Does sales tax apply to contractor work?
It depends on your state and the type of work. Most states tax the sale of materials but not labour for construction and repair services. However, some states (like Washington and New Mexico) tax the full contract price. A handful have no sales tax at all — Alaska, Montana, New Hampshire, Oregon, and Delaware.
Labour vs materials
In states that distinguish between the two, you typically only collect sales tax on the materials portion of the invoice — not your hourly labour charge. This is why itemising labour and materials separately on every invoice matters.
How to show sales tax on your invoice
Show it as a separate line item below your subtotal. Label it clearly as "Sales Tax" and include the rate if applicable. TradieNotes includes a Sales Tax field you can fill in manually before exporting your PDF.
- Sub Total (labour + materials)
- Sales Tax (your state rate on taxable items)
- Total Due
Your EIN on invoices
If you're operating as a business entity, your EIN (Employer Identification Number) is the equivalent of a tax registration number. Including it on invoices is good practice for larger commercial jobs.
Invoice with sales tax in 60 seconds
Snap your job notes, add your sales tax, export the PDF. $2 per invoice.
Create an invoice now