Is contractor labor taxable in Texas?
It depends on the property. Texas taxes the LABOR on repair and maintenance work to COMMERCIAL or non-residential real property, but not the same work on residential property. Repair and maintenance is not the same thing as a capital improvement, which is exempt to the customer in Texas — the classification of the job is what decides the tax, not the wording on the invoice. Source: 34 Tex. Admin. Code §3.291 (Contractors) and §3.357 (Nonresidential real property repair, remodeling and restoration).
| What | Texas |
|---|---|
| Repair labor — residential | Not taxable |
| Repair labor — commercial | Taxable |
| Repair materials — residential | Not taxable |
| Repair materials — commercial | Taxable |
| Capital improvement | Exempt to the customer |
Notes
Two independent axes. RESIDENTIAL repair, remodel and restoration is not taxable, and neither is new construction of any kind. NONRESIDENTIAL repair, remodel and restoration is fully taxable on labor and materials together — and for that work the lump-sum/separated distinction no longer changes the answer. The contract-type rule still governs new construction and residential work: lump-sum makes the contractor the consumer, separated makes them the retailer of the incorporated materials. Separated INVOICES do not create a separated contract unless the contract itself requires them.
Source
34 Tex. Admin. Code §3.291 (Contractors) and §3.357 (Nonresidential real property repair, remodeling and restoration). — last checked 2026-09-15.
This is a summary of a state’s published guidance, not tax or legal advice. Rates and rules change, local jurisdictions add their own, and the treatment of a specific job depends on the contract and the work. Check the citation and speak to a CPA or a state tax adviser before relying on it.
How Seayora uses this rule
Seayora resolves this rule on every invoice a contractor raises — per line, from the job site’s own address — and prints the rate, the jurisdiction and this citation on the document itself, so the estimate a customer accepts is the invoice they are billed. Where the rule is more nuanced than a single answer, Seayora refuses to guess a total rather than quoting a confident wrong one.
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The same question in other states
- Arkansas
- Connecticut
- Hawaii
- Iowa
- Kansas
- Nebraska
- New Jersey
- New Mexico
- New York
- North Carolina
- Ohio
- South Dakota