Georgia Sales Tax for Contractors: You Are the Consumer

Short answer: Georgia settles this in one sentence of statute. Under O.C.G.A. § 48-8-63, a person who contracts to furnish tangible personal property and perform services in Georgia is deemed the consumer of that property and pays the sales tax at the time of purchase. So you pay tax at the supply house, at the 4 percent state rate plus your county’s local taxes, and you do not add a sales tax line to the homeowner’s invoice for construction labor.

Georgia sales and use tax is administered by the Georgia Department of Revenue, and federal income and self-employment tax by the IRS — two different authorities that ask about the same receipts. The licensing side is a third question entirely, covered in Georgia contractor license requirements. What follows is the sales tax treatment of a Georgia construction job: who pays it, when, and what the invoice should look like when you are done.

Is contractor labor taxable in Georgia?

Georgia’s tax reaches retail sales of tangible personal property plus a short, specific list of enumerated services. O.C.G.A. § 48-8-2 defines a retail sale as a sale, lease, or rental for any purpose other than resale, sublease, or subrent, and then names the services that count: transient hotel and tourist accommodations, admissions to amusements and athletic events, transportation services, local telephone service, and charges for gas, electricity, and other fuels. Construction labor is not on that list.

That is why a Georgia contractor does not bill sales tax on labor to a homeowner. But it is worth being precise about why, because the reason drives everything else on this page: your labor escapes tax not because construction is exempt, but because the tax already landed one step earlier, on the materials you bought.

Are you the consumer of your own materials?

Yes, and this is the whole Georgia rule. O.C.G.A. § 48-8-63(b) says a person who contracts to furnish tangible personal property and perform services within this state is deemed to be the consumer of that tangible personal property and pays the sales tax imposed by the article at the time of the purchase.

You are not a reseller of lumber, wire, tile, and fixtures. You are the end user of them. Three consequences follow, and each one shows up in a real Georgia job:

• You pay tax at the counter. The supply house charges it, you pay it, and it becomes a cost of the job like freight or fuel.
• Nothing in § 48-8-63 turns on whether the work is a repair or a capital improvement. Some states run that split and make the customer sign a certificate to prove it. Georgia’s provision asks a different question — who consumes the property — so there is no certificate for the homeowner to hand you.
• Materials tax belongs in your price, not on the invoice as tax. If you bought $4,000 of materials and paid tax on them, that tax is part of your cost base. Marking the job up recovers it. Adding a separate tax line to the customer does not.

The practical version: price the job from the tax-inclusive cost of materials, and keep every supplier receipt, because those receipts are the evidence that the tax was paid at the right point in the chain.

What happens when the customer buys the materials?

This is the situation people get wrong, and Georgia legislated for it directly. Under O.C.G.A. § 48-8-63(c), a person contracting to perform services in Georgia who is furnished tangible personal property by the party the contract is performed for — where a sales or use tax on that property has not been paid to Georgia by the person supplying it — is deemed the consumer of the property so used and owes use tax based on its fair market value. The statute adds that this holds irrespective of whether any right, title, or interest in the property ever vests in the contractor.

So a homeowner buying the tile themselves does not make the tax vanish. If tax was never paid on that tile — say it came from an out-of-state seller who charged nothing — Georgia’s use tax reaches it, and the statute points at the person who used it on the job. The same logic applies to materials you buy out of state for your own jobs. If a Georgia supplier would have charged tax and an out-of-state one did not, the difference is not a saving; it is an unpaid use tax you report to the Department of Revenue.

Do you need a Georgia sales and use tax number?

O.C.G.A. § 48-8-59 requires every person desiring to engage in or conduct business as a seller or dealer in Georgia to file an application for a certificate of registration with the commissioner. One certificate covers you statewide — the statute says a business extending into more than one county needs to secure only one.

Whether that reaches you depends on what you actually sell:

What you do	Registration position
Install materials you bought and paid tax on	You are the consumer, not a dealer of those materials
Sell appliances, fixtures, or materials over the counter without installing them	That is a retail sale, and dealer registration follows
Buy materials from out of state with no Georgia tax charged	Use tax is owed and has to be reported to the Department

If you are unsure which column you sit in, ask the Department of Revenue rather than deciding once and forgetting. Contractors who add a retail sideline — a truck stocked with parts sold to other trades — cross that line without noticing.

How should this show up on the invoice?

Two Georgia specifics decide the layout. The first is above: no sales tax line for construction labor, because the tax was paid on materials at purchase.

The second is in the definition of “sales price” in O.C.G.A. § 48-8-2, which excludes installation charges if they are separately stated on the invoice, billing, or similar document given to the purchaser. That exclusion is why line-item discipline matters on any job where you genuinely are selling tangible personal property and installing it: a bundled lump sum and an itemized one are not treated the same way. Labor or service costs that are not separately stated stay inside the taxable base.

