Sales tax on home services: what's taxable by state

Why there is no single answer

Sales tax was built for goods, and states have added services to it one by one. As of 2026, 45 states levy a statewide sales tax; Alaska has none at the state level but allows local sales taxes, and Delaware, Montana, New Hampshire and Oregon have no statewide sales tax^[1]. Inside the 45, the list of taxable services ranges from short to long, and local taxes are stacked on top. That is why a pest control company in one state charges tax on every visit and a company doing the same work across the state line charges none.

The businesses affected are mostly small. In 2023 there were 227,045 services-to-buildings-and-dwellings establishments with employees, a group that covers cleaning, pest control and landscaping^[4], and more than a million cleaning businesses with no employees at all^[5]. Many of them never register for a sales tax permit because nobody told them they needed one.

Where combined rates are highest

When a service is taxable, the rate the customer pays is the state rate plus local rates. California has the highest state rate at 7.25%, but the highest combined state and average local rates in 2026 are in Louisiana, Tennessee, Washington, Arkansas and Alabama^[1]. On a recurring commercial cleaning contract, a rate near 10% changes the customer's budget, so quote it clearly.

Three questions decide most cases

1. Is the service itself on your state's taxable list? Some states tax cleaning, pest control or lawn care by name; others tax almost no labor.
2. Is the work on real property or on tangible personal property? Fixing a dishwasher is usually treated differently from repairing a roof, because the roof is part of the building.
3. Is the property residential or commercial, and is it new construction? Several states treat these differently, and new-construction work bought by a builder can be excluded.

Texas, as a worked case

Texas is a useful example because its Comptroller publishes a clear list. Its taxable services include real property services, defined to include pest control and extermination, garbage and waste removal, janitorial and custodial services, and landscaping and lawn maintenance, including tree surgery^[2]. The same list includes personal property repair services, and the Comptroller names appliance repair as an example^[2]. Repair, restoration and remodeling of nonresidential real property is taxable, and the definition of nonresidential excludes property used as a family dwelling, such as apartment complexes^[2].

For lawn care there is a narrow exemption. A self-employed person with no employees does not collect tax on lawn services while gross receipts from those services stay at or under $5,000 during the most recent four calendar quarters; above that, tax collection starts on the first day of the next quarter^[3]. Taxable lawn work includes planting, mowing, trimming and edging grass, pruning and fertilizing plants, and maintaining trees and flower gardens^[3].

Example: a fictional Austin company offers house cleaning, lawn mowing and handyman repairs to homeowners, plus office cleaning for two small businesses. Under the Texas rules above, its cleaning and lawn services are taxable whether the client is a home or an office, while residential handyman repairs fall outside the nonresidential repair category. The owner sets three tax codes in the field service software, one per service line, and asks a CPA to review them once a year.

Set it up properly

1. 01

   List every service you sell

   Write each line item on your invoice today: recurring clean, deep clean, mowing, aeration, pest service, appliance diagnosis, part, labor, trip charge.

2. 02

   Check each against state guidance

   Look for your revenue department's taxable services list or industry guides. Note the page and date for your records.

3. 03

   Register before you collect

   If any service is taxable, get a sales tax permit before charging tax. Collecting tax without a permit creates its own problem.

4. 04

   Separate labor, parts and materials

   Many states tax materials and labor differently. Separate lines make it easier to apply the right rule and to defend an audit.

5. 05

   Map tax codes to locations

   Local rates differ by city and county. Most field service and accounting tools can look up the rate from the job address; turn that on.

6. 06

   Keep exemption certificates

   Builders, resellers and exempt organizations may hand you certificates. File them with the job; without them, the exemption may not hold.

7. 07

   Calendar the filings

   Monthly, quarterly or annual filing depends on volume. A missed filing often costs more in penalties than the tax itself.

Memberships, trip charges and bundled prices

The tricky invoices are rarely the simple ones. Four situations deserve a specific answer from your state guidance or your CPA before you set them up in software:

• Maintenance memberships. A yearly HVAC or pest plan may bundle taxable and non-taxable parts. Ask whether the plan is taxed when sold, when each visit happens or not at all.
• Trip and diagnostic charges. In states that tax a service, the charge to show up and diagnose it is often treated as part of that service. Do not assume it is exempt because no repair was made.
• Lump-sum bids. A single price for a landscape install that includes plants, stone and labor can be taxed differently from an itemized bid. Some states require itemization to treat labor separately.
• Discounts and coupons. Tax is usually calculated on the price after a seller's discount, but not after a manufacturer rebate the customer claims later. Set this up once and test it on a sample invoice.

When the guidance is unclear, many states let you request a written ruling. It takes time, but a written answer protects you if an auditor later disagrees with your reading.

Records that make an audit short

Sales tax audits of small service companies usually look at a sample period and ask you to show how each invoice was treated. The owners who get through them fastest keep the same five things:

1. Invoices that show service, parts, materials and tax on separate lines, with the job address.
2. A one-page tax map listing each service you sell and how you treat it in each state where you work, with the guidance you relied on.
3. Exemption and resale certificates filed by customer and job.
4. Filed returns and proof of payment for every period.
5. Notes on any change you made to tax settings, with the date and the reason.

Review the tax map once a year and whenever you add a service line. Adding window cleaning, gutter work or a small retail counter can change your obligations even if your main trade has not changed.

Working across a state line

Companies near a border often serve two states with different rules. Tax generally follows where the service is performed, so a single route can include taxable and non-taxable stops. Treat each state as its own setup: its own permit if needed, its own tax codes and its own filing calendar. Ask your CPA whether your volume in the second state creates any other registration duties, such as income or franchise tax, before you hire there.

Explaining tax to customers

Customers rarely object to tax they expected. They object to surprises. Put the tax treatment in your estimate and in your phone answers:

• "Our quote is the service price; state and local sales tax is added on the invoice because cleaning is taxable here."
• "Parts are taxed and labor is not in this state, so you will see two lines."
• "If you have a tax exemption certificate, please send it before the visit so we can apply it."

Sales tax is one item on a longer setup list. If you are just starting out, work through the startup legal checklist, then compare LLC and S corp structures with your CPA, since entity choice and tax registration usually happen in the same week.