Is Labor Taxable in Georgia? Sales Tax on Contractor Labor

Real property work: you are the consumer of the materials

Georgia's contractor rule reads: "Any person who contracts to furnish tangible personal property and perform services thereunder in constructing, altering, repairing or improving real property in this State is deemed to be the consumer of all tangible personal property used or consumed in performing such contract." The tax is due "at the time of purchase, use, storage or consumption in this State, whichever occurs first."

In plain terms, you pay sales tax at the supply house on the lumber, wire, pipe, shingles and fixtures, and that is the end of the tax on them. Your customer's bill for the remodel carries no sales tax, whether you write it as one lump sum or break it into labor and materials. A bathroom remodel at $18,000 is an $18,000 invoice.

Repairs to real property are inside the same rule. The word "repairing" is in the definition, so a plumber replacing a section of pipe under a slab, a roofer fixing flashing and an electrician swapping a failed breaker panel are all working under a real property contract.

Three things follow from being the consumer:

• You cannot buy materials tax free. The Department's FAQ answers "No" to whether contractors can buy materials exempt, "even if the materials are used in contracts performed for government agencies." A resale certificate is not for materials you will build into a job.
• Untaxed materials mean use tax. If a customer supplies materials nobody paid Georgia tax on, or you buy from an out-of-state seller who charged none, you accrue use tax and report it on your return.
• Every contractor registers. Resident and nonresident, general and sub, all contractors must register for a sales and use tax number and, under the rule, file a return monthly on Form ST-3 unless the Department authorizes another schedule. The Department's FAQ says a return is due "even if there is no sales or use activity."

Cabinets show where the line sits. Build cabinets at the job site and fix them into the house, and you are a contractor paying tax on your cost of materials. Sell finished cabinets from your shop, and you are a dealer collecting tax on the sale price, with installation labor untaxed "when billed separately to the consumer." Alarm and sound systems follow the same split: installed into real property, you pay tax on what you used; sold as goods, you collect it.

Painters and paperhangers have a rule of their own, and it is one sentence: they "perform services not taxable under the Act" and pay tax on their paint, wallpaper, supplies and equipment.

Source: Ga. Comp. R. & Regs. r. 560-12-2-.26, Contractors, Georgia DOR: Contractor FAQs, r. 560-12-2-.94, Cabinet Makers, r. 560-12-2-.98, Alarm, Warning, Sound and Music Devices and r. 560-12-2-.68, Painters and Paperhangers.

Selling goods with installation: the separate line rule

When what you hand over stays movable property, you are a retailer for that item. A window air conditioner, a freestanding range, a portable generator or a dehumidifier you sell and set up all fall here. You collect tax on the price of the goods.

The Labor rule decides what happens to your installation charge: "Charges for labor in installing, applying, remodeling or repairing tangible personal property sold, when billed separately to the consumer, are not considered a part of the sales price of the article sold. Unless such labor is separately stated on the consumer's invoice, the total charge shall be subject to the tax."

Take a $1,400 range with $200 of installation. On two lines, tax applies to $1,400. As one line reading "range, installed, $1,600," tax applies to $1,600. At an 8% combined rate that is $112 against $128, for the same job.

Delivery is different. The Department lists delivery charges inside the taxable sales price of goods. Its own example is a $20 shirt with $5 delivery, taxed on $25. So a delivery fee on a taxable item is taxed even on its own line, while installation labor on its own line is not.

The Department's contractor FAQ states the labor rule in one short answer: "Repair and installation labor are exempt when separately stated on an invoice. If not separately stated, labor charges are taxable." The FAQ does not say which jobs it means, so the safe habit is to give labor its own line on every Georgia invoice, including real property work where no tax is due anyway.

Source: Ga. Comp. R. & Regs. r. 560-12-2-.88, Labor, Georgia DOR: What is Subject to Sales and Use Tax? and Georgia DOR: Contractor FAQs.

Fabrication: the labor Georgia always taxes

One kind of labor is taxed however you write it. The Labor rule says "Fabrication labor is a part of the sales price of tangible personal property and subject to the tax, whether or not the charge therefor is separately stated." Fabrication means giving materials "a new form, quality or property," including cutting, carving, shaping and bending them into an article.

The Fabrication rule draws the line against repair. Restoring "a used or worn piece of tangible personal property to its original state is a service," and the labor is untaxed when billed separately. Changing the form of the property is fabrication. Welding a broken trailer hitch back together is a repair. Building a new custom trailer gate from steel stock and selling it is fabrication, and tax applies to the whole price.

Sheet metal shops meet this often. A sheet metal contractor who makes and installs ductwork into a building is a contractor paying tax on materials. One who makes a custom item and sells it without installing it into real property collects tax "on the total sales price of the fabricated tangible personal property" and takes credit for the tax paid on the raw materials, keeping those records separate.

Source: r. 560-12-2-.88, Labor, r. 560-12-2-.37, Fabrication of Tangible Personal Property and r. 560-12-2-.99, Sheet Metal Contractors.

