Florida Contractor Taxes and Licensing: Sales Tax, Licenses and Workers' Comp

In Florida, how you price the contract decides the sales tax. On lump-sum, cost-plus or time-and-materials real property jobs, the contractor is the final consumer: it pays the 6% state tax plus any county surtax on materials and charges the customer none. Only a retail sale plus installation contract lets you buy for resale and charge tax on materials.

What makes Florida different for contractors?

Two things stand out. First, the Florida Department of Revenue (DOR) sorts jobs by contract structure, not by whether the work is new construction or a repair. The same kitchen remodel can be a nontaxable real property contract or a taxable sale of materials depending on how you write it up. Second, Florida's licensing system splits into certified licenses that work statewide and registered licenses that only work in the local areas where you proved competency. Add a workers' comp rule that kicks in at one construction employee, and Florida is a state where paperwork choices carry real money.

This page is a plain-English summary of official sources, checked on 2026-10-19. It isn't tax or legal advice. Rules change, so confirm with the agency linked in each section and talk to a CPA who works with Florida contractors before you change how you bill.

Is contractor labor taxable in Florida?

Generally no, when the work improves real property. DOR's guide GT-800067 says items "permanently installed into a structure, where they cannot be removed without destroying them, are classified as real property and are not subject to sales tax." Its examples include electrical systems, landscaping, roofing, masonry, carpentry, driveways, docks and seawalls, and tile. Repairs to fixtures are treated as repairs to real property too.

The exception is repair of tangible personal property, meaning things that aren't part of the building. If you use parts in that kind of repair, DOR says to "charge the customer tax on labor and materials." A labor-only repair of personal property isn't taxable. GT-800067 draws no residential vs. commercial line for real property work, which is a big contrast with Texas.

Who pays tax on materials, and when do you need a resale certificate?

Under lump-sum, cost-plus, fixed-fee, time-and-materials and similar real property contracts, DOR says "the contractor is the final consumer of materials and supplies." You pay sales tax to your suppliers on everything you buy and you "should not charge tax to the customer." Build that tax into your price.

A retail sale plus installation contract flips it. You list and price all materials before work starts, the customer takes title and risk of loss on them, and you "should buy the materials tax-exempt for resale" and "charge the customer tax on all materials." To buy for resale you need to be registered as a dealer (Form DR-1 application, DR-11 certificate) and give suppliers a Florida Annual Resale Certificate (DR-13).

• Real-property-only contractors usually shouldn't register. DOR says contractors should not register unless they fabricate items or also sell at retail.
• Fabrication: if you build items in your shop for your own jobs, you owe use tax on their fabricated cost.
• Exempt customers: you can't use a church's or government's exemption to buy materials. The entity has to buy directly, with its own purchase order and exemption certificate, or you owe the tax.
• Out-of-state suppliers: if they don't collect Florida tax, you owe use tax plus surtax. See use tax for contractors.

For how Florida compares with other states, see sales tax on labor vs. materials.

What is Florida's sales tax rate, and how do county surtaxes work?

"Florida's general state sales tax rate is 6%," according to DOR, with a few exceptions (for example, 6.95% on electricity). Many counties add a discretionary sales surtax, published each year on Form DR-15DSS. For real property work, DOR says to use the rate of the county where the consumer, usually the contractor, takes delivery of the materials. On a retail sale plus installation job, use the county where the work is done.

Which Florida contractor licenses do you need?

Most building trades are licensed by the Department of Business and Professional Regulation (DBPR). The Construction Industry Licensing Board (CILB) covers general, building, residential, roofing, air conditioning, mechanical, plumbing, pool and other classes; electrical has its own board. A license number starting with C is certified and lets you "contract in any jurisdiction in the state." One starting with R is registered and limits you to the local jurisdictions where you met competency requirements.

Section 489.103(9) of the Florida Statutes exempts work "of a casual, minor, or inconsequential nature in which the aggregate contract price for labor, materials, and all other items is less than $2,500." The exemption doesn't apply to work that's part of a larger job, jobs split up to dodge the limit, or anyone who "advertises that he or she is a contractor." Unlicensed contracting also puts your right to get paid at risk; see our contractor license guide.

Local licensing: registered contractors depend on local competency cards, and counties and cities can charge a local business tax for the privilege of doing business there (Fla. Stat. § 205.032). Check the county tax collector and the building department where you work.

Does Florida have a state income tax for contractors?

Not for individuals. The Florida Constitution (Art. VII, § 5) bars a state tax on the income of residents beyond a federal credit offset. If you run as a sole proprietor, a single-member LLC or another pass-through, there's no Florida return on your business profit. You still owe federal income tax and self-employment tax, so plan quarterly estimated taxes and use the quarterly estimated tax calculator.

Corporations (and LLCs taxed as corporations) pay Florida corporate income tax at 5.5% for tax years beginning on or after January 1, 2022, after an exemption DOR lists as "$50,000 as of December 31, 2015." Confirm the current exemption with DOR. Estimated payments are required if the corporation "owes more than $2,500 in Florida corporate income tax annually." Ask your CPA whether an S corporation election makes sense for you.

When do Florida contractors need workers' comp?

Construction businesses need coverage with one or more employees, and the Division of Workers' Compensation (Department of Financial Services) counts business owners who are corporate officers or LLC members toward that number. Non-construction employers need coverage at four or more employees. Owners can opt out for themselves through an exemption, but limits on construction officer exemptions aren't spelled out on the coverage page, so check with the Division. DBPR licensees also need workers' comp or an exemption to keep a license in good standing. More in workers' compensation for contractors.

What local taxes should Florida contractors watch?

• County surtax on your materials, based on where you take delivery (real property jobs) or where you work (retail sale plus installation).
• Local business tax receipts from counties and cities under chapter 205.
• Permit and impact fees set by local building departments. These aren't taxes, but they belong in your bid.

Neighboring state guides

Working across state lines? Compare Georgia, where income tax applies, Alabama, and Texas, the other big no-income-tax state, where residential vs. nonresidential decides whether labor is taxed.