Free guide for contractors
Do contractors charge sales tax in New Jersey?
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.
NJ New Jersey
Depends on the jobIt 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.
Watch out for
- Repair and maintenance of residential heating systems (three families or fewer) are tax-free, parts and labor (S&U-3, p.10).
- Replacing all the tiles or the entire roof with upgraded materials can be a capital improvement rather than a repair (S&U-3, p.5).
- Work for exempt organizations, government agencies, qualified Urban Enterprise Zone businesses and qualified housing sponsors is exempt with a certificate (S&U-3, p.10).
- Subcontractors on taxable capital improvements collect tax from the general contractor (S&U-3, p.10).
“treated as taxable services, regardless of whether they result in a capital improvement”NJ S&U-3, on flooring, landscaping, alarms and signs