Repairs to equipment and vehicles: itemize the parts

Repair work on movable property, such as a truck, a riding mower, a washing machine or a commercial ice maker, runs under the Repairs and Alterations rule. It gives you two outcomes and the invoice picks between them:

• Parts not itemized. "The tax will apply to the total charge for such materials and labor."
• Parts itemized at a retail price, labor stated separately. Tax applies only to the parts.

A $650 mower repair with $180 of parts shows the gap. Itemized, tax is on $180. Written as "repair mower, $650," tax is on $650. At 8% that is $14.40 against $52.00. The Labor rule adds a condition: separately billed repair labor is untaxed "provided the same article is returned to the customer."

A repair shop that is registered as a dealer can buy its parts for resale with a certificate of exemption, the Form ST-5, and collect tax when the parts go out on an invoice. A repairer the Department does not require to register pays tax to its suppliers on everything it buys, and pays use tax directly on parts from unregistered sellers.

Watch the line between this and real property work. An HVAC technician fixing a window unit in a customer's bedroom is repairing movable property: itemize the parts and collect tax on them. The same technician replacing a compressor on a central system that is part of the house is generally on a real property repair: tax on the compressor was paid at purchase and none goes on the bill. Describe what you worked on so the invoice shows which one it was.

Source: Ga. Comp. R. & Regs. r. 560-12-2-.78, Repairs and Alterations, r. 560-12-2-.88, Labor and Georgia DOR: Nontaxable Sales.

Cleaning, lawn care, pest control and landscaping

House cleaning, janitorial contracts, mowing, leaf removal, pressure washing and pest control are services, and none of them is on Georgia's short list of taxed services. Your customer pays no sales tax on the visit. You are the end user of your chemicals, fuel, bags and equipment, and the Department says service providers are "end users and liable for sales or use tax on all tangible personal property used by them to provide their service."

If you also sell goods, such as bags of mulch handed over at the curb or a bottle of cleaner left with the customer, those sales are taxable and the Department expects a service provider who sells goods to "collect and remit sales tax as appropriate."

Planting is where landscapers need care. The Florists and Nurserymen rule says that when someone sells shrubs and similar items and agrees to plant them "for a lump sum, the tax applies to the total charge therefor, except in those cases where installation is billed separately." A spring install of twelve shrubs at $45 each plus $360 of planting labor, billed on two lines, is taxed on $540. Billed as "install shrub bed, $900," the whole $900 is taxed.

Hardscape work such as a retaining wall or a paver patio is generally building onto real property, and that runs under the contractor rule above. When a job mixes both, split it on the invoice.

Source: Georgia DOR: What is Subject to Sales and Use Tax? and r. 560-12-2-.42, Florists and Nurserymen.

Churches, charities and government: fewer breaks than you expect

Georgia gives nonprofits less than most states. The rule for churches and charities is short: "No exemption is granted to churches, religious, charitable, civic and other non-profit organizations." The Department lists a limited set of exceptions, such as licensed nonprofit hospitals and nursing homes, nonprofit private schools, food banks and health centers. For contractors the one that matters is narrow: construction materials for qualifying private colleges, zoological institutions and aquariums.

Government customers split by job type. On a real property contract for a city, a county or the state, you still pay tax on your materials; the Department's FAQ says so in those words. When you sell goods or repair parts to a government body that pays you directly by warrant on appropriated government funds, the sale is exempt, and the customer gives you an ST-5 with that box ticked. Keep the certificate. The Department's position is that "All sales are subject to sales tax until the contrary is established," and a properly completed certificate taken in good faith is what moves that burden off you.

Source: r. 560-12-2-.22, Churches, Religious, Charitable, Civic and Other Non-Profit Organizations, Georgia DOR: Tax Exempt Nonprofit Organizations, r. 560-12-2-.41, Federal and State Governments, Georgia DOR: ST-5 Certificate of Exemption and Georgia DOR: Nontaxable Sales.

Which rate applies

The state rate is 4%. Counties add local taxes on top (LOST, SPLOST, ESPLOST, TSPLOST and others), and on the Department's rate chart effective October 1, 2026 the combined county rates run from 6% in Cobb and Gwinnett to 9% in dozens of counties, with the City of Atlanta at 8.9%. The chart changes every quarter, so pull the current one before you set a rate in your invoices.

On real property work the rate that counts is where the materials are used. The Department's contractor examples spell it out: buy materials in a 6% county and use them in a 6% county, and nothing more is due. Use them in an 8% county and you accrue the 2% difference as use tax on your return. Pay 8% at a supplier and use the materials in a 6% county, and there is no credit for the extra 2%. Materials bought out of state get credit "like tax against like tax," state against state and local against local.

On goods you sell, the Department's guidance places the local tax generally in the county where the buyer receives the goods, and Atlanta's 1% municipal option tax applies to retail sales delivered to customers within the city limits. A range delivered to a house in Fulton County outside Atlanta and one delivered inside the city can carry different rates.

Source: Georgia DOR: Sales Tax Rates, General (rate chart effective October 1, 2026), Georgia DOR: Sales and Use Tax for Contractors Examples, Georgia DOR: What is Subject to Sales and Use Tax? and Georgia DOR: Sales & Use Tax.