Tax guide · Tennessee · Rules checked November 2026

Is Labor Taxable in Tennessee? Sales Tax on Contractor Labor

Do Tennessee contractors charge sales tax on labor? Not on work to a building or the land under it. Tennessee taxes goods and a short list of services, and work on real property is not on that list. You pay tax on the materials when you buy them, and the customer's invoice carries no tax line. The catch is the other half of the trades. Repairing, installing or cleaning anything that stays movable (an appliance, a window unit, a generator, a vehicle) is a taxable service, labor included, and splitting labor onto its own line does not change that. Every rule below links to the Tennessee Department of Revenue page it came from.

Rules checked as of November 2026 ยท Tennessee. Plain-English summary of the published Tennessee sales and use tax rules for contractors and service businesses, checked against the Tennessee Department of Revenue pages linked in the guide, chiefly its Sales and Use Tax Manual published December 2025. Not tax advice. Sources: TDOR Sales and Use Tax Manual (December 2025), TDOR: Sales Tax Issues for Contractors, TDOR: Services Subject to Sales Tax in Tennessee, TDOR: Single Article Special Tax Rates, TDOR Letter Ruling 24-05, Repair Services.

Read this first. This is a plain-English summary of the Tennessee rules for contractors and service businesses, not tax advice. Tennessee asks one question about almost every job: did the work go into real property, or onto something the owner could pick up and take when they move? The answer decides whether the labor is taxed. Read the linked Department of Revenue guidance, and check with the Department or your accountant before you change how you bill.

Work on real property is untaxed. Work on movable things is taxed, labor and all.

The Department's contractor guidance puts it in two lines. For "products and/or services provided to real property," the instruction is "DO NOT charge sales tax." For "services provided to tangible personal property," it is "charge sales tax." Its Sales and Use Tax Manual says the same in general terms: "In general, labor service performed on real property is not subject to sales tax."

So Tennessee trade work sorts into three kinds of job:

  • Building, repairing or maintaining real property. New construction, a remodel, a roof, a water heater, a central HVAC system, wiring, plumbing, an in-ground pool. You are the user and consumer of the materials, you pay the tax on them, and the customer pays no sales tax.
  • Repairing or installing tangible personal property. A freestanding refrigerator, a window air conditioner, a portable generator, an above-ground pool, a mower, a car. The whole charge is taxable: parts, labor, the service call and the trip charge.
  • Selling goods without installing them. A retail sale. You charge sales tax on the item.

Source: TDOR: Sales Tax Issues for Contractors and the TDOR Sales and Use Tax Manual, chapter 5.

What gets taxed, at a glance

The job Is the labor taxable? Who pays tax on materials On the invoice
New construction, remodels, roofing, siding, flooring laid in the buildingNoYou, when you buy themNo tax line
Repairing plumbing, wiring, a water heater or a central HVAC systemNoYou, when you buy themNo tax line
Installing a built-in appliance, custom shutters or a custom carportNoYou, when you buy themNo tax line
Repairing a freestanding appliance, a generator, a mower or a vehicleYes, parts, labor and service callCustomer, through your billTax on the whole charge
Selling and installing a window AC unit, curtain rods or an above-ground poolYes, even if listed separatelyCustomer, through your billTax on the item and the install
House cleaning, janitorial work, window washingNoYou, on suppliesNo tax line
Cleaning rugs, furniture or vehiclesYesCustomer, through your billTax on the charge
Mowing, landscaping, tree work on the customer's landNoYou, on plants, mulch and stoneNo tax line

Real property jobs: you are the consumer of the materials

The Manual's contractor section is direct: contractors and subcontractors who improve realty "are considered the users and consumers of the materials that are used or installed as part of the real property." If you bought the materials without paying tax, for example from an out-of-state supplier, you owe use tax on what they cost you. Your labor and your markup are not taxed.

Two consequences matter on the invoice:

  • No tax line. The Manual says the tax "cannot be itemized separately and collected from the contractor's client." The contractor guidance adds that you may include the tax you paid "in the price of the bid/invoice," which means inside your material prices, not as its own line.
  • Exempt customers do not change it. You owe the tax on materials for a job for a city, a county or a nonprofit, "even when the tax-exempt entity buys the materials" and hands them to you. Two exceptions: materials a church buys for church construction are exempt from state and local tax, and materials a private nonprofit college or university buys for its construction are exempt from the state tax only.

