Sales Tax on Services: Which States Tax Haircuts, Repairs, Lawn Care & More (2026)

The Basic Rule — Services vs Goods

In most US states, physical goods (tangible personal property) are taxable by default — you pay sales tax unless the state specifically exempts the item. Services work in exactly the opposite way in most states: services are exempt by default and taxable only when the state specifically enumerates that service type in its tax code.

There are four distinct groups of states when it comes to service taxability. The first group — five states — have no sales tax at all (Alaska, Delaware, Montana, New HampshireNew Hampshire Tax: 0.00%, Oregon): nothing is taxed including services. The second group — four states — tax services by default with narrow exemptions: Hawaii, New Mexico, South DakotaSouth Dakota Tax: 4.50%, and West VirginiaWest Virginia Tax: 6.00% broadly tax most services unless specifically exempted. The third group — the largest — comprises 41 states and DC where services are exempt by default but specific enumerated services are taxable. The fourth consideration: even within these 41 states, every state taxes a different specific set of services, creating enormous variation.

The result is a patchwork where a haircut is taxable in Washington state (personal care service taxed) but exempt in Ohio (not enumerated). Lawn mowing is taxable in most states but was reclassified as non-taxable in Indiana effective January 1, 2026. Car repair labor is taxable in many states but only the parts are taxable in others. Legal services are exempt virtually everywhere — and so are most accounting and medical services — because professional services groups have successfully lobbied for exemptions in most state legislatures.

Six Categories of Taxable Services

While no two states tax exactly the same services, the services that are taxed across states fall into six broad categories. Understanding which category a service belongs to is the first step in determining whether it is likely taxable in your state.

Reverse Formula — Verify a Service Invoice

When a service provider charges you sales tax, use the reverse formula to verify whether the correct rate was applied to the correct portion of the invoice — especially for invoices that include both taxable and exempt components.

Example: A Texas auto repair invoice shows $280 labor + $195 parts + $16.09 tax. Texas combined rate 8.25%. Divide: $16.09 ÷ 0.0825 = $195.03 ≈ $195 (parts only). Labor was correctly exempted in Texas where separately stated repair labor is not taxable — only the parts. If the implied taxable base had shown $475 (labor + parts), the shop incorrectly taxed the labor as well.

Step-by-Step: How to Determine if a Service Is Taxable

Real-World Service Tax Scenarios

Scenario 1: Haircut — Taxable in Washington, Exempt in Ohio

Scenario 2: Auto Repair — Parts Taxable, Labor Exempt (Texas)

Scenario 3: Lawn Care — Indiana's 2026 Rule Change

Scenario 4: SaaS Subscription — Taxable in New York, Exempt in California

Service Taxability by State — Key Rules (2026)

The table below covers the most important service taxability rules for major states — focusing on the services consumers and small businesses most commonly encounter: personal care, repair services, lawn care, professional services, and digital services.

Sources: Avalara, TaxJar, TaxHero, HandsOffSalesTax, State DOR websites — April 2026. Rules change frequently — verify with your state's DOR before relying on these for business compliance.

Taxable vs Exempt Services — Common Examples

The Labor vs Materials Split — Critical for Service Invoices

Who Needs to Understand Service Taxability?

• Small business owners buying services — a business that hires a SaaS tool, lawn service, cleaning company, or IT repair service needs to know whether the vendor is correctly applying or exempting sales tax. In states like New York (SaaS taxable) or Texas (data processing 80% taxable), being charged tax on a business SaaS subscription is correct — but in California or Florida, the same SaaS charge should have zero tax. Incorrect charges represent either overpaying (overcharged tax on exempt service) or potential use tax liability (not charged when you should have been)
• Auto repair customers in states with labor exemptions — knowing that Texas, California, and several other states exempt separately stated repair labor means consumers can check their auto repair invoice before paying. If the invoice bundles labor and parts in a single line and taxes the whole amount, asking the shop to itemize separately may eliminate the sales tax on the labor portion — a legitimate and often significant savings on a large repair bill
• Indiana homeowners with lawn care services — the January 1, 2026 rule change reclassified lawn care application services (fertilizer, herbicide application) as non-taxable in Indiana. Homeowners who received Indiana lawn care invoices in 2026 with 7% sales tax on application services should contact their lawn care provider about the updated guidance — the charge may no longer be applicable
• Businesses purchasing SaaS and cloud subscriptions — with 24 states now taxing SaaS in some form, the question of whether your SaaS subscriptions are correctly taxed is increasingly important. New York and Massachusetts tax SaaS at full rates. Texas taxes 80% of the charge. Connecticut taxes at 1% for business use. California and Florida exempt it. If your business is in a taxable state and your SaaS vendor is not collecting tax, you may technically owe use tax on those subscriptions
• Service business owners who invoice clients — understanding which of your services are taxable in each state where your clients are located determines whether you need to collect and remit sales tax on your invoices. A consultant providing management consulting in most states owes no sales tax. A consultant who also provides a SaaS platform or data processing service may owe tax on those components in states where they are taxable
• Washington state residents — Washington is one of the broadest service-taxing states with a general sales tax, taxing personal care services (haircuts, nail salons), lawn care, cleaning services, repair services, and physical fitness services. Washington residents who are used to paying sales tax on personal care services should verify that their service providers are correctly applying the 10.25% combined Seattle rate or the applicable local rate to all taxable services

