Is Labor Taxable in Washington? Sales Tax on Contractor Labor

Construction and repair work: tax on the whole contract price

The rule for building contractors is WAC 458-20-170. A prime contractor is anyone doing the constructing, repairing, decorating or improving of buildings or other structures for consumers, for the whole job or any part of it. That includes a handyman replacing a faucet, a roofer, a painter and a general contractor running a six-month build. The rule says prime contractors "are required to collect from consumers the retail sales tax measured by the full contract price."

"Buildings or other structures" includes fences, retaining walls, tanks and pavements. The statute also covers "the installing or attaching of any article of tangible personal property" to real property "whether or not such personal property becomes a part of the realty." So mounting a television bracket, hooking up a dishwasher and setting a new water heater are all retail work. There is no repair-versus-improvement line to draw in Washington: both are taxed.

Take a bathroom remodel for a homeowner in Spokane: $6,500 of tile, fixtures and a vanity, $11,500 of labor, $18,000 in total. Tax is charged on the $18,000. The state share alone is $1,170, and the local rate for the house's address comes on top. Splitting the bill into a materials line and a labor line does not change the taxable amount. The rule also says engineering, architectural or supervisory fees inside a construction contract are part of it, and "the fact that the charge for such services may be shown separately" does not take them out.

With no stated contract price, as on a cost-plus job, tax is measured by total construction costs, including permits and fees you paid.

The tax has to appear as its own amount. RCW 82.08.050 says the tax "must be stated separately from the selling price" on the invoice, and the Department's construction guide adds that the words "tax included" are not enough. If you quote a homeowner a flat number, the law presumes the tax was not in it.

Source: WAC 458-20-170(1) and (4), RCW 82.04.050(2)(b), RCW 82.08.050(9) and WA DOR: Custom construction.

Materials, tools and the reseller permit

Because the customer pays tax on the finished job, Washington treats the materials that go into it as bought for resale. Concrete, lumber, finish hardware, wire, pipe and fixtures that become part of the structure can be bought without sales tax. Form lumber qualifies only when it is used on one job and then built into that same job.

To buy that way you give the supplier a reseller permit. Construction businesses apply to the Department for one through My DOR. There is no charge, the application asks for your retail and wholesale construction costs over the past 24 months (a new business estimates the next 24), the Department answers within 60 days, and an approved contractor's permit is valid for two years.

The permit does not cover what you use up yourself. Tools, equipment purchases and rentals, sandpaper, masking tape, saw blades, fuel and lubricants are taxable to you. Buying them on a reseller permit is misuse, and the Department's construction guide says misuse carries a penalty of 50% of the tax due on top of the tax. When a supplier charges you no tax on something you consume, you owe use tax on it yourself. A rented excavator is yours to pay tax on, even when you pass its cost along.

If you paid sales tax on materials that later went into a customer's job, you do not pay twice. The Department lets you take a "Taxable Amount for Tax Paid at Source" deduction. Its example: $500 of materials bought with $40 of tax and built into a custom job gives a $500 deduction.

Source: WAC 458-20-170(4)(c), (4)(d) and (5), WA DOR: Reseller permits for contractors, WA DOR: Custom construction and Custom construction, continued.

Prime contractor or subcontractor

Who hired you matters more than what you did. A subcontractor, in the rule's words, performs "a similar service for persons other than consumers": you are working for a general contractor or another prime, not for the owner. Subcontract work is a wholesale sale. You charge no sales tax, provided you get a copy of the prime contractor's reseller permit. Without it, the Department says you collect sales tax on your charges.

An electrician wiring a kitchen addition for a general contractor is the clean example. The electrician's $9,000 invoice to the general contractor carries no tax. The general contractor's invoice to the homeowner includes that $9,000 inside the full contract price, and the homeowner pays tax on all of it once.

Equipment with an operator is a trap. A crane company that only moves materials around the site is making a retail rental and must charge tax; a crane operator who bolts an HVAC unit to the roof is a subcontractor and can take the permit.