A $2,200 water heater replacement in Knoxville is billed at $2,200. The tax you paid on the $900 heater in Nashville, $83.25 at the 9.25% combined rate, is part of your cost.

Contractor-dealers. If you also sell building materials to the public, you may buy on a resale certificate, collect sales tax on what you sell over the counter, and report use tax on what you pull from stock for your own jobs.

Source: TDOR Sales and Use Tax Manual, chapter 6 (Contractor's Use Tax) and TDOR: Sales Tax Issues for Contractors.

Real property or personal property: "can you take it with you?"

The Department's contractor slides print the test as a question: "Can you take it with you when you move?" If it is built in and removing it would damage the building or the item, it is real property and the work on it is untaxed. If the owner would ordinarily remove it, it stays tangible personal property. The Department's own pairs:

  • Real property: a building on a foundation, carpet laid in a building, an HVAC unit, a custom window treatment, a custom built-in bookshelf, an in-ground pool or spa, custom shutters, awnings and carports, built-in appliances, glass windows, underground tanks.
  • Personal property: a portable building, a rug, a window air conditioner, curtains from store stock, a removable bookshelf, an above-ground pool, in-stock versions of shutters and awnings that come off without damage, removable appliances.

The Manual says the call is made "on a case-by-case basis" from the parties' intent and how the item is attached. Describe the work so the answer is plain: "Installed built-in dishwasher, new supply and drain" reads differently from "Delivered and hooked up range."

Source: TDOR: Sales Tax Issues for Contractors (Tangible vs. Real Property, Examples) and the TDOR Sales and Use Tax Manual, chapter 12.

Repairs and installs on movable property: all of it is taxed

Tennessee taxes "any repair of any tangible personal property" done in the state (Tenn. Code Ann. 67-6-205(c)(4)), and the Manual is specific about what that covers: "Any type of charges for repair services and repairs, such as a 'service call,' minimum charge, hourly or flat rates, mileage, etc., are subject to the sales tax." That includes repairs where the customer supplied the parts. A trip that is only to give an estimate, with no repair contemplated, is not taxed.

Installing something that stays personal property is taxed too, and here Tennessee parts ways with states like Georgia and Arizona: installation sold with the item is part of its sales price "even if separately itemized." A $450 window unit with a $150 install in Nashville carries $55.50 of tax on the full $600.

A refrigerator repair in Nashville with a $90 part and $140 of labor carries $21.28 of tax at 9.25%, whether you write it on one line or two.

Mixed maintenance contracts. Maintenance of a building is untaxed only "if billed separately from services for the maintenance of tangible personal property." One lump sum for both makes "the entire amount" taxable. A $1,200 monthly contract covering an office building and its freestanding equipment, billed as one figure, carries $111 of tax. Billed as $800 for the building and $400 for the equipment, it carries $37.

Source: TDOR Sales and Use Tax Manual, chapters 5 and 11, TDOR Letter Ruling 24-05 and TDOR: Services Subject to Sales Tax in Tennessee.

Cleaning, lawn care and landscaping

Cleaning. Tennessee taxes cleaning of tangible personal property: "clothing, furniture, rugs, jewelry, motor vehicles, and animals." Cleaning the building itself is not on the list, because the Manual says "the sale, cleaning, or repair of real property" is not subject to the tax. A house cleaner or janitorial company pays tax on supplies and adds none to the bill. A rug cleaner, an upholstery cleaner and an auto detailer charge it. A company that does both should put them on separate lines.

Lawn care and landscaping. Mowing, edging, planting and tree work are labor on land, which is real property, and none of it is a listed service. The plants, mulch, sod and stone you put in the ground are materials you consume, so you pay tax on them when you buy them. Selling plants or a pallet of stone that you only deliver is a retail sale and is taxed.

Source: TDOR Sales and Use Tax Manual, chapters 5 and 12 and TDOR: Services Subject to Sales Tax in Tennessee.

