Sales Tax on Contractor Estimates: The Basics

Sales tax rules for construction vary widely. Depending on your state and the type of work, tax may apply to materials only, to the full contract, or not at all. This article covers how to handle tax in an estimate, not what your obligation is.

Tax is collected, not earned

Sales tax you collect from a customer belongs to the taxing authority. It is not revenue and should not be counted in your markup, margin, or gross profit.

Mark which items are taxable

If only some items are taxable in your situation, mark each line accordingly. Built2Bid applies the tax rate only to taxable lines and shows tax separately on the proposal.

Discounts and adjustments

When you apply a discount or adjustment to the whole job, it is spread across taxable and non-taxable items in proportion to their price before tax is calculated.

Confirm your rules

Check with your state's department of revenue or a tax professional to confirm what is taxable for your trade and project type.