Practically, that means writing invoices that separate materials from installation as a matter of habit rather than only when it seems to matter. What to include on an invoice covers the general layout; the Georgia addition is that the split between property and installation is a tax fact, not a formatting preference. Contrast this with a state like Florida, where the sales tax treatment hinges on the contract type — Florida sales tax for contractors shows how differently the same job can be handled a state away.

What if you hire an out-of-state subcontractor?

Georgia puts a collection duty on you here, and it carries hard numbers. O.C.G.A. § 48-8-63 defines a nonresident subcontractor as a person without a bona fide place of business in Georgia — no permanent domicile or business facility here engaged in contracting real property work.

Trigger	Georgia’s requirement
Total contracts with nonresident subcontractors on a project equal or exceed $250,000	The general or prime contractor withholds 2 percent of payments due
The nonresident subcontractor posts a bond instead	Bond of not less than $5,000 and not more than $50,000, as determined by the commissioner
Bond validly posted	No withholding of sales and use tax amounts from that subcontractor

The 2 percent is withheld in satisfaction of any sales or use taxes that subcontractor owes Georgia, and you hold it until they produce the commissioner’s certificate showing the tax has been settled. If you run projects large enough to pull crews from Alabama, Tennessee, or Florida, the $250,000 figure is a number to track across the whole project, not per invoice. Read the current text of § 48-8-63 before you set a withholding policy — the threshold and the bond range are statutory numbers the legislature can move.

What records hold this position up?

Everything above rests on receipts. That you paid Georgia sales tax at the register is only as good as the supplier documentation behind it, and that a job was labor rather than a retail sale is only as good as the invoice showing it. Georgia’s rule pushes the proof burden onto your purchase side — exactly the side small contractors document worst. How long to keep tax records sets the retention window.

Keel is an iOS app built for that job and nothing else. It runs entirely on the device — no account, no bank connection, no cloud sync, and an App Store privacy label reading Data Not Collected. It makes invoice PDFs with your own numbering, your logo, and a payment-link QR code, so a materials line and an installation line stay separate on the document the customer receives. It captures receipts read on-device with Apple Intelligence, logs mileage, and writes it all into an append-only, hash-chained ledger you can export as one file per year or as an Accountant Pack. Free is $0 with unlimited invoices, receipts, and mileage; Keel Pro is a one-time $249.99 Lifetime purchase.

Keel is a record keeper, not a compliance tool. It does not register you with the Department of Revenue, calculate your county’s rate, or file a return. It keeps the evidence those filings are built from.

Frequently asked questions

Do Georgia contractors charge sales tax on labor?

Not for construction labor. Georgia taxes retail sales of tangible personal property plus a short list of enumerated services that does not include construction work. The tax on a Georgia job lands earlier — on the materials, at the point you buy them — because O.C.G.A. § 48-8-63 deems the contractor the consumer of that property.

Can a Georgia contractor buy materials tax-free for resale?

Not for materials you install. The statute deems you the consumer of tangible personal property you furnish while performing services, and a consumer pays the tax at purchase. Genuine over-the-counter resales are a different activity with different obligations, and that is the line to check with the Department of Revenue before treating a purchase as exempt.

What is the Georgia sales tax rate for contractors?

The state rate is 4 percent under O.C.G.A. § 48-8-30, and it was still 4 percent when this page was updated in 2026. Counties add local option taxes on top, so the figure you actually pay at the supply house depends on where the purchase happens. Because you pay as the consumer rather than collecting from a customer, the relevant rate is the one at the point of purchase.

Does it matter if the job is a repair or a capital improvement in Georgia?

Not for the rule in § 48-8-63. That provision asks who consumes the tangible personal property, not what category the work falls into, so there is no capital improvement certificate for a Georgia homeowner to sign. States that run a repair-versus-improvement split work very differently, which is why advice written for one of them travels badly.

What if my customer supplies the materials?

The tax follows the property, not the buyer. Under § 48-8-63(c), where no Georgia sales or use tax was paid by whoever supplied the material, a contractor furnished materials by the party the contract is performed for is deemed the consumer of what is used and owes use tax on its fair market value — irrespective of whether title ever vests in you. Ask where the material came from and whether Georgia tax was charged.

Do I have to withhold from an out-of-state subcontractor in Georgia?

Yes, once the total of your contracts with nonresident subcontractors on a project equals or exceeds $250,000. Then the general or prime contractor withholds 2 percent of payments due, in satisfaction of the sales and use taxes that subcontractor owes Georgia, and holds it until they produce the commissioner’s certificate. The alternative is a bond set by the commissioner at not less than $5,000 and not more than $50,000, after which no withholding applies.

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This article is general information, not legal or tax advice. Rules change — confirm with the authority named above.