Tax guide · Virginia · Rules checked October 2026

Is Labor Taxable in Virginia? Sales Tax on Contractor Labor

Do Virginia contractors charge sales tax on labor? On work to a house or building, no, and not on the materials either. Virginia makes the contractor the consumer of everything it installs, so you pay the tax at the supply house and the customer's invoice carries no tax line at all. The tax shows up on the other side of the trade: selling goods and installing them, repairing appliances, equipment and vehicles, and parts-and-labor service contracts. On sales and repairs the goods are taxed and the labor is not, as long as you state it separately. Every rule below links to the Virginia Code, regulation or Department of Taxation document it came from.

Rules checked as of October 2026 ยท Virginia. Plain-English summary of the published sales tax rules for contractors and service businesses in Virginia, checked against the official pages linked in the guide. Not tax advice. Sources: Va. Code 58.1-610, Contractors, 23VAC10-210-410, Contractors Respecting Real Estate, Va. Code 58.1-609.5, Service Exemptions, 23VAC10-210-3050, Repair Businesses, 23VAC10-210-4040, Services, 23VAC10-210-910, Maintenance Contracts and Warranty Plans, Virginia Tax Bulletin 24-3, One-Time Safe Harbor for Contractors, Ruling of the Tax Commissioner 07-171, Landscapers and Real Property Contractors, Virginia Tax: Retail Sales and Use Tax rates.

Read this first. This is a plain-English summary of the Virginia rules for contractors and service businesses, not tax advice. Virginia asks two questions about a job: does what you install become part of the real estate, and is anything sold to the customer as goods. The answers decide whether you collect tax, and on which lines. Read the linked law and check with Virginia Tax or your accountant before you change how you bill.

Real estate work carries no tax line. Goods are taxed, separately stated labor is not.

The statute covers anyone who contracts "orally, in writing, or by purchase order" to perform "construction, reconstruction, installation, repair, or any other service with respect to real estate or fixtures thereon" and supplies materials for it. That person "shall be deemed to have purchased" the materials "for use or consumption." The regulation then says it plainly: a contractor, prime or subcontractor, "does not pass the sales or use tax on to anyone else as a tax," and takes the tax into account when bidding.

So Virginia trade work sorts into three kinds of job:

  • Real property contract. New construction, a remodel, a new roof, a water heater swap, a furnace repair, rewiring. You pay tax on materials and supplies when you buy them. The customer pays no sales tax, on the labor or anything else.
  • Sale and installation of goods. What you sell stays movable property, such as a range, a washer, a window unit or a nonmonitored alarm panel. You are a retailer: tax the goods, and leave the installation untaxed when it sits on its own line.
  • Repair of movable property. Appliances, mowers, generators, vehicles, equipment. Parts are taxed. Separately stated repair labor is not.

Services on their own are untaxed. Virginia taxes goods and a short list of services expressly named in the sales tax chapter, and its services regulation opens with "charges for services generally are exempt."

Source: Va. Code 58.1-610(A) and (D), 23VAC10-210-410(A), Va. Code 58.1-603 and 23VAC10-210-4040(A).

What gets taxed, at a glance

The job Is the labor taxable? Who pays tax on materials On the invoice
New construction, remodel, roof, addition, deckNoYou, when you buy themNo tax line
Repairing or replacing plumbing, wiring, a furnace or a water heater in a buildingNoYou, when you buy themNo tax line
Store that sells and installs an appliance, a window unit or a nonmonitored alarmNo, if separately statedCustomer, through your billTax the goods. Installation on its own line
Repairing an appliance, mower, generator or vehicleNo, if separately statedCustomer, through your billTax the parts. Labor on its own line
Yearly parts-and-labor service plan on equipmentHalf the price is taxedCustomer, through your billTax 50% of the contract price
Mowing, trimming, mulching, fertilizing, plantingNoYou, when you buy themNo tax line
House cleaning, janitorial, window washingNoYou, on supplies you use upNo tax line
Building for a government, school, hospital or churchNoYou. The customer's exemption does not reach youNo tax line

Real property contracts: you are the end user of the materials

Materials "incorporated in real property construction" that lose their identity as goods count as used or consumed by you. Your supplier collects the tax from you, and no purchase on a job is exempt because it is "a cost-plus contract." If a supplier does not charge Virginia tax, for example an out-of-state seller, you owe use tax on that purchase and report it to Virginia Tax yourself. Tools, equipment and supplies you use up are taxable to you on every kind of job.