Recent Changes and Key Risks in 2026

Indiana 2026 lawn care rule change: Effective January 1, 2026, Indiana reclassified lawn care application services (fertilizer, herbicide, pesticide application) as non-taxable, applying the "true object" test to determine that the primary purpose of such transactions is the service, not the chemical products. This may extend to pool cleaning, pest control, and snow removal. Indiana lawn care providers who were charging 7% on application services should update their invoicing; homeowners should check 2026 invoices and request refunds for incorrect tax charges.

DC rate increase to 7% for taxable services: Washington DC's sales tax rate on taxable services will increase from 6% to 7.0% effective October 1, 2026. DC taxes a broad range of services. Businesses and consumers in DC should anticipate higher service bills in the fourth quarter of 2026.

Maine 2026 digital expansion: Effective January 1, 2026, Maine added digital audiovisual works and digital audio works to its taxable services definition. This includes streaming subscriptions and fees for platforms like Netflix, Hulu, Spotify, Apple Music, and audiobook and podcast subscriptions. Maine consumers who were not previously seeing tax on these subscriptions should now see the Maine rate applied.

Ohio 2026 changes: Ohio's budget bill repealed the 25% partial refund of sales tax paid by providers of electronic information services, potentially increasing the effective cost of certain Ohio digital services. Ohio also repealed the exemption for rented motor vehicles provided to owners whose vehicles are being repaired — a change affecting auto dealers' loaner car practices.

The SaaS expansion trend: The number of states taxing SaaS has grown from single digits a decade ago to approximately 24 states as of 2026. This trend continues as states recognize the growing proportion of business spending on cloud software and seek to apply their existing service or digital goods tax frameworks to these subscriptions. Businesses using cloud software should periodically review their vendor invoices to confirm whether sales tax is being correctly applied or omitted in each state where they have employees or nexus.

Expert Insight and Market Impact

The taxation of services represents the most significant structural gap in most US state sales tax systems. The Tax Foundation estimates that extending sales taxes to most consumer services could allow states to reduce their standard sales tax rates substantially while maintaining equivalent revenue — because the untaxed service economy now represents a majority of consumer spending in most states. But political resistance from professional services lobbying groups (bar associations, medical societies, CPA organizations) has successfully blocked broader service taxation in most states for decades.

The area of most active expansion is digital services. States that struggled to tax streaming, cloud software, and SaaS under traditional tangible property tax frameworks have been aggressively reclassifying these services as taxable "digital goods," "data processing services," or "electronically delivered software" to capture revenue from the growing digital economy. Maine's 2026 expansion to streaming subscriptions and DC's rate increase on taxable services are both part of this broader national trend.

For consumers, the practical impact of service taxability varies enormously by state. A Washington state resident who purchases personal care services, cleaning services, lawn care, and gym memberships pays sales tax on all of them — at a combined rate that can exceed 10% in Seattle. A California resident making the same purchases pays zero sales tax on all of them — those services are not taxed in California. Over a year of typical household service spending, this difference can easily exceed $500 in annual sales tax burden.

Final Verdict

Services are not taxable by default in 41 US states — they are only taxable when a state specifically enumerates that service type in its tax code. Four states (Hawaii, New Mexico, South Dakota, West Virginia) tax most services broadly. Five NOMAD states have no sales tax on anything. Professional services — legal, accounting, medical — are exempt in virtually every state. Repair services on tangible property, lawn care, and personal care services are taxable in many states but exempt in others.

The most practical consumer action: always request itemized invoices that separately state labor, materials, and different service types. In states that exempt repair labor when separately stated (Texas, California, Indiana), this simple request can eliminate a meaningful portion of your service bill's tax. Use the reverse formula to verify any service invoice: Tax Charged ÷ Combined Rate = Implied Taxable Amount. Compare to what you believe should be taxable — and ask questions when the numbers do not match.