Sales tax on professional services work: what goes on the invoice

There is no national sales tax

Sales tax in the US is set at state level, and most states let counties, cities and special districts add their own tax on top. That means two jobs a few miles apart can carry different rates, and the same work can be taxable in one state and exempt in another. Five states have no statewide general sales tax at all, though localities in one of them still levy their own.

How it usually lands on professional services work

Professional services are untaxed in most states, but several tax specific categories — information services, data processing and certain administrative services among them. Which category your work sits in is the deciding factor, so verify it with your state revenue department.

What a tax-ready invoice shows

• A unique, sequential invoice number.
• Your business name, address and, where you have one, your seller's permit or tax ID.
• The customer's name and the service address — the location often decides the rate.
• The invoice date and the date the work was performed.
• Materials and labor on separate lines, described per line.
• The taxable subtotal, the rate applied, and the tax amount as its own line.
• The total due, and any exemption certificate reference if the sale is exempt.

Finding your own rate

We deliberately do not publish rates — they change, and a stale number on an invoice is your problem, not ours. Look up the combined state and local rate for the service address with your state's revenue department, and confirm whether your type of work is taxable there before you charge or omit tax.

Worked example

Subtotal for the job

$775.50

Sales tax at your combined rate

you enter the rate

Total the customer pays

subtotal + tax

Any tax you collect is never your money — you are holding it for the state and remitting it on your next return.

Common questions

What is a pass-through cost?

A third-party cost you paid on the client's behalf and are recovering at cost, such as a filing or search fee. List it separately from your fees.

Do we need a W-9 on file with each client?

Business clients generally require one before they can set you up as a vendor. Provide it once, with the first invoice.

Should the invoice show hours?

If you bill time, yes — by rate band or role. It reduces queries and speeds approval.