bonded before work begins.

Residential jobs, and jobs of $10,000 or less, fall under the ordinary 7% sales tax, and the trade decides how. The Department's guide taxes gross income for HVAC, electrical, plumbing, grading and landscaping, and insulating, and for installed sales such as roofing, tile, glass, carpet, flooring, siding, windows, doors and fences.

For painting, drywall, masonry, carpentry and general remodeling, the contractor pays tax on materials and no sales tax is due on gross income. On a mixed job whose charges are not stated separately, the job's primary purpose decides.

It turns on: whether the job is residential or non-residential; whether the total contract is over $10,000; what trade the work is; on a mixed job, whether charges are stated separately.

“3.5% contractor's tax on contract price. No sales or use tax on purchases of component materials and services”MS DOR, Guide for Construction Contractors

No, for construction work. Missouri contractors are the final consumers of their materials, unless title passes to the customer before installation.

Missouri's regulation makes a contractor the final user and consumer of the materials and supplies used in a construction contract. A contractor is anyone who agrees to improve, repair, replace, erect or alter real property.

If title to an item passes to the customer after it is attached, the contractor pays tax when buying it and does not collect tax. If title passes before attachment, the contractor collects tax on the sale. Title passes after installation unless the parties agree otherwise.

A contractor that also sells products through a showroom charges tax on the total price of those direct sales.

It turns on: when title to the materials passes to the customer; whether the item is sold directly rather than installed under a construction contract.

“a contractor is the final user and consumer of the materials and supplies”12 CSR 10-112.010(1)

No. Montana has no general sales tax, so there is no sales tax to add to a contractor's invoice.

The Montana Department of Revenue says Montana does not have a general sales tax.

Some resort communities may levy a local resort tax of up to 3%, limited to lodging, restaurants, bars, destination recreation and luxuries. State law excludes appliances, hardware, tools and necessities of life from 'luxuries'.

“Montana does not have a general-use sales tax.”Montana DOR, Sales Tax Guidance

It depends on which option the contractor elected when registering. Option 1, the default, collects tax on materials.

Nebraska contractors elect one of three options, and the option applies to all of their construction contracts. A contractor may not operate under more than one at a time. A contractor that makes no election is treated as a retailer under Option 1.

Under Option 1, the contractor collects sales tax on the total amount charged for building materials it annexes to real estate. Separately stated labor is not normally taxed, but one combined price for materials and labor is taxed in full.

Under Options 2 and 3, the contractor normally collects no sales tax on repairs or improvements to real estate. Both still collect tax on property that is not annexed, on live plants and on taxable services.

It turns on: which option the contractor elected (1, 2 or 3); under Option 1, whether materials and labor are priced separately; whether the item is annexed to real estate.

“The option selected applies to all construction contracts.”Neb. Admin. Code REG-1-017.03A

No, for work improving real property. Nevada makes the contractor the consumer of materials, taxed on its purchase.

Nevada's regulation makes a construction contractor the consumer of all the tangible personal property it buys to improve real property. The tax applies to the price the contractor pays for it.

The definition of a construction contract covers lump-sum and time-and-material contracts alike. Repairs done under a construction contract follow the same rule.

Work on things that stay movable is different. Repairers are retailers of the parts and materials they furnish when their value is substantial, and appliance repairs are listed as substantial.

It turns on: whether the work improves real property or repairs something movable; on a repair, whether labor is stated separately.

“A construction contractor is the consumer of all the tangible personal property purchased for use in improving real property”NAC 372.200(1)

No. New Hampshire has no general sales tax, so there is no sales tax to add to a contractor's invoice.

The New Hampshire Department of Revenue Administration says there is no general sales tax on goods purchased in New Hampshire.

The Business Enterprise Tax and the Business Profits Tax fall on the business itself. Neither is a line on the customer's invoice.

“No, there is no general sales tax on goods purchased in New Hampshire.”NH DRA, Does New Hampshire have a sales tax?

It depends on the work. Capital improvements with a Form ST-8 carry no tax; repairs and maintenance are taxable.

