Sales Tax on Services: Which States Tax Services and Which Don't (2026)
Last updated: April 2026
Researched by the NexusFlag Research Team
Most states originally designed sales tax to apply to tangible goods, not services. However, a growing number of states have expanded their sales tax base to include various services. As of 2026, the taxability of services varies widely — some states tax nearly all services, while others tax almost none.
States That Tax Nearly All Services
A small group of states have designed their tax systems to reach most economic activity — including services — rather than limiting the tax to physical goods. If your business operates in or sells into these states, almost everything you do is taxable unless there is a specific exemption.
Hawaii
Hawaii's general excise tax applies to virtually all business receipts, including services. There is no broad service exemption. Legal services, accounting, cleaning, consulting, software development, and nearly every other service category is subject to GET. Hawaii is the broadest service-tax state in the US.
New Mexico
New Mexico's gross receipts tax applies to most services sold in the state. The GRT is technically a tax on the seller's receipts, not the buyer's purchase — but sellers typically pass it to customers. Most service categories are taxable unless specifically exempted. Professional services have limited exemptions.
South Dakota
South Dakota taxes most services, with specific exemptions for medical, legal, and certain financial services. The state has expanded its service tax base significantly over the past decade. Notable: South Dakota was the state that triggered Wayfair, so its compliance infrastructure is mature.
West Virginia
West Virginia taxes many services that other states exempt, including personal services, repair services, and some professional services. The state has a broader service tax base than most mid-Atlantic or Southeastern states.
States That Tax Few or No Services
The majority of US states limit their service taxes to specific, enumerated categories. If your service type is not explicitly listed as taxable, it is presumed exempt. California is the clearest example: sales tax applies to tangible goods, and services are exempt unless they produce a taxable end product.
California
California taxes tangible goods. Services are generally exempt unless they are part of a transaction where the primary value is a taxable tangible product. A photographer shooting a wedding is providing a service (exempt). A photographer selling printed photos is selling a tangible product (taxable).
Florida
Florida taxes a limited set of services: commercial cleaning, pest control, security services, detective agencies, and similar categories. Most professional and personal services are exempt. Florida does not tax legal, accounting, medical, or general business consulting services.
Texas
Texas has a relatively long list of taxable services compared to most states — but it still exempts most professional services. Taxable in Texas: landscaping, pest control, janitorial, computer repair, and data processing. Exempt: legal, accounting, medical, consulting, and financial services.
New York
New York taxes specific service categories: information services, protective and detective services, interior design and decoration, and a few others. Broadly, professional services and most personal services are exempt from New York sales tax, though they may be subject to New York City's own taxes.
Service Categories That Are Commonly Taxed
Even in states that broadly exempt services, certain categories get taxed. These are the service types most likely to appear on a state's taxable list.
Repair and maintenance services
Taxable in TX, WA, MN, NC, SC, and others
Auto repair, appliance repair, and equipment maintenance are taxed in roughly half of all states with sales tax.
Landscaping and lawn care
Taxable in TX, WA, CT, MN, and others
Texas taxes landscaping including lawn mowing, tree trimming, and landscaping design.
Janitorial and cleaning services
Taxable in TX, FL, WA, AZ, CT, and others
Commercial cleaning is one of the most commonly taxed service types across states.
Personal care services
Taxable in WA, HI, NM, SD, and several others
Hair salons, nail salons, and spa services are taxed in states with broad service tax bases.
Telecommunications
Taxable in almost all states
Phone, internet, and cable services are taxed in nearly every state — often at higher rates than general sales tax.
Construction and installation
Varies significantly by state
Most states tax the materials used in construction but not the labor. Some states tax both. The rules depend on whether the contractor is classified as the consumer of materials.
Service Categories That Are Usually Exempt
Even in states with broader service tax bases, certain categories are protected by specific exemptions. Professional services, healthcare, and education have the strongest exemption records across US states.
