Sales Tax

Sales tax is a state-imposed tax that contractors must charge and collect on taxable home improvement services, such as repairs, maintenance, and installation work. In New York, this tax is collected on behalf of the state and city and then remitted through the contractor’s Certificate of Authority.

Not all home improvement work is taxable. Capital improvements—like adding a room, installing new flooring throughout a home, or building a deck—are exempt, while repairs and replacement work are taxable.

If you perform any taxable services, you are legally required to:

1. Hold a Certificate of Authority

2. Charge the correct sales tax rate

3. File sales tax returns

4. Remit the tax to New York State

Failing to collect or remit sales tax can lead to audits, penalties, and license issues for home improvement contractors.