In New Jersey, a capital improvement carries no sales tax when the property owner gives the contractor a fully completed Form ST-8, whether materials and labor are itemized or billed as one amount. New kitchen cabinets and fixtures are listed as capital improvements.

Repairs and maintenance are taxable. Only a separately stated pass-through of the actual cost of materials is left out, and any markup counts as labor. If materials and labor are not itemized on a taxable job, the entire receipt is taxable.

Some work is taxed even when it is a capital improvement: flooring, landscaping, alarm systems and permanently affixed signs.

It turns on: capital improvement versus repair or maintenance; whether the owner provides Form ST-8; what trade the work is; whether materials are itemized at cost.

“treated as taxable services, regardless of whether they result in a capital improvement”NJ S&U-3, on flooring, landscaping, alarms and signs

Yes, as gross receipts tax. New Mexico taxes construction receipts, labor and materials together, and tax passed on must be shown on the bill.

New Mexico's gross receipts tax (GRT) is imposed on the business, but it is commonly passed on. If it is passed on, it must be separately stated on the invoice. Since July 1, 2019, a bill must either separately state the tax or tell the customer that GRT is included.

Construction is a taxable service, and it includes the construction materials that become part of the project. GRT billed to the buyer is excluded from gross receipts, so there is no tax on the tax. Construction services are reported at the location of the construction site.

A subcontractor selling to a person in the construction business deducts those receipts with a Type 6 nontaxable transaction certificate (NTTC). Work for a government is still taxable: the sale-to-government deduction excludes construction materials. The 501(c)(3) deduction does not cover construction either, except for organizations providing homeownership to low-income families.

The state rate is 4.875% from July 1, 2026 to June 30, 2027. Combined state and local rates run from 5.25% to about 9.44%. Local rates change only in July, unless there is a special situation.

It turns on: the job site's location code, which sets the combined rate; whether the customer is a contractor that gave a Type 6 NTTC.

“If GRT is passed on to the customer, it is required to be separately stated on the invoice.”NM TRD, Gross Receipts Tax: Business Overview

It depends on the job. A capital improvement carries no sales tax; repair, maintenance and installation work is taxed on the whole charge.

New York splits work on real property in two. A capital improvement is an addition or alteration that meets all three tests: it adds substantial value or prolongs the property's life, it is permanently affixed, and it is intended to be permanent. On a capital improvement the contractor pays tax on materials to its supplier and collects no sales tax from the customer.

The contractor should get a completed Form ST-124, Certificate of Capital Improvement, from the customer. Without the form, the contract or other project records can still show that the work was a capital improvement.

Repair, maintenance and installation work is taxable, on all materials and labor billed. Repair and maintenance means keeping or restoring real property to fitness, efficiency, readiness or safety. Installing items that stay tangible personal property, such as washers, dryers, refrigerators and furniture, is a taxable installation, and the item itself is a taxable sale.

Lawn mowing, hedge and tree trimming and snow removal are taxable maintenance. Planting a new lawn, shrubs or trees is a capital improvement.

It turns on: whether the work meets all three capital improvement tests; whether the customer gave a Form ST-124; whether the customer is an exempt organization with an exemption certificate.

“Maintaining, servicing, and repairing real property are services that are subject to sales tax.”NYS DTF, TB-ST-505

It depends on the job. North Carolina taxes repair, maintenance and installation work; a capital improvement, such as a remodel, is not taxed.

North Carolina taxes repair, maintenance and installation (RMI) services to real property at the general rate. A real property contract for a capital improvement is different: the contractor is the consumer of the materials and must not separately state any tax on the invoice. Tax shown on a real property contract is an erroneous collection.

Capital improvements include new construction, reconstruction and remodeling, roofs, siding, plumbing and electrical systems, HVAC, painting or wallpapering (unless it is incidental to a repair, maintenance or installation service), decks, driveways and landscaping. Replacing more than one like-kind item, such as windows, doors, flooring, cabinets or countertops, is RMI unless it is substantiated as a capital improvement.