Speculative builders sit on the other side. If you build on land you own and then sell the house, the sale is a real estate sale and no sales tax is charged on it. In exchange, you pay sales tax on every material you buy and on every subcontractor's charge, and you cannot use a reseller permit for those purchases. Work done after a buyer signs is taxed again.

Source: WAC 458-20-170(1)(b) and (2), WA DOR: Custom construction, continued and WA DOR: Reseller permits for contractors.

Repairs to equipment and vehicles: labor is taxed too

Repairing things that are not part of a building follows WAC 458-20-173. A business that installs, cleans, repairs or otherwise alters personal property for consumers must collect sales tax "upon the total charge made for the rendition of such services, even though no tangible personal property in the form of materials or supplies is sold or used." The rule names automobile repair, washing and painting, boat repair, and repairing radios, refrigerators, machines, watches and other articles.

A $640 brake job with $260 of parts and $380 of labor is taxed on $640. A $95 diagnostic visit to a refrigerator that ends with no parts is still taxed on $95. Itemizing parts does not move any of the bill out of tax.

Parts that become part of the repaired item can be bought on your reseller permit. Shop supplies, hand tools, machines, fuel and lubricants you use up are taxable to you. One exception helps shops near the border: when a customer from outside Washington ships an item in for repair and you deliver it back outside the state, no sales tax applies to the labor or the parts.

Source: WAC 458-20-173 and RCW 82.04.050(2)(a).

Landscaping, lawn care and tree work

Landscape maintenance and horticultural services are named retail sales in RCW 82.04.050(3)(d), and WAC 458-20-226 spells out the list: grading, filling, planting, seeding, sodding, cutting, trimming, pruning, mulching, aerating, applying chemicals, watering and fertilizing to establish, promote or control the growth of trees, shrubs, flowers, grass and ground cover. Building sprinkler systems, walks, fences and retaining walls is on the list too, and so is "all tree trimming" other than for farmers or timber growers.

The rule tells landscapers to collect sales tax "upon the full contract price." A $160 monthly mowing contract is taxed on $160 every month. A spring yard install of $4,200 is taxed on $4,200. Plants, sod, seed, fertilizer, chemicals, rock and sprinkler parts that become part of the finished work can be bought for resale; mowers, trimmers and the fuel to run them cannot.

Three kinds of work are not retail sales. Landscape design by a landscape architect, billed separately from a maintenance contract, is a service taxed only under the business and occupation tax. Horticultural work for farmers is excluded. So is clearing trees and brush near power lines when an electric utility directs the work. If the design is folded into an install contract, the rule's own example says the whole contract is taxed.

Source: WAC 458-20-226(2), (3) and (5) and RCW 82.04.050(3)(d).

Cleaning: janitorial is out, specialized cleaning is in

Cleaning a building is a retail sale under the statute, but the same sentence carves out "the charge made for janitorial services." Janitorial means the cleaning and caretaking that commercial janitor businesses ordinarily do. The Department's examples: washing interior and exterior window surfaces, cleaning and waxing floors, cleaning interior walls and woodwork, cleaning rugs, drapes and upholstery in place, dusting and taking out trash. That income carries no sales tax. You pay sales tax on your cleaning products and equipment.

Everything else is what the Department calls "specialized or non-repetitive cleaning services," and it is taxed. Its list includes construction cleanup (unless done for a contractor who gives you a reseller permit), water and flood cleanup, mold abatement, duct cleaning, fire damage and smoke cleanup, hoarder cleanup, hot tub and pool cleaning, and exterior cleaning of a building. The statute adds that painting, papering, repairing, furnace or septic tank cleaning, and sandblasting are never janitorial.

A weekly office cleaning route is janitorial, so no tax. Pressure washing the outside of the same building is exterior cleaning, so taxed. WAC 458-20-172 excludes income from contracts "providing solely for the performance of janitorial services," so put taxable extras on their own work order and invoice rather than inside the routine contract.

