Depending on the type of labor that you are providing, you might need to tax the transaction, or maybe a part of it. Make sure to break down the invoice and describe the labor.
Transcript
Is there sales tax on labor in Georgia?
The basis for a taxable sales price for an item sold in Georgia includes:
- The cost of materials used
- The cost of labor
The state separates labor into different categories, so let’s define each one clearly.
Types of Labor in Georgia and Their Tax Treatment
Repair Labor
- Labor to repair or restore an item to its original form.
- Tax Exempt when separately stated on an invoice.
Installation Labor
- Labor used to affix, connect, or make an item ready for use.
- Tax Exempt when stated separately on an invoice.
Fabrication Labor
- Labor used to make a new item or change an existing item into a new item.
- Fully Taxable on the entire charge, whether it is separately stated on an invoice or not.
If you have any other questions about labor and its taxability, feel free to give us a phone call.
Thanks for watching.
Frequently Asked Questions
Is labor taxable in Georgia?
It depends on the type of labor being provided. Georgia law classifies labor into repair, installation, and fabrication labor, each with different tax treatments. Some are tax-exempt if invoiced properly, while others are fully taxable.
What types of labor are tax-exempt in Georgia?
Repair and installation labor are tax-exempt only when they are separately stated on the invoice. If not itemized, they may be considered part of a taxable transaction.
Is fabrication labor taxable in Georgia?
Yes, fabrication labor is fully taxable. This includes making a new item or significantly changing an existing one. The tax applies regardless of whether the labor is listed separately on the invoice.
How should I itemize labor on an invoice to avoid unnecessary tax?
To ensure tax-exempt labor remains exempt, clearly break down the invoice and list repair or installation labor separately. Failure to do so could result in those services being taxed.
What should I do if I’m unsure about labor tax rules in Georgia?
You should consult a tax professional or call your local Department of Revenue office. Misapplying tax rules could lead to compliance issues or penalties.