A capital improvement can be substantiated with records or with an affidavit of capital improvement (Form E-589CI); the person receiving the affidavit is protected unless there is fraud. On a mixed contract, if the unrelated RMI part is 25% of the price or less, the whole job is a real property contract; above 25%, the RMI part is taxed.

Cleaning of real property, pest control (the application of pesticides to real property), road, driveway and sidewalk services, and trash removal are exempt RMI.

It turns on: whether the work is a capital improvement or repair, maintenance and installation; for like-kind replacements, whether they are part of a capital improvement; on a mixed contract, whether the RMI part is more than 25% of the price.

“shall not separately state any amount for tax for a real property contract”N.C.G.S. 105-164.4H(a)

No, for property installed into real estate. North Dakota contractors pay the tax when buying materials and may not itemize it.

North Dakota's Tax Commissioner says a contractor who incorporates tangible personal property into real property owes the sales or use tax when buying it.

That tax can be passed to the customer as a materials cost, but it cannot be itemized as a sales tax charge on the customer's invoice.

A contractor making retail sales may buy that property tax free, and must then charge sales tax on what it sells.

It turns on: whether property is installed into real estate or sold; for sand, rock and dirt, whether it is spread or only dumped.

“It cannot be itemized as a sales tax charge on the customer’s invoice.”ND Tax Commissioner, Tax responsibilities for contractors

No, for construction contracts. Ohio contractors are the consumers of their materials, but carpet, landscaping and several services are taxable.

In Ohio a construction contract is not a sale. The construction contractor is the consumer of the materials it incorporates into real property, whether the job is new construction or an addition or alteration.

Some work is never a construction contract. The sale and installation of carpeting, and of landscaping and lawn care materials, are taxable sales. An agreement to transfer and install a business fixture is a sale, not a construction contract.

Repair and installation of tangible personal property, landscaping and lawn care, building maintenance and janitorial service, and exterminating are taxable services.

It turns on: whether the work is a construction contract or a sale such as carpeting or a business fixture; whether the work is a taxable service, such as landscaping, janitorial work or exterminating.

“The construction contractor is the consumer of such tangible personal property.”R.C. 5739.01(B)(5)

Usually no. Oklahoma treats contractors as consumers who pay sales tax on materials used to improve real property.

Oklahoma's rules define contractors as consumers or users. They pay sales tax on the materials, supplies and equipment they buy to develop, repair, alter, remodel and improve real property.

So there is nothing to add to the customer's invoice for real property work. The rules give painting, road, grading and excavating, electrical and plumbing contractors as examples.

Items that do not become attached to real property are sales of tangible personal property. A septic tank sold without connecting it is one example in the rules.

Oklahoma generally does not tax repair labor. On a lump-sum repair, the repairer pays tax on the parts and charges none. Separately stated parts are taxable, and separately stated labor is not.

It turns on: whether the item is attached to real property; what trade the work is (alarm and security systems); on repairs, whether parts are stated separately.

“Contractors are defined by statute as consumer/users and must pay sales tax”OAC 710:65-7-13(a)

No. Oregon has no general sales tax, so there is no sales tax to add to a contractor's invoice.

The Oregon Department of Revenue says Oregon has no general sales or use tax. The exceptions it lists, a vehicle use tax and lodging and rental-car taxes, are not charges a contractor bills.

Oregon's Corporate Activity Tax applies to taxable Oregon commercial activity over $1 million. It is the business's own tax, not an invoice line.

“Oregon doesn't have a general sales or use/transaction tax.”Oregon DOR, Sales Tax in Oregon

No, for construction work. Pennsylvania contractors pay tax on what they install and may not bill it as a separate item.

Pennsylvania requires a contractor to pay tax on the materials, equipment and supplies it furnishes and installs in construction activities. This applies to lump-sum, cost-plus, unit-price and time-and-materials contracts alike.

The contractor may include that tax in its bid, but not as a separately stated item. Construction activities include repairing real estate. Items such as plumbing systems, furnaces, water heaters, electrical fixtures, roofing, siding and attached cabinets are presumed to become part of the real estate.

