Sales Tax on Services by State: 2026 State-by-State Guide

If you run a service business, the question “do I need to charge sales tax on services?” rarely has a simple answer. Tangible goods are mostly taxable across the country. Services are the opposite — most states tax some services, a few states tax nearly all of them, and a handful tax very few. The category matters. The state matters. Where your client is located matters. And the rules change every legislative session.

This guide walks through how sales tax on services works state by state in 2026, which categories are most commonly taxed, how nexus is triggered, what registration looks like, and the pitfalls that catch service business owners off guard. It’s a starting point — not a substitute for advice from your state Department of Revenue (DOR) or a CPA.

General information, not tax or legal advice. Sales tax laws change frequently, and the details below are summarized for readability. Always verify current rules with your state DOR before you decide whether to collect, register, or remit. Links to each state’s DOR are included at the bottom of this guide.

How services and sales tax work
The four categories of states
State-by-state reference table
Service categories most often taxed
Nexus: when you owe tax in a state you don’t live in
How to register and remit sales tax on services
Common pitfalls service businesses miss
State DOR lookup links
Frequently asked questions

How services and sales tax work

Sales tax is a state and local tax on retail transactions. Each state writes its own rules about what’s taxable, and most also let counties and cities add a local rate on top of the state rate.

For tangible goods, the default in 45 states (and DC) is “taxable unless an exemption applies.” Five states — Alaska, Delaware, Montana, New Hampshire, Oregon — have no statewide sales tax at all, though Alaska allows local jurisdictions to tax.

For services, the default flips: most states tax services only when the law specifically lists that category. So instead of asking “is my service exempt?”, you usually ask “is my service on the state’s list of taxable services?”

There are exceptions. A handful of states tax services broadly, with exemptions instead of inclusions. That’s where the term “broad-base service tax states” comes from — and it’s the smaller group.

The four categories of states

States generally fall into one of four buckets when it comes to taxing services:

Broad-base service tax states. Hawaii, New Mexico, South Dakota, and West Virginia tax most services by default. These states usually call it something other than “sales tax” — Hawaii has the General Excise Tax (GET), New Mexico has the Gross Receipts Tax (GRT) — and the base is broader than retail goods alone.
Selective service tax states. Most states tax a specific list of services — repair, installation, fabrication, lawn care, dry cleaning, telecom, certain digital services, and so on. The list varies enormously. Connecticut, Texas, Iowa, Ohio, and Pennsylvania tax dozens of categories. Other selective states tax just a handful.
Mostly non-taxing states. A few states tax very few services — typically just utilities, telecom, and admissions. California, Virginia, and Massachusetts are common examples for professional and business services, though all three tax some specific categories.
No statewide sales tax. Alaska, Delaware, Montana, New Hampshire, Oregon. Alaska allows local sales taxes (more than 100 jurisdictions levy them), and a few of these states have other taxes (Delaware has a gross receipts tax, New Hampshire has a meals and rentals tax) that can apply to services.

The line between “selective” and “broad-base” is fuzzy. Tennessee and Texas, for example, tax a long enough list of services that some practitioners call them broad-base. Use the table below as a starting point, but read your state’s rules before you act.

State-by-state reference table

As of early 2026. State legislatures revise sales tax rules every year — recent expansion of digital services and SaaS taxation is one of the fastest-moving areas. Notable 2026 changes include Illinois dropping its 200-transaction nexus threshold (now $100,000 sales only), Maine adding digital audiovisual and audio services, Washington DC increasing its digital services rate to 7% (effective October 2026), and Washington State expanding taxability to several previously exempt services. Verify current law with your state DOR before relying on this table.

