Sales tax by state: are services taxable?
by June 5, 2024
When researching sales tax laws, you’ll often see taxability rules for “tangible personal property” or “physical goods”. This is because most states wrote these laws with only physical goods in mind. Historically, most states defaulted to a mindset of “products are taxable, services are exempt”. However, that has changed significantly in recent years, making sales tax compliance for businesses offering services complex.
On top of changing legislation, there are different definitions of services for sales tax purposes. While there are a wide variety of services, services are generally organized into four categories:
- Business services: These include services for businesses such as advertising, computer services, human resources services, lobby and consulting and payroll services.
- Personal services: These include services such as dry cleaning, hair care, and tanning salons.
- Professional services: These include services provided by accountants, architects, attorneys, and doctors.
- Maintenance and repair services: These include services that are provided to tangible personal property (for example, cars, or your house) or improvements to buildings and land (for example, landscaping).
Software as a service (SaaS) is generally not included in service taxability legislation. Instead, it is treated as software. We outline SaaS taxability for each state in this blog post.
Additionally, it’s difficult to find accurate information on how to manage service taxability for each state. This often means digging into rulings and documented minutes from state legislature meetings to determine if you need to charge sales tax in a certain state. To help make this easier, we’ve compiled a quick reference guide to service taxability by state. To dig in deeper to service taxability for each state, click the link on the state name for more information.
Service taxability by state
Alabama – Services in Alabama are generally not taxable, with a few exceptions.
Alaska – Services are not taxable in Alaska.
Arizona – Services in Alaska are generally not taxable, with a few exceptions.
Arkansas – Many services are taxable in Arkansas.
California – Services are not taxable in California.
Colorado – Services are not taxable in Colorado.
Connecticut – Many services are taxable in Connecticut.
Florida – Services in Florida are generally not taxable, with a few exceptions.
Georgia – Services are not taxable in Georgia.
Hawaii – Services are generally taxable in Hawaii.
Idaho – Services in Idaho are generally not taxable, unless the service you provide includes creating or manufacturing a product.
Illinois – Services are not taxable in Illinois.
Indiana – Services are not taxable in Indiana.
Iowa – Many services are taxable in Iowa.
Kansas – Many services are taxable in Kansas.
Kentucky – Services in Kentucky are generally not taxable, with a few exceptions.
Louisiana – Services in Louisiana are generally not taxable, with a few exceptions.
Maine – Services in Maine are generally not taxable, but there are a few exceptions.
Maryland – Services in Maryland are generally not taxable, with a few exceptions.
Massachusetts – Services in Massachusetts are not taxable.
Michigan – Services in Michigan are not taxable.
Minnesota – Services in Minnesota are generally not taxable, with a few exceptions.
Mississippi – Many services are taxable in Mississippi.
Missouri – Services in Missouri are generally not taxable, but there are a few exceptions.
Montana – Services are not taxable in Montana.
Nebraska – Services are generally not taxable in Nebraska, with a few exceptions.
Nevada – Services in Nevada are generally not taxable.
New Hampshire – Services are not taxable in New Hampshire.
New Jersey – Many services are taxable in New Jersey.
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Sign upNew Mexico – Most services performed in New Mexico are subject to gross receipts tax.
New York – Many services are taxable in New York.
North Carolina – Services are generally not taxable in North Carolina, with a few exceptions.
North Dakota – Services are generally not taxable in North Dakota, with a few exceptions.
Ohio – Many services are taxable in Ohio.
Oklahoma – Many services are taxable in Oklahoma.
Oregon – Services are not taxable in Oregon.
Pennsylvania – Many services are taxable in Pennsylvania.
Rhode Island – Services are not taxable in Rhode Island.
South Carolina – Services are generally not taxable in South Carolina, with a few exceptions.
South Dakota – Services are taxable by default in South Dakota, with a few exceptions.
Tennessee – Services are generally not taxable in Tennessee, with a few exceptions.
Texas – Many services are taxable in Texas.
Utah – Many services are taxable in Utah.
Vermont – Services are generally not taxable in Vermont, with a few exceptions.
Virginia – Services are generally not taxable in Virginia, with a few exceptions.
Washington – Many services are taxable in Washington.
West Virginia – Services in West Virginia are taxable by default, with some exceptions.
Wisconsin – Many services are taxable in Wisconsin.
Wyoming – Services generally not taxable in Wyoming, with a few exceptions
How to stay compliant with sales tax when you sell services
Managing all the moving parts of sales tax can be challenging. Are accounting services taxed? What about hair care or car maintenance? They may not be taxed in your state today, but sales tax laws change all the time. TaxJar makes it easier for you to stay current with it all, especially as you scale your business across states.
If you need to charge sales tax on services, TaxJar takes all of these state laws into account and makes your job simple. To learn more about TaxJar and get started automating your sales tax compliance, start a free, 30-day trial today.
