Free guide for contractors
Do contractors charge sales tax in Kansas?
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.
KS Kansas
Depends on the jobIt 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.
Watch out for
- If a contract neither states the tax nor says that all applicable sales taxes are included, the customer is presumed not to have been charged sales tax (KDOR Pub. KS-1525).
- An exempt entity can pass its exemption to a contractor only through a Project Exemption Certificate issued by the Department of Revenue (KDOR Pub. KS-1525).
- Labor services on real property cannot be bought for resale by a general contractor (KDOR Pub. KS-1525).
“Labor services are not automatically exempt simply because they are performed at a residential property.”KDOR Pub. KS-1525