Installation Charges Taxable in North Carolina, March 2016
- Jan 20, 2016 | Gail Cole
North Carolina sales tax is being expanded to several services beginning March 1, 2016, including installation charges.
Installation charges will be taxable even when separately stated on invoices. This is a change. Prior to March 1, separately stated installation charges are exempt.
Rates vary depending on the type of product being installed. The general state, local and applicable transit tax rates may apply, the general state rate only may apply, or a special reduced rate may apply. Some transactions have a maximum tax cap. Below are examples (a non-inclusive list)
State, local and applicable transit sales and use tax apply to the following transactions:
- Installation charges included in the sales price of tangible personal property, certain digital property, and taxable services (with some exceptions).
- Installation charges that are part of the gross receipts from the lease or rental of tangible personal property. Applicable maximum tax rates apply.
Other rates:
- Installation charges that are part of the sales price of manufactured or modular homes sold at retail are subject to the state rate only (4.75%).
- Installation charges that are part of the sales price of each boat sold at retail are subject to a reduced state rate of 3% with a maximum tax of $1,500.
- Installation charges that are part of the sales price of an aircraft sold at retail are subject to the 4.75% state rate only, with a maximum tax of $2,500.
- Installation charges by a retailer to provide telecommunication service and ancillary service, video programming service, piped natural gas, and electricity are subject to the 7% combined general rate of sales and use tax.
Additional information and examples are available in the North Carolina Department of Revenue Important Notice: Repeal of Installation Charges Exemption.
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