Free guide for contractors
Do contractors charge sales tax in Massachusetts?
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.
MA Massachusetts
Usually no tax on the invoiceUsually 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).
Watch out for
- Nonresident contractors give a 5% deposit or bond on contracts over $20,000; the hiring party withholds 5% only if no Department certificate is furnished (Directive 05-3).
- For exempt customers such as government agencies, 501(c)(3) organizations and schools, an electrician may buy materials exempt with Form ST-5C (Sales Tax Guide for Electricians).
“the contractors are the consumers of tangible personal property purchased by them for the performance of their contracts”Massachusetts DOR, Directive 14-2