Free guide for contractors
Do contractors charge sales tax in Idaho?
General information, not tax advice. Tax rules change and depend on the details of each job. Confirm how they apply to your business with your accountant or the state's revenue department before relying on them.
ID Idaho
Usually no tax on the invoiceNo, 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.
Watch out for
- On a free-standing appliance sold with installation, sales tax is due only on the unit when the installation charge is properly separated (IDAPA 35.01.02.014.04).
- An exempt customer's exemption does not pass to the contractor, who still pays tax on the materials (IDAPA 35.01.02.012.06.b, 012.07).
“A contractor doesn't charge sales tax to the customer”Idaho State Tax Commission, Contractors guide