Do you charge sales tax on services?

It depends on the state and the service. Most states tax goods by default and only specific services, while a few, like Hawaii, New Mexico and South Dakota, tax most services. Common taxable services include repairs, landscaping, and digital products in some states. Check your state's taxable services list.

Updated November 2026 · By Pankil Kumar, Managing Partner

Quick facts

  • Default. Most states tax goods and list the services they tax
  • Taxes most services. A few states tax most services
  • Watch for. Parts and labor billed together

Which services are commonly taxed?

There's no national list, but these show up often.

  • Repair and maintenance of goods, such as auto repair
  • Landscaping and lawn care
  • Cleaning and janitorial services
  • Installation of goods
  • Software as a service and digital products, in some states
  • Telecommunications, admissions and amusement

Professional services like legal work, accounting and consulting usually aren't taxed, though there are exceptions. States keep adding digital services, so a rule that was true two years ago may not hold now.

How do you find out for your state?

Go to your state's revenue department site and search for "taxable services" or find the sales tax guide for your industry. Many publish fact sheets for specific trades. If the answer still isn't clear, some states issue written rulings on request. That's better than guessing for a large contract.

What about a mixed invoice?

A bill for both labor and parts is the common trap. In some states, if you lump them together, tax applies to the whole amount. If you list them separately, only the taxable part is taxed. So itemize your invoices. For auto repair shops and contractors, this one habit can change a lot of tax on a single ticket.

Where is the service taxed?

Sourcing rules decide which location's rate applies. Goods are usually taxed where they're delivered. Services might be taxed where they're performed or where the benefit is received. If you serve customers in other states, you may also need to check your nexus there.

What if you've been getting it wrong?

If you charged tax you shouldn't have, you can't just keep it. Refund the customer or send it to the state. If you should have charged it, you may owe it from your own pocket. See what to do if you never collected sales tax.

Sources

General information, not tax advice for your situation.

Selling in more than one state?

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Questions

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Do I charge sales tax on labor?

In many states, repair labor is taxed and construction labor isn't, but it varies. Check your state and itemize labor separately.

Is software as a service taxable?

In some states, yes. SaaS is one of the fastest-changing areas of sales tax, so check each state where you have customers.

Do consultants charge sales tax?

Usually not, but a few states tax most services, including Hawaii, New Mexico and South Dakota.

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