Pest work: the statute names "fumigating" buildings as retail, and lawn and shrub treatments fall under the landscaping rule. For other pest control, check with the Department before leaving tax off.

Source: RCW 82.04.050(2)(d), WAC 458-20-172, WA DOR: Common janitorial services and WA DOR: Specialized cleaning services.

Federal jobs, public roads and everyone else

Washington's exempt-customer list for construction is short, and it is not the one most contractors expect.

• The United States and its instrumentalities, and city or county housing authorities. Building and repair work for them is "government contracting." No sales tax is charged on any part of the contract price, and you and your subcontractors pay sales or use tax on every material, even when the government reimburses the cost and takes title the moment you buy it.
• Roads owned by a city, county or the United States. Building or repairing a street, road, bridge or public parking facility they own is public road construction. Same result: no tax on your charge, tax on your materials.
• The State of Washington, cities, counties and school districts on other work. These are taxable customers. The rule for state and local government says retail sales tax applies to sales made to them "unless a specific exemption applies." A school remodel is taxed like any other remodel.
• Churches and nonprofits. The state's rule for nonprofits notes that Washington's tax system, "unlike the tax systems of most states," reaches nonprofit organizations, and they pay sales tax on purchases unless a specific statutory exemption applies. A church roof is taxed like any other roof unless a specific exemption covers the project.

A few project exemptions run on certificates, such as installing qualifying machinery for a manufacturer that gives you its exemption certificate. Keep any certificate with the job: RCW 82.08.050 relieves a seller of liability for the tax when it holds a fully completed one.

Source: WAC 458-20-17001, Government contracting, WAC 458-20-171, Public road construction, WAC 458-20-189(5), WAC 458-20-169, Nonprofit organizations and WA DOR: Custom construction, continued.

Which rate applies

The state rate is 6.5%. Cities and counties add a local rate, so the combined rate differs from one address to the next, and the Department updates the local rates quarterly.

Washington sales tax is destination based: "Sales tax collection is based on the location where the customer receives the merchandise or service." For construction that means the job site. The Department's construction guide says retail construction services are sourced "to the location where the construction takes place," and goods delivered to a job site are taxed at the site's rate. A Tacoma contractor building a deck in Puyallup charges the Puyallup rate.

Look up each address with the Department's Tax Rate Lookup Tool, which takes a street address, a ZIP+4 or a point on a map and returns the rate and location code. Work done outside Washington carries no Washington sales tax at all.

Source: WA DOR: Retail sales tax, WA DOR: Sales and use tax rates and WA DOR: Custom construction.

The 2025 and 2026 changes: what touches the trades

Since October 1, 2025, a law known as ESSB 5814 has made several business services retail sales: advertising, information technology services, custom website development, live presentations, investigation, security and armored car services, temporary staffing, and custom software. The 2026 Legislature amended the definition again (chapter 250, Laws of 2026, much of it applied back to October 1, 2025), and the Department lists further exclusions from July 1, 2026.

For tradespeople the change that matters is the security category. The statute now covers "security system services and monitoring" alongside guards and patrols, and it says the category "does not include locksmith services." If you install alarms or cameras, the installation on a building was already retail construction work. What the 2025 law adds is that monitoring contracts are now named expressly as a retail sale. A locksmith rekeying a door is not pulled in by this category.

The construction, repair, landscaping and janitorial rules on this page did not change.

Source: WA DOR: Services newly subject to retail sales tax and RCW 82.04.050(3)(i), as amended by 2026 c 250.

B&O tax: a cost, not a line on the bill

Washington's business and occupation tax is a separate tax on your gross receipts, and it applies whether or not sales tax does. Prime contractors report under retailing, subcontractors under wholesaling, janitorial income under service and other activities. The statute says the B&O tax is not a tax on the customer and is "a part of the operating overhead" of the business. Build it into your prices. Do not add a line labeled B&O tax and do not fold it into the sales tax line.

Source: RCW 82.04.500, WAC 458-20-170(3), WAC 458-20-172 and WAC 458-20-226(4).