State	Approach to service taxation	Notes
Alabama	Selective	Taxes specific services (repair, installation on tangible property, certain admissions). Most professional services not taxed.
Alaska	No statewide tax	Local jurisdictions may tax. Check the local rate where the customer is located.
Arizona	Selective	Transaction Privilege Tax (TPT). Taxes prime contracting, telecom, amusements, and more. Treated as a tax on the seller, often passed to customer.
Arkansas	Selective	Taxes a longer list — repair, alterations, lawn care, telecom, specific digital services.
California	Mostly non-taxing for services	Sales tax generally applies to tangible property. Most professional and personal services not taxed. Fabrication labor is an exception.
Colorado	Selective	Narrow base — telecom, lodging, certain admissions. Most services not taxed at the state level. Local rules vary.
Connecticut	Broad selective	Taxes a long list (computer services, repair, advertising, business analysis, janitorial). Often cited as one of the most aggressive selective states.
Delaware	No statewide sales tax	Has a gross receipts tax on businesses (not collected from customer like sales tax).
Florida	Selective	Taxes commercial cleaning, pest control, detective and protection services, nonresidential repair. Recently active around digital services.
Georgia	Selective	Narrow — primarily telecom, accommodations, in-state transportation. Most professional services not taxed.
Hawaii	Broad-base (GET)	General Excise Tax on nearly all business activity. Taxes most services. Higher base rate but applied broadly.
Idaho	Selective	Narrow — admissions, hotel/motel, certain rentals. Most services not taxed.
Illinois	Mostly non-taxing for services	Sales tax (Retailers’ Occupation Tax) is on tangible property. 2026: eliminated 200-transaction nexus threshold — now $100,000 sales threshold only. Some services taxed at the local level (Chicago amusement and lease taxes).
Indiana	Selective	Lodging, telecom, certain rentals, some software services.
Iowa	Broad selective	Long list of taxable services — janitorial, lawn care, dating, dance instruction, machine repair, software services.
Kansas	Selective	Taxes installation, repair, alteration of tangible property; certain professional services exempt.
Kentucky	Broad selective (expanded recently)	Expanded in 2018 and 2022 to tax veterinary, fitness, landscaping, photography, parking, and more.
Louisiana	Selective	Telecom, hotel, certain repairs, fabrication. Local parishes may add taxes with different bases.
Maine	Selective	Telecom, lodging, prepared food, certain rentals, fabrication. 2026: adds digital audiovisual and digital audio services (streaming, subscriptions).
Maryland	Selective	Recently expanded to tax SaaS and some digital services. Detective, security, telecom, fabrication also taxed.
Massachusetts	Mostly non-taxing for services	Telecom, telecommunications, certain digital products taxed. Most services not taxed.
Michigan	Selective	Narrow — telecom, hotel/motel. Most services not taxed.
Minnesota	Selective	Lawn care, building cleaning, detective and security, laundry, pet care, parking, and more.
Mississippi	Broad selective	Long list of taxable services and digital products.
Missouri	Selective	Telecom, admissions, certain rentals. Most services not taxed.
Montana	No statewide sales tax	Some lodging and rental taxes apply.
Nebraska	Selective	Building cleaning, pest control, security, repair, telecom, and more.
Nevada	Mostly non-taxing for services	Narrow base. Most services not taxed at state level.
New Hampshire	No statewide sales tax	Has a meals and rentals tax that affects some service businesses.
New Jersey	Selective	Telecom, parking, security, investigation, certain repair and maintenance.
New Mexico	Broad-base (GRT)	Gross Receipts Tax applies to most services. Often passed to customer like a sales tax.
New York	Selective	Long list — repair, maintenance, security, information services, parking, certain digital products, fabrication.
North Carolina	Broad selective	Repair, maintenance, installation services on tangible property; service contracts; certain digital products.
North Dakota	Selective	Telecom, certain rentals, specific contractor services.
Ohio	Broad selective	Long list — landscaping, building cleaning, snow removal, employment services, repair, telecom, info services.
Oklahoma	Selective	Telecom, admissions, lodging, certain repair.
Oregon	No statewide sales tax	Some local taxes (Portland) apply to certain services.
Pennsylvania	Broad selective	Repair, maintenance, lobbying, employment, secretarial, lawn care, building cleaning. Recently active on digital.
Rhode Island	Selective	Telecom, lodging, certain rentals, software-as-a-service treatment evolving.
South Carolina	Selective	Telecom, accommodations, laundry, certain electronic services.
South Dakota	Broad-base	Most services taxable unless specifically exempted.
Tennessee	Broad selective	Telecom, repair, installation, lodging, parking, dating, certain digital products and SaaS.
Texas	Broad selective	One of the longest taxable services lists — data processing, info services, debt collection, security, real property repair, amusement, telecom.
Utah	Selective	Telecom, accommodations, repair to tangible property, certain admissions.
Vermont	Selective	Telecom, admissions, fabrication, certain digital products.
Virginia	Mostly non-taxing for services	Most services not taxed. Telecom, accommodations, certain digital products are exceptions.
Washington	Broad selective + B&O	2026: expands taxable services list. Sales tax on a wide list of services; Business & Occupation (B&O) tax on most gross receipts (separate from sales tax).
West Virginia	Broad-base	Most services taxable unless specifically exempted; a small number of professional services exempt.
Wisconsin	Selective	Telecom, landscaping, lodging, repair, dry cleaning, photographic services.
Wyoming	Selective	Telecom, lodging, certain admissions.
District of Columbia	Broad selective	Long list — data processing, info services, real property maintenance, employment services, security. Rate on digital services increases to 7% effective October 2026.