Painting, wallpapering, sandblasting, brick pointing, driveway sealing and building repair are not taxable building maintenance. Selling and installing floor covering is a construction contract; a straight sale of floor covering, with no installation, is taxed.

Items sold that do not become part of the real estate, such as appliances that are not built in, window air conditioners and water softener or filtration equipment, are taxable. Labor and transportation tied to that sale are taxable even when stated separately.

It turns on: whether the item becomes part of the real estate; whether the work is construction or a taxable service such as lawn care or cleaning; for flooring, whether it is installed or sold outright.

“The contractor may include the tax he must pay in his bid proposal but not as a separately stated item.”61 Pa. Code § 31.12(a)(1), Example 1

Usually no. Rhode Island treats the contractor as the consumer of materials on lump-sum, cost-plus and time-and-material contracts.

Rhode Island's regulation treats a contractor as the consumer of materials used in a lump-sum, cost-plus, time-and-material or any other kind of construction contract.

The exception is a contractor who contracts to sell materials at an agreed price and charges for the service separately. That contractor is a retailer, taxes the materials but not the labor, and must hold a permit to make retail sales. The Division's example taxes $12,000 of deck materials at 7% ($840) and leaves $15,000 of labor untaxed.

Standard units are taxed on their selling price. If that price is not stated separately from the installation charge, the entire charge is taxable.

It turns on: whether the contractor contracts to sell materials at an agreed price; whether a line is a complete standard unit; whether the contractor is a nonresident.

“where the contractor contracts to sell materials or supplies at an agreed price and to render service in connection therewith”RI Division of Taxation, Contractor Guide

No, for construction work. South Carolina contractors are the consumers of what they buy, unless they are really retailers making sales and installations.

In South Carolina a construction contractor is the user or consumer of everything it buys, and pays tax on building materials.

A retailer making sales and installations is different: it taxes the materials, but separately stated, reasonable installation labor is not taxed. Whether a business is a retailer or a contractor depends on the facts, such as advertising, a showroom, licensing, subcontract work and how materials are priced on the invoice.

The statewide rate is 6%.

It turns on: whether the business is a construction contractor or a retailer making sales and installations; for a retailer, whether installation labor is separately stated.

“A construction contractor is the user or consumer of everything he buys.”SC Sales and Use Tax Manual, ch. 16

It depends on the work. Building or repairing real property carries a 2% contractor's excise tax instead of sales tax; some trades charge sales tax.

South Dakota levies a 2% excise tax on the gross receipts of prime contractors on realty improvement contracts. That covers repair and remodeling of existing real property as well as new construction. Construction services are exempt from sales tax, except floor laying and locksmiths.

The excise tax applies to the total contract price, labor and materials, with no deduction for materials, labor or payments to subcontractors. Except on qualified utility projects, materials the owner furnished are included. A contractor may list the excise tax and any use tax as a separate line item on contracts and bills. Because tax collected is itself gross receipts, the Department suggests a bid factor of 2.041% to recover the full 2%.

The contractor is the consumer of the materials it installs and pays sales or use tax on them. A subcontractor that keeps the prime contractor's project exemption certificate owes no excise tax; one without it is treated as a prime contractor.

Some contractor work is subject to sales tax instead: lawn, garden and tree services done apart from a realty improvement contract, most floor covering sales and installations, cleaning, calibration and adjustment without repairing or replacing parts, and repair services. The state sales tax rate is 4.2%, with municipal tax of 1% to 2% on top; the statute shows 4.5% effective July 1, 2027.

It turns on: whether the job is a realty improvement or a sales-taxable service; for flooring, the type of floor covering; whether the contractor is the prime contractor or a subcontractor holding a certificate.

“The tax imposed by this chapter applies to the total contract price including all labor and materials.”SDCL 10-46A-3

No, for work on real property. Tennessee contractors pay tax on installed materials and may not itemize it to the client.

Tennessee contractors and subcontractors are the users and consumers of materials that become part of real property. Construction labor and markup are not taxable, and the tax cannot be itemized separately and collected from the client. The contractor stays liable for tax on materials even when the client is an exempt entity.