Repairs to the building count. The statute names "repair" next to construction, so a plumber fixing a supply line, an electrician replacing a breaker and an HVAC tech replacing a part in a central system are all real property contractors on that call. In one ruling the Tax Commissioner took HVAC repair parts out of an audit for that reason: the system "was a part of real estate," so the installing contractor was the consumer of the parts. The Department reads routine upkeep the same way. A 1995 bulletin says "persons who provide maintenance to real property are deemed to be real property contractors."

What counts as real estate. Virginia uses the law of fixtures from the state Supreme Court's Transcontinental Pipeline case. Three tests apply: how the item is attached to the property, whether it is adapted to the use of that part of the property, and "the intention of the parties (the chief test)." In the ordinary case ductwork, a water heater piped into the house and a roof pass. A range that plugs in, a window air conditioner and a freestanding ice machine normally stay movable.

Source: Va. Code 58.1-610, 23VAC10-210-410(A), Ruling 95-31, Bulletin 95-247, Parts and Labor Maintenance Contracts and Ruling 16-155.

Charged tax by mistake? You still owe the use tax

Putting a sales tax line on a real property job does not move your tax onto the customer. Virginia Tax Bulletin 24-3 says contractors "are not required to and should not collect sales tax on these transactions," and that charging it "does not eliminate the contractor's responsibility to remit use tax" on the property installed. Before July 1, 2024 a contractor caught doing this paid use tax on the materials and generally got no credit for the sales tax it had already sent in.

The 2024 law gives one safe harbor. The first time an audit finds it, the Department will apply the sales tax you wrongly collected and remitted against the use tax assessment, if you can match the specific materials to the specific job. The bulletin's own examples are a fence builder and a cabinet installer. Credit covers only what physically became part of the fence or the kitchen, never tools or supplies, and it is available once. A refund of the tax itself still requires showing you paid it back to the customer.

Source: Virginia Tax Bulletin 24-3 (July 1, 2024).

Selling and installing goods: tax the goods, not the installation

Anyone who sells goods at retail and installs them "as part of or incidental to the sale is a retailer." The rule for the installation is short: "The tax does not apply to installation charges when separately stated on a sales invoice. If the installation charge is not separately stated, the tax must be computed on the total charge." The statute behind it exempts "an amount separately charged for labor or services rendered in installing, applying, remodeling, or repairing property sold or rented." Supplies you use in installing, such as fasteners and fittings, are taxable to you.

Take an appliance dealer in Fairfax County selling a $1,400 range with a $150 hookup. On separate lines the customer owes 6% on $1,400, or $84.00. Written as one $1,550 price, the tax is $93.00.

Some trades are named outright:

  • Locks. Anyone who furnishes and installs locks and locking devices is a retailer of them by statute, even on a building.
  • Alarm systems. A burglar, security or fire alarm system that the installer also monitors under contract is a service: the installer pays tax on the equipment and charges none. A system sold and installed without monitoring is a retail sale with untaxed installation when separately stated. The wiring that stays in the building is taxable to the installer.
  • Window bars and other security devices fixed to the building are real property work, so the installer is the consumer.

Running a counter and a crew. A contractor that also sells over the counter registers as a dealer. It may buy stock on a resale certificate only when it does not know at purchase that the item will go into a specific job, and it pays tax on the cost of anything it later pulls from that stock for a contract.

Source: 23VAC10-210-410(B) and (H), Va. Code 58.1-609.5(2), Va. Code 58.1-610(F) and 23VAC10-210-230, Burglar, Security, and Fire Alarm Systems.

Repairs to appliances, equipment and vehicles

A business that repairs movable property registers and collects tax on the parts it sells. Labor is exempt when it is billed as its own charge: the statute exempts "services rendered by repairmen for which a separate charge is made." The regulation sets the trap on the other side: "If the dealer performing the repair work does not separately state, itemize or segregate" the parts at a fixed price, "the tax will apply to the total charge including repair labor." Parts that go to the customer can be bought on a certificate of exemption. Tools and shop equipment cannot.

A refrigerator repair in Roanoke at the 5.3% rate, with a $90 part and $140 of labor on separate lines, carries $4.77 of tax. The same job billed as one $230 charge carries $12.19.