This table summarizes general approaches. It does not list every taxable category. Even within “selective” states, the specific list of taxed services can run dozens of items long. Always look up your specific service category in your state’s DOR rules before billing.

Service categories most often taxed

When you scan state-by-state lists, certain categories show up over and over. Knowing which buckets your service falls into makes the lookup faster.

Repair, installation, and maintenance on tangible property

Easily the most-taxed category of services nationwide. If you repair, install, alter, or maintain something tangible — appliances, vehicles, equipment, real property — there’s a strong chance the labor portion is taxable in your state, even when professional services aren’t. States that tax this category include Alabama, Arkansas, Connecticut, Iowa, Kentucky, Maryland, Mississippi, New York, North Carolina, Ohio, Pennsylvania, South Dakota, Tennessee, Texas, West Virginia, and others.

The “tangible property” requirement matters. Repairing a car is usually taxable. Reviewing an architectural plan is usually not.

Cleaning, janitorial, lawn care, and pest control

Building cleaning, janitorial, lawn maintenance, snow removal, and pest control are taxed in a long list of states — Connecticut, Florida, Iowa, Kentucky, Minnesota, Nebraska, New York, Ohio, Pennsylvania, and others. Residential vs. commercial distinctions sometimes apply.

Telecommunications, internet, and digital services

Telecom is taxed in most states. Digital services are the fastest-changing area: streaming, downloaded software, SaaS, and “specified digital products” (e-books, music, video) have been added to many states’ taxable lists in the last five years. Maryland, Connecticut, Tennessee, Mississippi, and Ohio are notably aggressive on SaaS taxation. California, Florida, and Virginia are still relatively narrow on digital services as of early 2026.

If you sell SaaS or digital subscriptions, this is one of the most volatile compliance areas — recheck every year. Maine added digital audiovisual and audio services to its taxable list in 2026.

Personal services (haircutting, fitness, dating, etc.)

Personal services are usually exempt — but not always. Kentucky now taxes fitness, photography, and personal training. Iowa taxes dating and dance instruction. New Mexico’s GRT and Hawaii’s GET sweep most personal services in.

Professional services (consulting, legal, accounting, design)

This is the category most service businesses care about most, and it’s mostly not taxed in most states. Lawyers, accountants, management consultants, designers, and similar professionals usually don’t collect sales tax on their fees. Major exceptions:

Hawaii (GET) and New Mexico (GRT) tax most professional services.
Washington’s B&O tax isn’t sales tax but functions like a gross receipts tax on professional services.
South Dakota taxes most services, including many professional categories.
Specific carve-outs in selective states — for example, Connecticut taxes business analysis and management consulting; Texas taxes data processing and information services; Pennsylvania taxes secretarial services.

