Sales tax is often associated with the purchase of tangible goods, but it also applies to services in many jurisdictions. In this article, we’ll delve into the intricacies of sales tax on services, explain the taxability rules, and introduce Yonda Tax’s solutions for service-based businesses.

Taxability of Services

The taxability of services varies from state to state. Some states tax a broad range of services, while others have more limited taxation. The taxability of services typically depends on the specific services provided and the jurisdiction’s laws.

Taxable Services

Common taxable services may include:

  • Professional Services: Services provided by professionals such as lawyers, accountants, and consultants.
  • Maintenance and Repairs: Services related to maintaining and repairing tangible personal property.
  • Personal Services: Services like dry cleaning, pet grooming, and personal training.
  • Amusement and Entertainment: Services related to entertainment, such as tickets to sporting events or concerts.
  • Contract Labor: Services provided by contractors and subcontractors.

Exempt Services

Certain services are often exempt from sales tax. These exemptions can vary widely between states. Exempt services may include:

  • Healthcare Services: Medical and dental services are typically exempt from sales tax.
  • Educational Services: Services provided by schools and educational institutions are often exempt.
  • Nonprofit Services: Services provided by nonprofit organizations may be exempt in some cases.

Economic Nexus and Services

For service-based businesses operating in multiple states, economic nexus rules come into play. Economic nexus refers to the level of economic activity that triggers a tax obligation in a state, regardless of physical presence. When a business exceeds the economic nexus threshold, it may be required to collect and remit sales tax on its services in that state.

Explore our Nexus Monitoring services to understand how we can help you monitor your economic nexus requirements.

Yonda Tax’s Solutions for Service-Based Businesses

At Yonda Tax, we understand the complexities of sales tax on services and the challenges faced by service-based businesses. Our solutions are designed to simplify compliance and tax management for these businesses:

Compliance Support

Our team provides expert guidance to help service-based businesses understand the taxability rules in their operating states and ensure compliance.

Tax Calculation Tool

Our Yonda Tax Calculation Tool accurately calculates sales tax on services, considering the varying tax rates and rules in different states.


Sales tax on services can be intricate, with taxability rules that vary by state. Service-based businesses must navigate these complexities to ensure compliance. At Yonda Tax, we offer solutions to simplify the process, whether it’s understanding the taxability of services or accurately calculating and remitting sales tax. Explore our offerings and ensure your service-based business remains in compliance. For comprehensive sales tax solutions, visit Yonda Tax. Stay tuned for more informative articles on sales tax and its effects on various industries.