Repair of tangible personal property, and installation of property that stays tangible personal property, are taxable services. Labor on real property generally is not.

Work on real property is untaxed only when it is billed separately from work on tangible personal property. One lump sum for maintenance on both makes the entire amount taxable.

The state rate is 7%, and local option rates run from 1.50% to 2.75%.

It turns on: whether the work is on real property or tangible personal property; whether real property work is billed separately from work on movable property.

“The sales or use tax cannot be itemized separately and collected from the contractor's client.”TN Sales and Use Tax Manual (Aug. 2026)

It depends on whether the property is residential and how the contract is written. Residential lump-sum jobs carry no sales tax.

In Texas, labor to repair, remodel or restore residential real property is not taxable. Under a lump-sum contract for residential work or new construction, the contractor pays tax on supplies and materials when buying them and does not charge the customer tax.

Under a separated contract, the contractor collects state and local sales tax from the customer on the amount charged for materials, and labor is not taxed. The materials price must be at least what the contractor paid.

Repair and remodeling of nonresidential property is different: the contractor collects state and local sales tax on the total charge for the job. Separately stated building permit fees, maintenance labor, and separately stated labor to repair damage from a declared disaster are not taxed.

A contract is a separated contract when its terms require invoices or progress billings to state these charges separately. Itemizing an invoice may not, on its own, make it one.

It turns on: residential or nonresidential property; repair and remodeling versus new construction; lump-sum versus separated contract.

“Labor to repair, remodel, or restore residential real property is not taxable.”Texas Comptroller, Pub. 94-116

No, for real property improvements. Utah says the contractor's charge to the homeowner is not taxable.

Utah's Tax Commission treats a sale of a real property improvement as not taxable. The contractor pays tax on materials when buying them, and the charge to the homeowner is not taxable.

On a contract to furnish and install, the contractor may not show the tax, or any amount that appears to be tax, as a separate line on the invoice or contract.

Labor to service, repair, renovate or improve real property is exempt. These points come from Tax Commission Publication 42 (revised July 2026).

It turns on: whether the work improves real property or repairs an appliance; whether items are sold without installation.

“Since sales of real property improvements are not taxable, the contractor's charge to the homeowner is not taxable.”Utah Publication 42

No, for real property work. Vermont contractors pay tax on their materials and may not itemize sales tax on the invoice.

In Vermont, sales of materials to contractors and repair persons for building, improving, altering or repairing real property are retail sales, so the contractor pays the tax as the consumer. When the materials are incorporated into buildings and structures, the contractor does not charge sales tax to the customer.

A contractor may not itemize sales tax on its invoice. It may state that it has paid the applicable Vermont taxes on materials.

A manufacturer or retailer doing real property work is treated as a contractor unless it elects retailer treatment under 32 V.S.A. § 9711. The election is filed 30 days ahead and binds for five years, and under it the business collects tax from the customer.

It turns on: whether the business has elected retailer treatment; whether the materials are incorporated into real property.

“the contractor should not charge sales tax to the customer”Vermont Department of Taxes, Contractors

No, for construction work. Virginia contractors are the consumers of their materials and allow for the tax in their bids, not as a tax line.

Virginia deems a person who contracts to do construction or other real property work, and furnishes the materials, to have bought those materials for use or consumption. The contractor does not pass the tax on to anyone else as a tax; it allows for the tax in its bid.

A contractor that also sells goods to customers is a dealer for those sales and must register. A retailer that sells and installs goods adds tax to the sales price. A separately stated installation charge is not taxed; if it is not separately stated, the total is taxed.

Persons who furnish and install locks and locking devices are retailers, not using or consuming contractors, and so are businesses primarily installing security systems for financial institutions.

It turns on: whether the job is a real property contract or a retail sale with installation; for a retail sale, whether installation is separately stated; whether the work is lock or financial-institution security installation.