The headline: most professional services aren’t taxed in most states, but you should never assume it without checking. The carve-outs are common enough to bite consultants who relocate or expand into a new state.

Construction and contractor services

Construction sales tax rules are unusually complicated. Some states treat the contractor as the consumer (contractor pays tax on materials, doesn’t charge tax to customer); others treat the contractor as a retailer (contractor charges tax on the full job). Arizona, Connecticut, Hawaii, New Mexico, and Texas each have notable contractor-specific rules.

Software, SaaS, and cloud services

The category to watch in 2026. As of early 2026, SaaS is taxable in around half the states, including New York, Texas, Pennsylvania, Connecticut, Massachusetts (in some cases), Tennessee, Mississippi, Maryland, and the District of Columbia. Definitions vary — “prewritten software accessed remotely,” “data processing services,” and “information services” are different statutory categories with different rules.

If you sell SaaS or any digital subscription, get this in writing from each state where you have nexus. The compliance risk is real and growing.

Nexus: when you owe tax in a state you don’t live in

Nexus is the legal connection that lets a state require you to collect sales tax on services. Two main types apply to service businesses:

Physical nexus

You have physical presence in the state — an office, employees, inventory, real property, or extended business activity (trade shows, on-site service work, equipment installs). Physical nexus has existed forever. If you provide services at a customer’s location in another state, you’ve likely created physical nexus there for that engagement.

Economic nexus

Created by the 2018 South Dakota v. Wayfair Supreme Court decision. States can now require remote sellers to collect sales tax once they cross sales thresholds — even with no physical presence. Most states use a $100,000 sales / 200 transactions threshold per year, but specifics vary:

Some states use only a sales threshold (e.g., $500,000 in California, New York, and Texas).
Illinois eliminated its 200-transaction threshold in 2026 — now $100,000 sales only.
Thresholds are evaluated against a defined period (current or prior calendar year, varies by state).

Important nuance: economic nexus thresholds were originally designed for goods sellers. Many service-only businesses have asked, “Does this apply to me if I don’t sell anything tangible?” Answer: it depends on the state and on whether your services are taxable there in the first place. If your service isn’t taxable in the destination state, crossing the economic nexus threshold typically doesn’t create a collection obligation. But if your service is taxable there, you can be on the hook.

Affiliate, marketplace, and click-through nexus

Less common for service businesses but worth knowing. If you receive referrals from in-state affiliates, sell through a marketplace facilitator, or have a related entity in the state, additional nexus rules may apply.

How to register and remit sales tax on services

Once you’ve determined you need to collect, the process is roughly:

Register with the state DOR (sometimes called the Department of Taxation, Tax Commission, or Comptroller). Most states accept online registration. You’ll get a sales tax permit, license, or registration number — typically free or low-cost.
Determine the correct tax rate. State rate plus any applicable local rates (county, city, special district). Source-based vs. destination-based sourcing matters: most states are destination-based for services (rate of the customer’s location), but a handful — including Texas — are origin-based for some categories.
Charge tax on each invoice. Show the rate and tax amount as a separate line item. Many states require this on the customer-facing invoice.
File returns and remit on the state’s schedule (monthly, quarterly, or annual depending on volume). Filing zero-due returns is usually still required if you’re registered.
Keep records of invoices, exemption certificates, and returns for the state’s retention period (3–7 years is typical).

If you collect sales tax on services across multiple states, services like TaxJar, Avalara, and Sovos handle multi-state compliance — useful once you cross 3–5 state nexus thresholds.

Common pitfalls service businesses miss

These are the issues that most often turn into audit findings or amended returns:

Charging the wrong rate. Local jurisdictions add rates on top of the state rate. A 6% state rate can become 8.25% in one ZIP code and 7.5% next door. Use the state DOR’s rate lookup tool or an automated solution rather than assuming.

Bundling taxable and non-taxable items. If you bill a flat rate that includes both taxable and non-taxable services, some states tax the entire amount unless you separately state the components on the invoice. Itemize.

