Sales tax for US contractors

There is no single national rule. What you charge depends on the state, sometimes the city, the type of work and whether it is labor or materials.

Start with where the work happens

States treat construction, repair, installation and maintenance differently. Many separate improvements to real property from sales of goods. Do not assume the rules in one state apply in the next.

Labor and materials can be taxed differently

Depending on the state and the contract, materials may be taxable while labor is not, both may be taxable, or you may be treated as the end consumer of the materials and pay tax when you buy them.

The generator handles this: turn on Split labor & materials, then set Sales tax applies to to materials only, labor only or everything.

Registration and exemption certificates

Check whether you must register to collect tax, and keep any exemption or resale certificates your customers give you with the invoice for that job.

Show the tax on its own line

If tax is due, show it as a separate amount. Remember the tax box in any invoice tool is only a calculator — it cannot tell you whether a job is taxable or which rate applies.

Use official sources

Your state department of revenue is the place to start. Talk to a tax professional for multi-state work or large contracts.

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Educational information only, not tax or legal advice, and not a substitute for current state guidance.