What services require sales tax in North Carolina? (2024)

What services require sales tax in North Carolina?

Services in North Carolina are generally not taxable, with important exceptions. If the service you provide includes creating or manufacturing a product, you may have to deal with the sales tax on products. Some counties also consider a limited number of services (such as laundry and dry cleaning) taxable.

Do I need to charge sales tax for services in NC?

Every person engaged in business in North Carolina is required to collect and pay sales or use tax on retail sales or leases of tangible personal property and certain digital property not specifically exempt by law. Some services are also taxable.

Is service labor taxable in North Carolina?

The NC Department of Revenue says that if you are selling anything at retail, thus collecting sales tax thereon, and you provide repair, maintenance, or installation services with respect to that item sold at retail, you are a retailer and will collect sales tax on labor.

What is exempt from sales tax in North Carolina?

Some goods are exempt from sales tax under North Carolina law. Examples include most non-prepared food items, food stamps, and medical supplies. We recommend businesses review the laws and rules put forth by the NCDOR to stay up to date on which goods are taxable and which are exempt, and under what conditions.

Should sales tax be applied to labor?

Charges for labor or services used in installing or applying the property sold are excluded from the measure of the tax. Such labor and services do not include the fabrication of property in place.

Are landscaping services taxable in North Carolina?

The landscape services exemptions secured in 2016 remain intact, but some of the clarifications - specifically irrigation maintenance and repair services on capital improvement projects (which could include replacement of essential components post construction), and landscape lighting services - are now defined as ...

How to pay sales tax as a business in NC?

Electronically file and pay your current or prior sales and use tax return (E-500) using our online filing and payment system. Note: If your sales and use tax filing frequency changed effective October 1, 2022, you may see an incorrect period for your September return online.

When to charge sales tax in NC?

You'll need to collect sales tax in North Carolina if you have nexus there. There are two ways that sellers can be tied to a state when it comes to nexus: physical or economic. Physical nexus means having enough tangible presence or activity in a state to merit paying sales tax in that state.

When did NC start charging tax on labor?

The changes to the NC Sales and Use Tax law state that installation charges (labor) in connection with a retail sale in NC will be subject to sales and use tax effective March 1, 2016.

Do contractors pay sales tax in NC?

Under an RPC, services are provided to the general contractor or homeowner. The service provider pays sales tax to its supplier for materials purchased for the job. However, because sales tax on materials need be paid only once, RPCs are exempt from the sales tax on services.

What is outside sales exemption North Carolina?

To qualify under the outside sales exemption, an employee must: Be involved in making sales: To be exempt, the employee must engage in the act of selling, obtaining orders, obtaining service contracts, or obtaining shipment for sale. These acts must be a “primary duty.”

Does NC charge sales tax on food?

In North Carolina, grocery items are not subject to the state's statewide sales tax, but are subject to a uniform 2% local tax. Candy, however, is generally taxed at the full combined sales tax rate.

Do churches pay sales tax in NC?

Under current law, charitable nonprofits in North Carolina pay sales and use tax on their purchases and can apply for semi-annual refunds of the taxes they pay.

What is non-taxable labor?

Repair & installation labor

• Repair labor is exempt if taxable parts are stated separately on invoice. • Installation labor is exempt if no tangible property is created or assembled.

Do you add tax to an invoice for services?

In short, it depends on what the invoice represents. The general rule of thumb is that: If the invoice is for the sale of a product, you likely will need to apply sales tax. If the invoice is for the sale of a service, you likely won't need to apply sales tax.

Does a handyman charge sales tax in Florida?

Under Florida law, transactions that require labor and materials to alter, remodel, maintain, adjust, or repair tangible personal property are taxable.

Is lawn mowing taxable in NC?

Repairs, maintenance and installation (“RMI”) services are subject to sales tax unless the service can be classified as real property construction or capital improvement. If so, the service is not subject to sales tax.

Are inspections taxable in NC?

Sales of or the gross receipts derived from the following repair, maintenance, and installation services are not taxable: A fee or charge for an inspection required by law provided the charge is separately stated on the invoice at the time of the sale.

Is tree removal taxable in NC?

Generally all Repair, Maintenance and Installation (RMI) and service contracts will be taxable unless specifically exempted. That is why NC DOR told you that.

How often do you file sales tax in NC?

Quarterly returns are due on or before the last day of January, April, July, and October for the preceding three-month period. Monthly returns are due on or before the 20th of the month following the end of the month.

What is the tax rate for small business in NC?

North Carolina Tax Rates, Collections, and Burdens

North Carolina also has a 2.50 percent corporate income tax rate. North Carolina has a 4.75 percent state sales tax rate, a max local sales tax rate of 2.75 percent, and an average combined state and local sales tax rate of 6.99 percent.

Does NC require quarterly taxes?

Generally you must make your first estimated income tax payment by April 15. You must either pay all of your estimated income tax at that time or pay in four equal amounts on or before April 15, June 15, September 15 and January 15 of the following year.

Who should register for sales and use tax in NC?

Every business, person, or facilitator engaged in business in North Carolina of one or more of the following must register online or by mail with the Department to obtain a Certificate of Registration: Selling tangible personal property at retail. Selling and providing taxable services.

How much do I charge for sales tax in NC?

How much is sales tax in North Carolina? The base state sales tax rate in North Carolina is 4.75%.

Does North Carolina charge sales tax on out of state sales?

North Carolina purchasers are required to pay North Carolina use tax on tangible personal property purchased, leased, or rented inside or outside this State for storage, use, or consumption in North Carolina, as well as digital property and services sourced to North Carolina, if North Carolina sales and use tax was not ...