Is Labor Taxable in Ohio? Sales Tax on Contractor Labor

Construction contracts: the contractor is the consumer

The statute says that when property is incorporated into real property under a construction contract, "the construction contractor is the consumer." The Administrative Code defines a construction contract as any agreement, written or oral, to transfer property and incorporate it into real property, "without regard to whether it is new construction or an addition to or alteration of an existing building or structure."

So a plumber swapping a water heater, a roofer and a remodeler gutting a bathroom all pay tax on materials and charge the homeowner none. In the Department's door example, the contractor pays sales tax on the door (or use tax once it is installed) and charges the customer no tax.

Repairs to the building follow the same rule. Ohio's repair service tax applies to tangible personal property, and a furnace, a breaker panel or a supply line is part of the house. The Department lists plumbing, electrical and HVAC repair and maintenance among the work that is not a taxable service. Labor-only calls, such as clearing a drain line, carry no tax either.

Your tools, equipment and job supplies stay taxable whoever the customer is, and so do repairs to them. Temporary items such as construction fencing, shoring lumber and concrete forms never count as built in.

If you also sell over the counter. A contractor who makes substantial sales of the same items it installs may buy them on a resale claim, but then needs a consumer's use tax account and must pay use tax on everything that ends up in a construction job, unless it holds direct payment authority.

Source: Ohio Rev. Code 5739.01(B)(3)(a) and (B)(5), Ohio Adm. Code 5703-9-14(A), (B), (D), (E) and (H), Ohio Dept. of Taxation: Sales and Use Taxability and ST 2002-04, question 2.

Business fixtures, carpet and other things that stay movable

Bolting something to a wall does not make it real estate in Ohio. A business fixture is property permanently attached to land or a building that "primarily benefits the business conducted by the occupant on the premises and not the realty." The statute lists machinery, equipment, signs, and storage bins and tanks. The rule says a business fixture keeps its status as personal property after it is attached, so "an agreement to transfer and install a business fixture is a sale and not a construction contract." You charge tax on the full price, and the statute's definition of price makes clear that installation charges cannot be deducted.

This matters most to commercial HVAC and electrical crews. The definition excludes fixtures common to buildings, such as HVAC that mainly serves the people inside, water and fire lines, and electrical and communication lines. So rooftop units that heat a store are real property work. Machinery, signs or a production line installed for the business that occupies the space is a business fixture, and installing it is a taxable sale.

Two more ways a job becomes a sale. If title to what you install never passes to the owner or tenant, such as leased equipment, the rule treats it as a sale. And the statute names carpet, agricultural land tile and portable grain bins as never part of a construction contract.

Carpet inside a remodel. Carpet plus pad, tack strip and adhesive is always a retail sale, taxed on materials and labor together. Other floor and wall coverings (tile, wood, vinyl, wallpaper) are construction work. When a remodeling contract includes carpet, the Department lets the contractor treat it as a consumed material only while the contract does not state a separate price for it. Price the carpet on its own line and you have a mixed contract: you collect tax on that line under a vendor's license, and may buy that carpet for resale.

Not sure which side an item falls on? The customer may certify in writing which parts of the contract are personal property and which real property. If that certification proves wrong, the customer owes the tax.

Source: Ohio Rev. Code 5701.03(B), business fixture, Ohio Adm. Code 5703-9-14(B), (C) and (G), Ohio Rev. Code 5739.01(H)(1), ST 1994-01, Sale and Installation of Carpet and Other Floor/Wall Coverings and ST 2003-02, Golf Courses.

Repairs to equipment, appliances and vehicles: everything is taxed

Any transaction in which an item of tangible personal property "is or is to be repaired" or "installed" is a sale in Ohio. The only exception is property that would itself be exempt to buy, such as qualifying manufacturing machinery, and the customer must support that claim with an exemption certificate.

Itemizing does not shrink the tax in Ohio. The Department's radiator example: $99.95 in parts and $100.00 in labor, and the whole $199.95 is taxable. Shop supplies and other charges billed with the repair are part of the price too.

The same rule reaches appliance repair, small engine and mower repair, and portable equipment. The Department's own contrast: a refrigerator repair is taxable, a new door is a construction contract. For an HVAC tech the dividing line is the unit. Fixing a central furnace is real property work with no tax to collect. Fixing a window air conditioner or a portable dehumidifier is a repair of personal property, taxed on parts and labor at the rate for wherever the customer receives it.

Source: Ohio Rev. Code 5739.01(B)(3)(a) and (b) and Ohio Dept. of Taxation: Sales and Use Taxability, Auto Repair Service and Construction Contract examples.

Cleaning: taxable in houses as well as offices

Building maintenance and janitorial service means "cleaning the interior or exterior of a building and any tangible personal property located therein or thereon." The Department's release says it covers washing, vacuuming, dusting, polishing and waxing "in offices, houses, and other buildings," and names maid service, carpet cleaning, chimney sweeping, window washing, power washing siding and gutters, and duct cleaning.

The price is the total billed. Itemizing cleaning supplies or mileage does not take them out. A cleaner with under $5,000 a year in sales of this service is outside the definition. Once you reach $5,000 in a calendar year, you register as a vendor and collect on every sale after that until you close the business.

