Historically, in the U.S., only goods were subject to sales tax. But as the economy has shifted from a production to a service-based economy (beginning in the 1950s), some services became subject to sales tax.
Historically, in the U.S., only goods were subject to sales tax. But as
the economy has shifted from a production to a service-based economy (beginning in the 1950s), some services became subject to sales tax.
It’s Up to the State
It should be noted that each state treats sales tax differently. For example, some states (e.g. New Hampshire, Oregon, Montana, Alaska, and Delaware) charge no sales tax for goods or services. Some states charge sales tax for nearly all goods and services (e.g. Hawaii, South Dakota, New Mexico, and West Virginia) except for a few types of services which have been statutorily exempted.
In Ohio, the following services are considered taxable:
- Rental of hotel rooms or similar sleeping accommodations for less than 30 days by establishments with five or more sleeping rooms.
- Provision of landscaping or lawn care service, if annual sales of this service equal or exceed $5,000.
- Provision of private investigation or security service.
- Provision of information service through use of a nine-hundred telephone call (1-900).
- Production of tangible personal property from material supplied by the customer. For example, a tailor using fabric furnished by the customer.
- Building maintenance and janitorial service, if annual sales of this service equal or exceed $5,000.
- Exterminating service.
- Employment service.
- Employment placement service.
- Physical fitness facility service.
- Recreation and sports club service.
- Repair of tangible personal property (except repair of property which is exempt from sales tax).
- Installation of tangible personal property (except installation of property which is exempt from sales tax).
- Washing (except coin-operated), cleaning, waxing, polishing, or painting of motor vehicles.
- Towing service for motor vehicles, this includes the conveyance of a wrecked, disabled, or illegally parked motor vehicle.
- Laundry and dry cleaning service, excluding sales made through coin operated machines.
- Automatic data processing, computer services, or electronic information services provided for use in a business. Electronic information services include, but are not limited to, Internet access charges and e-mail service charges for use in a business.
- Certain telecommunication services.
- Satellite broadcasting service.
- Personal care service, including skin care, application of cosmetics, manicures, pedicures, hair removal, tattoos, body piercing, tanning, massage and other similar services. It does not include hair care: cutting, coloring, and styling.
- Transportation of persons, within Ohio, except by public transit systems or commercial airlines.
- Snow removal service, if annual sales of this service equal or exceed $5,000.
- Storage of tangible personal property (except such property that the consumer of the storage holds for sale in the regular course of business).
If you have any questions about whether specific services are subject to sales tax, contact your Zinner State and Local Tax (SALT) expert.