Warranties

A warranty or service contract covering real property is not taxed. The Manual's example is a home warranty on the roof, siding and built-in appliances. A contract covering movable property is taxed, and if one contract covers both for a single price, "the entire warranty is subject to sales and use tax." Repairs covered by a taxed contract are not taxed again.

Source: TDOR Sales and Use Tax Manual, chapter 15.

Which rate applies, and the single article cap

The state rate is 7%. Every county, and some cities, add a local option tax of up to 2.75%, so the combined rate tops out at 9.75%. Nashville and Davidson County add 2.25%, for 9.25%. The Department publishes every jurisdiction's rate in its rate map and its jurisdiction and rate database.

The single article cap helps you at the supply house. On one item of tangible personal property, the local tax applies only to the first $1,600 of the price, and a state single article tax of 2.75% applies to the slice from $1,600 to $3,200. A $4,800 condenser you buy in Nashville carries $336 of state tax, $36 of local tax and $44 of single article tax: $416, not the $444 a flat 9.25% would give. Hamblen County outside Morristown caps the local tax at $300 and Hancock County at $375.

It does not help on your taxable services. The Department says the single article limit "does not apply to sales of taxable services" or to warranty contracts. A $2,500 generator repair is taxed at the full combined rate on the whole bill.

Source: TDOR: Single Article Special Tax Rates and the TDOR Sales and Use Tax Manual, chapters 8 and 9.

What this means for how you write the invoice

  • No tax line on real property work. A $14,500 bathroom remodel in Chattanooga carries no sales tax. The tax you paid on tile, fixtures and lumber belongs inside your material prices, with your markup on top.
  • Tax the whole charge on equipment repairs. Parts, labor, the service call and mileage all go in the taxable total. Splitting labor out does not lower the tax in Tennessee.
  • Separate building work from equipment work. On a maintenance contract or a mixed visit, a lump sum makes everything taxable. Two lines keep the building work untaxed.
  • Describe what was installed and how. "Built-in," "custom" and "hard-wired" tell an auditor it became real property. "Delivered" and "plugged in" say it did not.
  • Charge the job site's local rate on taxable work. Look it up in the Department's rate database when you set up the customer.

In Numulo every line has a Tax box. On a real property job, leave the rate at zero. On a mixed visit, set the rate and untick the lines for building work, and the tax line shows its base, such as "Tax (9.25% on $230.00)" for the refrigerator repair above.

Write the Tennessee invoice the way the state taxes it

The free Numulo editor puts parts, labor and materials on separate lines, marks each line taxable or not, and prints the base the tax was worked out on. Fill it in and download a clean PDF, no account needed.

Open the free invoice generator → or start from the HVAC, electrician or cleaning template, or the contractor invoice template for remodels and new construction.

Frequently Asked Questions

Do Tennessee contractors charge sales tax on labor?

Not on work to real property. Building, remodeling, repairing or maintaining a building, its wiring, plumbing and HVAC, or the land is not a taxable service in Tennessee. The contractor is the user and consumer of the materials, pays sales or use tax on them, and may not bill the customer for that tax as a separate line. Labor to repair, install or clean tangible personal property, such as freestanding appliances, window units, equipment and vehicles, is taxable.

Is appliance or equipment repair labor taxable in Tennessee?

Yes, when the item is tangible personal property. Tennessee taxes repair services to tangible personal property, including the service call, minimum charge, hourly or flat rates and mileage, even when the customer supplies the parts. Listing labor on its own line does not make it exempt. Repairs to built-in appliances and central HVAC systems are work on real property and are not taxed. A trip only to give an estimate is not taxed.

Can a Tennessee contractor add sales tax for materials to the invoice?

Not as a tax line on a real property job. The Department of Revenue says the tax a contractor pays on materials cannot be itemized separately and collected from the client, but the contractor may include it in the price of the bid or invoice. Build it into the material prices. The contractor owes that tax even on jobs for government and most exempt customers.

Is house cleaning or lawn care taxable in Tennessee?

No. Cleaning a building and mowing or landscaping the land are services to real property, which Tennessee does not tax. The business pays tax on its supplies, plants and materials. Cleaning tangible personal property is taxable, so rug, upholstery and furniture cleaning and auto detailing carry sales tax. Selling plants or stone without installing them is a taxable retail sale.

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