Auto repair follows the same rule with two extras. Separately charged diagnostic labor is exempt "regardless of whether there is a sale of a repair or replacement part or a shop supply charge." A separately stated shop supplies charge, on the other hand, is a retail sale and is taxed. A Virginia Beach shop billing $320 in parts, $25 in shop supplies, $450 of labor and a $120 diagnosis collects 6% on $345, or $20.70.

Source: 23VAC10-210-3050, Repair Businesses, Va. Code 58.1-609.5(1) and (8) and Va. Code 58.1-602, retail sale.

Service contracts and warranty plans

A maintenance contract is an agreement to maintain or repair an item of movable property over a set period for a fee fixed up front. Virginia taxes it by what it covers:

  • Labor only. Not taxed. You pay tax on the parts and supplies you use.
  • Parts only. Taxed in full, even if labor is billed separately by the hour later.
  • Parts and labor. Taxed on one-half of the total charge, "regardless of the percentages of labor and parts actually provided." You may buy the replacement parts on a resale certificate.

A $600 yearly parts-and-labor plan covering a restaurant's ice machine and reach-in coolers in the City of Richmond is taxed on $300, so the customer owes $18.00. Extended warranty plans sold by a business are taxed the same way. Plans issued by a licensed insurance company are insurance and are not taxed.

The half rule is for movable property only. A service agreement on a central heating and cooling system or a building's plumbing is real property work, and the contractor is the consumer of the parts it installs.

Source: 23VAC10-210-910, Maintenance Contracts and Warranty Plans, Va. Code 58.1-609.5(10) and Bulletin 95-247.

Landscaping, lawn care, cleaning and pest control

Lawn and grounds work is a service. In a 2007 ruling that changed Department policy, the Tax Commissioner said landscape contractors that do "mowing, weed eating, seeding, fertilizing, mulching, trimming, pruning, aerating and similar services" are the users and consumers of what they buy for that work. They pay tax on the mulch, seed, fertilizer and chemicals and charge the customer none. The same ruling moved landscapers and site contractors who plant trees, shrubs and sod as part of real property work onto the contractor rules, so the plants are taxed when you buy them, not on the customer's bill.

Two places tax still applies. Selling mulch, gravel, topsoil or plants that you deliver but do not spread or plant is a retail sale, with a separately stated delivery charge exempt. And garden centers, nurseries and home improvement stores that sell and plant are retailers: the plants are taxed and the planting charge is exempt when it is on its own line.

Cleaning and pest control. Virginia's sales tax chapter does not list house cleaning, janitorial service, window washing or exterminating as taxable services, and under the services regulation the provider "is the taxable user and consumer" of what it buys to do the work. A cleaning or pest control company pays tax on its supplies and equipment and adds no tax to the bill. A product sold to the customer to keep, such as a bottle of cleaner or a bag of bait, is a retail sale and is taxed.

Source: Ruling of the Tax Commissioner 07-171 (November 2007), 23VAC10-210-610(B) and (C), Florists and Nurserymen and 23VAC10-210-4040(A) and (E).

Government, school, hospital and church jobs

The customer's exemption does not pass to you. The regulation says "no sale to a contractor is exempt on the ground that the other party to the contract is a governmental agency, a public service corporation, a nonprofit school, or nonprofit hospital." That holds on contracts with Virginia, the United States and local governments, even when title passes straight to the government or it reimburses you for materials.

Two exceptions. If the government buys the materials itself and hands them to you, you owe no use tax on them. And purchases are exempt only where you have been officially designated as the government's purchasing agent and its credit is bound directly. A church that buys building materials, kitchen equipment or HVAC units without paying tax and gives them to you to install leaves the use tax with you, at their fair market value. The exception is a baptistry for a church building, which is exempt whoever buys it.

Source: 23VAC10-210-410(A) and (J), Va. Code 58.1-610(B) and 23VAC10-210-310, Churches.

