Free guide for contractors
Do contractors charge sales tax in Pennsylvania?
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.
PA Pennsylvania
Usually no tax on the invoiceNo, 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.
Watch out for
- Lawn care on an existing lawn, such as mowing and fertilizing, is taxable; establishing a new lawn, tree trimming and planting shrubs are not (61 Pa. Code § 55.6).
- Building cleaning and pest control are taxable services (61 Pa. Code § 9.3; § 60.1).
- Central air conditioning maintenance and alarm maintenance can be taxable building maintenance; residential air conditioning maintenance has not been taxable since July 1, 2000 (61 Pa. Code § 60.1).
- A contractor doing both construction and sales must hold a sales tax license and may not collect tax without one (61 Pa. Code § 31.12(a)(4); § 31.13(k)).
“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