Resale and exemption certificates. Selling to another business that’s reselling? Or to a tax-exempt entity (nonprofit, government)? You need a valid exemption certificate on file. Without it, the state can hold you liable for the uncollected tax — even though the customer would have been exempt.

Crossing nexus thresholds without noticing. A consultant who picks up three Texas clients can quickly cross the $500,000 threshold without realizing it. Check your sales by state at least quarterly if you do meaningful interstate business.

Treating SaaS like a non-taxable service. SaaS taxability has expanded dramatically. If you sold SaaS to a Connecticut customer in 2017 and the rules changed in 2019, the obligation didn’t wait for you to find out.

Forgetting use tax. When you buy services for your business from an out-of-state vendor that didn’t charge sales tax (because they didn’t have nexus), your state may require you to self-assess use tax on that purchase.

Not registering before you collect. Charging sales tax on an invoice without an active permit is illegal in many states. Register first, then start charging.

Assuming “service” automatically means “exempt.” In Hawaii, New Mexico, South Dakota, and West Virginia, the default goes the other way. And selective states have long lists of taxed categories that are easy to miss.

How Pronto Invoice handles tax across states

Pronto Invoice lets you configure tax rates by service type and by state, then applies them automatically to invoices you send. If you bill clients across multiple jurisdictions, you can set up a separate tax rate for each state (and locality) you’ve registered in, label it on the invoice, and avoid the manual rate-lookup work every time you send a bill.

Pronto Invoice doesn’t file returns or assess your nexus exposure for you — for that, work with a CPA or use a multi-state filing service like TaxJar or Avalara — but it gets the front-end of the workflow (calculating and showing the right sales tax on services on the invoice itself) off your plate. Try Pronto Invoice free.

State DOR lookup links

Bookmark the page for any state where you do business. These DORs publish the official, current rules:

Frequently asked questions

Do I have to charge sales tax on services if my service isn’t taxable in my state?

No. If your service isn’t on your state’s taxable list and you don’t have nexus in another state where it is taxable, you don’t collect sales tax. But verify on the DOR site — the list of taxed categories is longer than most people assume, and it changes.

What if I serve clients in multiple states?

You may have collection obligations in any state where you’ve crossed an economic nexus threshold and where your service is taxable. Many service businesses that operate purely remotely never trigger sales tax obligations elsewhere because their service isn’t taxed in destination states. Confirm both nexus and taxability before assuming.

Are SaaS and digital services taxed?

Increasingly, yes. Around half the states now tax SaaS in some form, and the list is growing every year. Check the destination state’s specific rules — definitions of “prewritten software,” “data processing,” and “specified digital products” differ. Maine added digital audiovisual and audio services in 2026.

Do I charge tax based on my location or my client’s?

Most states are destination-based for services — you charge the rate at the customer’s location. A few are origin-based (Texas sources some services to the seller’s location). Check each state where you have nexus.

What happens if I should have been collecting sales tax on services and didn’t?

The state can assess back tax, interest, and penalties — typically against you, not the customer, since you were the one obligated to collect. Many states offer voluntary disclosure programs that reduce penalties if you come forward before they audit you. If you’re behind, talk to a tax professional before contacting the state.

Does my CPA handle sales tax for me?

Most CPAs handle income tax. Sales tax is a different specialty. Ask whether your accountant covers sales tax registration, returns, and nexus monitoring. If not, look at TaxJar, Avalara, or a state-and-local-tax (SALT) specialist.

Bottom line

Sales tax on services is messy because every state writes its own rules, and the rules change. The questions to answer for your business:

What service(s) am I selling, in plain language?
In which states do I have customers, and what’s my dollar volume in each?
For each state with meaningful sales, is my service category taxable there?
Where have I crossed a nexus threshold (physical or economic)?
For every state where the answer to 3 and 4 is yes, am I registered, charging the right rate, and filing returns?

If those answers are clear, you’re in good shape. If they’re not, this guide is the starting point — your state’s DOR site (linked above) is the next stop, and a sales-tax-aware CPA is the one after that.