Georgia Contractor Taxes and Licensing: Sales Tax, Licenses and Income Tax

Georgia treats contractors on real property jobs as the consumer of their materials: you pay the 4% state tax plus local tax when you buy, and don't collect it on the contract. Even so, all contractors, including subs and out-of-state firms, must register for a sales tax number. Separately stated repair and installation labor is exempt.

What's unusual about Georgia for contractors?

Georgia's Department of Revenue (DOR) is blunt about registration: "ALL contractors, resident, nonresident, general and subs, must register for a sales and use tax number." That surprises shops coming from states where a contractor who only pays tax on materials never registers. Georgia also cares about how your invoice reads. Repair and installation labor is exempt only when it's broken out on its own line. And it watches out-of-state contractors closely, with bonds and withholding on larger jobs.

This guide summarizes official Georgia sources checked on 2026-10-19. It's general information, not tax advice. Rules and rates change quarterly in some cases, so confirm with DOR and a Georgia CPA before you rely on it.

Does Georgia charge sales tax on contractor labor?

Not when it's separately stated. DOR's contractor FAQ says "repair and installation labor are exempt when separately stated on an invoice" and "if not separately stated, labor charges are taxable." On real property construction contracts, the contractor pays tax on materials as the consumer and doesn't collect tax from the customer on the contract. We found no residential vs. commercial split in DOR's contractor guidance.

How do Georgia contractors handle tax on materials?

A contractor performing a real property contract "is deemed to be the consumer of all tangible personal property used or consumed in performing such contract," per DOR, and that includes government jobs. You pay sales tax at the supply house and build it into your bid. If you buy from an out-of-state vendor that doesn't charge Georgia tax, "use tax is due." See use tax for contractors for how to report it.

Rules for out-of-state (nonresident) contractors

• "Nonresident contractors have bonding requirements if the contract the contractor will be performing is $10,000 or greater," and the job must be registered with DOR.
• On contracts of $250,000 or more, the general contractor must withhold 2% from a nonresident subcontractor on behalf of the state unless DOR confirms the sub has posted a sales and use tax bond.

The broader question of who pays tax on materials versus labor across states is covered in sales tax on labor vs. materials.

What's the sales tax rate in Georgia?

The state rate is 4%. Counties add local taxes in 1% units, such as LOST, SPLOST and TSPLOST, plus MARTA in metro Atlanta and the City of Atlanta's 1% MOST. DOR publishes a new rate chart each quarter; the current one runs October 1 through December 31, 2026. Because local rates vary by county, the tax on your materials depends on where you buy and use them, so check the chart before you price a job across county lines.

What contractor licenses does Georgia require?

Two boards under the Secretary of State cover most construction. The State Licensing Board for Residential and General Contractors licenses residential and general contractors once a job crosses the dollar threshold in O.C.G.A. § 43-41-2. We couldn't load the board's site to confirm the current figure, so check with the board before bidding. Its rules require a general contractor to show a "minimum net worth in the amount of $150,000," and offer a limited tier license capped at contracts of $1,000,000 with a $25,000 net worth minimum. Trade licenses come from the Construction Industry Licensing Board.

Local licensing: Georgia cities and counties generally require a business license or occupation tax certificate, and building departments check state licenses before issuing permits. Ask the city or county where you're based. For the bigger picture on licensing, read our contractor license guide.

What income and business taxes do Georgia contractors pay?

Georgia has a flat 4.99% individual income tax for 2026, per DOR's tax updates page. Sole proprietors and owners of LLCs and S corporations pay it on their share of business profit. Corporations pay 4.99% of Georgia taxable net income, plus a net worth tax: corporations with net worth of $100,000 or less owe none but must file, and the maximum is $5,000 for net worth over $22 million.

Because no employer withholds for you, plan quarterly estimated taxes for both federal and Georgia. Our quarterly estimated tax calculator helps with the federal side; for Georgia's estimated payment rules, check with the department or your CPA.

When is workers' comp required in Georgia?

"If you regularly employ three or more persons in your Georgia business, you are required to provide the benefits," says the State Board of Workers' Compensation. Corporate officers and LLC members count. Up to five can waive coverage on themselves, but "officer exemptions do not reduce the number of employees." Sole proprietors and partners are treated as employers, not employees, and can elect coverage in writing. More in workers' compensation for contractors.

Local taxes Georgia contractors should know

• Local sales taxes stack on the 4% state rate in 1% units and change by county and quarter.
• Business license or occupation tax from your city or county.
• Permit fees set by local building departments. Not a tax, but price them in.

Neighboring state guides

Working near the line? Florida has no personal income tax but decides sales tax by contract type. South Carolina, Tennessee, Alabama and North Carolina, which taxes repair and installation work, each handle contractors differently.