Important Updates on Sales Tax Laws on RMI Services

NCHBA members achieved a tremendous victory when both chambers agreed to a conference report for SB 628 Various Changes to Revenue Laws. The bill contains numerous provisions sought by our NCHBA’s legislative team to simplify and clarify recent changes to sales tax on repair, maintenance, and installation (RMI) services.

Perhaps the most significant change increased the “mixed transaction” threshold (which is a project that includes both a capital improvement and one or more RMI services). Under current law, if the RMI portion of the project is less than 10%, it is exempt from sales tax on labor. This bill increases the percentage to 25% or less of the cost of the entire project. This increase means that most traditional residential remodeling jobs will be exempt from sales tax on labor even if they include significant repair items unrelated to the remodeling. New construction is already exempt from sales tax on labor because, by definition, it is a “capital improvement.”

Read full details here on the NEW Law that Clarifies Sales Tax on Labor

The bill also includes language which NCHBA sought language that alters the calculation of the franchise tax owed. A part of larger business tax changes, this legislation allows taxpayers to reduce tangible property base for franchise tax purposes by the amount of any debt owed on the property. The adjustment was eliminated in the 2015 franchise tax simplification changes. However, the elimination of the debt factor resulted in higher tax bills for some of our members who must pay franchise taxes. This change will be effective for the 2019 tax year.

Learn more about the original bill by clicking here.

With the help of our local member’s contributions to NC Build PAC, NCHBA and the AHBA is able to help make your voice be heard at the Local, State, and National Level in regards to regulations that effect the building industry.

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