“does not pass the sales or use tax on to anyone else as a tax.”23VAC10-210-410(A)

Yes. Washington treats construction for a property owner as a retail sale, taxed on the full contract price.

Washington law defines building, repairing, decorating or improving buildings and other structures for consumers as a retail sale. A prime contractor is taxed under the retailing classification and collects retail sales tax from the customer.

The tax is measured by the full contract price, labor and materials together. Showing a charge separately in a bid does not take it out of the taxable amount.

The tax has to be stated separately on the invoice. The Department of Revenue says the words 'tax included' are not enough. The rate is the one where the construction takes place.

A subcontractor working for a prime contractor makes a wholesale sale, and charges no sales tax, when the prime contractor gives it a valid reseller permit.

It turns on: whether the customer is the property owner or a contractor with a reseller permit; where the job site is (the local rate); whether the customer is a government and the work is public road or federal contract work.

“Prime contractors are required to collect from consumers the retail sales tax measured by the full contract price.”WAC 458-20-170(4)(a)

It depends on whether the job is a capital improvement. Capital improvements carry no sales tax; other repair and maintenance can be taxed.

West Virginia's consumers sales and service tax applies to selling goods and to furnishing all services, except professional and personal services. It does not apply to contracting services. A contractor's own purchases of goods and services used in contracting have been taxable since March 1, 1989.

Contracting means furnishing work, or work and materials, for another. Repair counts as contracting only when the repair is itself a capital improvement. A capital improvement is affixed to and becomes part of a building, structure or real property.

A capital improvement must be relatively permanent, meaning it lasts at least a year without regularly scheduled service at intervals of less than a year (W. Va. Code § 11-15-2(b)(3)(C)(vi)). Hook-up, connection or installation that is incidental to the seller's retail sale of goods from its own inventory, such as wall-to-wall carpet or household appliances, is not contracting. Repair or maintenance that is not a capital improvement is not contracting, and the tax applies to services generally.

Municipalities may add a 1% municipal sales and use tax to the 6% state rate.

It turns on: whether the work is a capital improvement; whether the work is relatively permanent or needs recurring service; where the job is, for the municipal tax.

“The term "repair" means, and is limited to, repairs which are capital improvements”W. Va. Code § 11-15-2(b)(3)(C)(iii)

It depends on the work. Wisconsin construction work carries no sales tax, but repairing many building systems and landscaping are taxed.

A Wisconsin contractor doing a real property construction activity is the consumer of its materials and is not permitted to collect sales tax from its customers. Installing a furnace in a home, for example: the contractor pays tax on the furnace, and the charge to the customer is not taxable.

Repair and maintenance of certain items, such as air conditioners, boilers, bathroom fixtures and dishwashers, is taxable, even if their original installation was a real property improvement. Repairing a furnace in a home is taxable on the entire charge, travel included.

Landscaping and lawn maintenance services are taxable. Servicing business fixtures and equipment in commercial establishments is taxable; similar work in homes may be a nontaxable realty improvement.

The state rate is 5%, plus 0.5% county tax where adopted. Since January 1, 2024, Milwaukee County's rate is 0.9% and the City of Milwaukee adds 2%.

It turns on: whether the work is a real property construction activity or a repair; what item is being repaired or serviced; whether the property is residential or commercial.

“A contractor who performs a real property construction activity is not permitted to collect sales tax from its customers”WI DOR Publication 207, Part 2.C

No, for real property work. Wyoming treats contractors as the end users of materials, who pay sales tax when buying them.

Wyoming law makes a contractor who furnishes tangible personal property under contract, or in developing real property, its consumer or user. The Excise Tax Division says contractors pay sales tax at the point of purchase.

Labor to alter, improve or construct real property is not taxed, unless it is performed within an oil or gas wellsite.

Repairs, alterations or improvements to tangible personal property are taxable, and so is renting out equipment. Every vendor needs a Wyoming sales tax license.

It turns on: whether the work is on real property or on movable property; whether the job is at an oil or gas wellsite.

“Wyoming law regards contractors to be the end users of all materials and supplies”Wyoming Excise Tax Division, Contractor bulletin