Work next to cleaning is often untaxed, and the release lists it: real property repairs, painting, plumbing, electrical and HVAC work, outdoor pools, unclogging drains, stripping paint or wallpaper, sandblasting, and industrial cleaning such as grease traps. Mix any of these into a cleaning job and you must separate the charges, or the entire invoice is taxable. A power washer who also does the driveway bills it on its own line, and that part is untaxed.

HVAC crews, note this one. A yearly clean-and-check tune-up is not a cleaning service, because the cleaning is incidental to adjusting, testing and lubricating the system. A service call made only to clean the ducts is taxable.

A construction contractor who hires you to clean a building is the consumer of your service and pays the tax on the total price.

Source: Ohio Rev. Code 5739.01(B)(3)(j) and (II) and ST 2002-04, Building Maintenance and Janitorial Services (April 2025).

Landscaping, lawn care, snow plowing and pest control

Landscaping and lawn care service covers "planting, seeding, sodding, removing, cutting, trimming, pruning, mulching, aerating, applying chemicals, watering, fertilizing" and similar work for a lawn or landscape kept for ornament or another nonagricultural purpose. The statute adds that this service "is never a construction contract," so planting a row of arborvitae is taxed on the full price even though the trees end up rooted in the ground. You may buy the plants, mulch, seed and fertilizer you leave with the customer exempt, with an exemption certificate to the supplier. Mowers, trucks, trailers, sprayers and the repairs to them stay taxable to you.

The Department's March 2026 release sorts common jobs. Taxable: tree and stump removal, leaf removal, spreading topsoil, finish grading, rock gardens, flowerbed borders, indoor plant care. Not landscaping: underground sprinklers, patios, decks, fences, pools, outdoor lighting, erosion retaining walls, excavation and design drawings. Those can still be taxable under other rules, but a patio built into the yard follows the construction contract rules. Clearing trees before a house or addition goes up is not landscaping. Removing dead trees from a finished yard is.

Snow removal "by any mechanized means" is its own taxable service, including salt spread by a truck spreader. Shoveling and salting by hand are not.

Lawn care and snow removal each carry their own $5,000 threshold. Reach $5,000 of either in a calendar year and you register and collect on all later sales of that service. A landscaper with $40,000 of mowing and $3,000 of plowing collects on the mowing only, until plowing crosses $5,000 too.

Exterminating has no threshold. Eradicating or preventing vermin in or around a building is taxed from the first dollar, inspections included. The line between lawn care and pest control is the target: chemicals that protect the grass are lawn care, and chemicals aimed at fleas, ticks or moles that bother people, pets or the house are exterminating.

Source: Ohio Rev. Code 5739.01(B)(3)(g), (k) and (r), (DD) and (JJ), ST 2003-02, Landscaping, Lawn Care Services, and Snow Removal (March 2026) and ST 1993-04, Exterminating Service.

Government, church and charity jobs

On construction work the exemption reaches your materials. The rule lets a contractor buy materials exempt when they go into real property owned by, or built under contract with, the United States, the State of Ohio or an Ohio political subdivision; a house of public worship or religious education; a building used exclusively for charitable purposes by a charitable nonprofit, or for the exempt purposes of a 501(c)(3) organization; and a few other listed projects. Tools, equipment and anything you consume are still taxable.

The paperwork has two forms. The customer signs a STEC CC, Construction Contract Exemption Certificate (a government official signs the political subdivision section, everyone else the owner/contractee section). You sign a copy for each supplier and pass copies to subcontractors, or use a STEC CO, Contractor's Exemption Certificate. A valid certificate is dated, states the reason for exemption, and identifies the contract and the job site. If the claim turns out wrong, the customer is treated as the consumer and owes the tax.

On taxable services the customer is the buyer. A government agency, county or city pays no tax, and the invoice must clearly name it. A church or charitable nonprofit gives you a fully completed exemption certificate for your files. A landlord does not get its exempt tenant's exemption: the landlord buying pest control or cleaning for a building it leases to the state still pays.

Source: Ohio Adm. Code 5703-9-14(D), (I), (J) and (K), Ohio Dept. of Taxation: Exemption Certificates, Ohio Rev. Code 5739.02(B)(1) and (B)(12) and ST 1993-04, questions M and R.

Which rate applies

The state rate is 5.75%. Counties and regional transit authorities add their own tax in steps of 0.05%, up to 3%, and the combined rate cannot exceed 8.75%. In the Department's table for October 1 to December 31, 2026, county totals run from 6.50% (Butler, Lorain, Stark and Wayne) to 8.00% in Cuyahoga and Franklin, with 8.25% in the part of Licking County inside the Columbus transit district. Rates change only at the start of a quarter. Warren County rose from 6.75% to 7.25% on October 1, 2026.

For a taxable service, use the rate where the customer receives it, which means the county where the building or yard is. A customer with property in several counties gets the charges split by county. Work done at your shop, like a mower repair dropped off at your counter, is taxed at your shop's location. The Department's address lookup, The Finder, gives the rate for a street address.

On construction work you pay whatever the supplier charges. When you pay use tax yourself, on materials bought untaxed out of state or on a resale claim, the use tax belongs to the place where the materials are used.

Source: Ohio Dept. of Taxation: Sales and Use Tax rates, Sales and Use Tax Rates by County, October 1 to December 31, 2026, Ohio Rev. Code 5739.02(A), 5739.033, sourcing and The Finder.