Legal services
Exempt in all states except Hawaii and NM
Accounting / CPA
Exempt in all states except Hawaii and NM
Medical and dental
Broadly exempt in all states
Education and tutoring
Broadly exempt in most states
Financial and investment
Exempt in most states
Real estate brokerage
Exempt in most states
Business consulting
Exempt in most states outside HI/NM
Human resources services
Exempt in most states
Veterinary services
Broadly exempt in most states
Service Taxability Quick Reference
The table below shows 10 common service types across 10 major states. Y = Taxable, N = Exempt, V = Varies by specifics. This is a general guide — specific exemptions within a category may apply.
| Service type | CA | TX | NY | FL | WA | OH | IL | PA | GA | HI |
|---|---|---|---|---|---|---|---|---|---|---|
| Landscaping / lawn care | N | Y | Y | N | Y | N | N | N | N | Y |
| House cleaning | N | N | N | N | Y | N | N | N | N | Y |
| IT support / tech services | N | V | N | N | Y | N | N | N | N | Y |
| Custom software development | N | N | N | N | N | N | N | N | N | Y |
| Legal services | N | N | N | N | N | N | N | N | N | Y |
| Accounting / CPA | N | N | N | N | N | N | N | N | N | Y |
| Car repair / auto service | N | Y | Y | Y | Y | Y | Y | Y | N | Y |
| Personal training | N | N | Y | N | N | N | N | N | N | Y |
| Photography | N | N | Y | N | N | N | N | N | N | Y |
| Advertising / marketing | N | N | N | N | N | N | N | N | N | Y |
Simplified reference only. Rules have exceptions and vary by service subtype. Verify specific service categories with each state's Department of Revenue.
Find out where your service business has nexus obligations
Even if your services are exempt in most states, you still need to register where you cross the threshold. NexusFlag tracks that for you — no spreadsheets needed.
Frequently asked questions about sales tax on services
Are services subject to sales tax?
It depends on the state and the type of service. Most US states originally designed their sales tax to apply to tangible goods, not services. However, states like Hawaii, New Mexico, South Dakota, and West Virginia tax nearly all services under their sales or gross receipts tax regimes. States like California, Georgia, and most of the Midwest tax only specific service categories — primarily personal care, repair, and installation — while exempting professional and business services broadly.
Which states tax the most services?
Hawaii taxes the broadest range of services through its general excise tax, which applies to virtually all business activity in the state at a rate of 4% (plus county surcharges). New Mexico's gross receipts tax similarly applies to most services at rates between 5% and 9.3125% depending on location. South Dakota and West Virginia also have broad service tax bases. Washington taxes many services but exempts professional services like legal and accounting.
Is consulting taxable?
In most states, consulting services are not subject to sales tax because they are classified as professional services, which are broadly exempt. California, Texas, Florida, and New York do not impose sales tax on business consulting. However, in Hawaii and New Mexico, consulting income is subject to the general excise tax or gross receipts tax respectively. If your consulting work involves a taxable end product — like custom software delivered to the client — the tangible output may be taxable even if the consulting hours are not.
Is IT services or software development taxable?
In most states, custom software development is not taxable because it is treated as a professional service. However, the line gets complicated when: (1) the deliverable is installed software or a product — some states tax the end product, (2) you also sell SaaS or licenses to software (often taxable), or (3) you sell IT support contracts bundled with hardware maintenance. States like Texas and Washington have specific rules for computer-related services that can make some IT services taxable even when pure consulting is not.
Does service taxability affect my nexus threshold calculation?
Yes. Economic nexus thresholds in most states are based on total gross revenue from sales into the state, including revenue from taxable and non-taxable services. Even if your services are exempt from sales tax in a state, your service revenue still counts toward whether you have crossed the registration threshold. A consulting firm with $120,000 in California revenue from business consulting has nexus in California even though the services are exempt — and must register and file returns (showing zero tax collected).
Disclaimer: NexusFlag provides informational data about state sales tax rules — not tax advice. Service taxability classifications are complex, change frequently, and often depend on the specific nature of the service provided. Consult a qualified sales tax professional or each state's Department of Revenue before making compliance decisions.