Sales Tax on Services

As of April 2016, forty-four states1 including the District of Columbia have a sales tax on some services. Typically, services taxed include entertainment, utilities, or telecommunications. However, to date most of the service taxes exclude real estate services or commissions. Many states have considered or are considering expanding the application of sales taxes of services to include a wide range of professional services such as real estate, legal assistance, accounting services, etc.

NAR opposes the application of state or local sales tax to rent real estate services and other professional services, including real estate broker commissions, title searches, appraisals, home inspections, property management services, and any other services related to the real estate transaction. NAR finds that the impact of such taxation places an undue burden on homeowners and other consumers of real estate services, falls disproportionately on the real estate sector, and is ultimately detrimental to state and local economies.

In November 2016, voters in Missouri approved a ballot measure to ban the state or local governments from expanding sales taxes on services not already taxed, effectively becoming the first state in the nation to prevent additional sales taxes on real estate services.

1 Arizona, Alabama, Arkansas, California, Colorado, Connecticut, District of Columbia, Florida, Georgia, Idaho, Illinois, Iowa, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.