Two ways contractors handle it
| Lump-sum contract | Separated contract | |
|---|---|---|
| How it’s written | One price for the job | Materials and labor listed separately |
| Who pays tax on materials | Contractor, when buying them | You, on the materials line |
| Tax line on your invoice | None | Sales tax on materials only |
| Tax on labor | None | None |
What counts as residential
The Comptroller’s guidance treats houses, duplexes, apartments, condominiums, nursing homes and retirement homes as residential. Property rented for less than 30 days, such as a short-term rental, doesn’t qualify for the residential treatment.
Some separately listed services, such as landscaping, final cleanup and security systems, can be taxable on a separated contract. Ask your contractor which method they use so you can compare quotes fairly.
Common questions
Is remodeling labor taxable in Houston?
No. Labor to repair or remodel residential property in Texas is not subject to sales tax. Houston’s combined sales tax rate applies to taxable materials and items.
Why does one quote show sales tax and another doesn’t?
The first is likely a separated contract that taxes materials on your invoice; the second is a lump-sum contract where the contractor already paid tax on materials. Compare the totals, not the tax line.
Is this tax advice?
No. This is general information from the Texas Comptroller’s published guidance. Confirm your situation with the Comptroller or a tax professional.
Sources
This guide is general information, not legal, tax or financial advice. Rules change; confirm details with the agency named in the sources or a licensed professional.