Which rate applies

The state rate is 4.3% and every city and county adds 1%, so most of Virginia is at 5.3%. Virginia Tax lists four rates in its table effective January 1, 2026:

  • 5.3% everywhere not listed below.
  • 6% in Northern Virginia (Alexandria, Arlington, Fairfax City, Fairfax County, Falls Church, Loudoun, Manassas, Manassas Park and Prince William), Hampton Roads (Chesapeake, Franklin City, Hampton, Isle of Wight, Newport News, Norfolk, Poquoson, Portsmouth, Southampton, Suffolk and Virginia Beach) and Central Virginia (Charles City, Chesterfield, Goochland, Hanover, Henrico, New Kent, Powhatan and Richmond City), from a 0.7% regional tax.
  • 6.3% in Charlotte, Gloucester, Halifax, Henry, Northampton, Patrick and Pittsylvania counties and the City of Danville, which each add 1% for school construction.
  • 7% in the Historic Triangle: James City County, Williamsburg and York County.

Use your place of business, not the job site. Unlike most states, Virginia sources an in-state dealer's sales to the city or county of the place of business that takes the order, "without regard to the city or county of possible use by the purchaser." The regulation's example is a Loudoun County dealer delivering to Roanoke County that still collects 6%. A repair shop or installing retailer in Leesburg charges 6% on a job in Winchester, and a Winchester shop charges 5.3% on a job in Leesburg.

On real property work you pay whatever your supplier charges. Use tax you owe yourself on untaxed purchases belongs to the place where the materials are used, but if you already paid Virginia sales tax on a purchase elsewhere in the state, you do not owe the 0.7% regional difference when you use it in Northern Virginia or Hampton Roads.

Source: Virginia Tax: Retail Sales and Use Tax, Rates, Va. Code 58.1-603.1, 58.1-603.2, 58.1-605(E), 58.1-605.1 and 23VAC10-210-2070, Situs of Sale.

What this means for how you write the invoice

  • No tax line on real property work. A $14,500 bathroom remodel in Henrico carries no sales tax. The tax you paid on tile, fixtures and lumber belongs inside your material prices, so price it in with the markup.
  • On sales and repairs, put labor on its own line. In Virginia this is what keeps labor out of the tax. A lump sum price taxes everything.
  • Price parts at a fixed figure. The repair rule asks you to "separately state, itemize or segregate" parts "at a fixed or retail price," not fold them into a flat rate.
  • Tax half of a parts-and-labor service plan. Split the plan price into two equal lines and tax one of them, so the tax falls on exactly half.
  • Charge the rate where your shop is. Not the customer's locality.
  • Describe the work exactly. "Replaced compressor in central AC system" and "repaired window AC unit" are taxed differently, so write what you worked on.

In Numulo every line has a Tax box. Set your locality's rate and untick the labor lines. The tax line then shows its base, such as "Tax (6% on $1,400.00)" on the range above, so the customer can see the hookup was not taxed.

Write the Virginia 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 mechanic, HVAC or electrician template, or the contractor invoice template for remodels and new construction.

Frequently Asked Questions

Do Virginia contractors charge sales tax on labor?

Not on work to real estate. A contractor who builds, remodels, installs or repairs something that becomes part of a house or building is treated as the consumer of the materials, pays sales or use tax when buying them, and charges the customer no sales tax on labor or materials. Labor is also untaxed on sales of goods and on repairs of appliances, equipment and vehicles, as long as it is separately stated on the invoice. In that case only the goods or parts are taxed. If the labor is folded into one lump-sum price, the whole charge is taxable.

Is installation labor taxable in Virginia?

Not when it is stated separately. Virginia exempts an amount separately charged for labor or services rendered in installing, applying, remodeling or repairing property sold or rented. A retailer who sells and installs an appliance collects tax on the appliance and not on a separately stated installation charge. If the installation is not separately stated, tax applies to the total. Installation that makes the item part of a building is real property work, where the contractor pays tax on the materials and the customer pays none.

What if a Virginia contractor charged sales tax by mistake?

The contractor still owes use tax on the materials it installed. Virginia Tax Bulletin 24-3 says contractors should not collect sales tax on real property jobs, and charging it does not remove their use tax liability. Since July 1, 2024 the Department will apply the sales tax wrongly collected and remitted against the use tax assessment, but only once per contractor and only for materials matched to the specific job. A refund of the tax requires showing it was paid back to the customer.

Is lawn care or house cleaning taxable in Virginia?

No. Virginia does not tax mowing, trimming, mulching, fertilizing, house cleaning, janitorial service or pest control. The business is the consumer of the supplies, chemicals, seed and mulch it uses and pays tax when it buys them, then charges the customer no tax. Selling goods the customer keeps, such as a delivered load of mulch the customer spreads, is a retail sale and is taxed.

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