# New York Contractor Taxes and Licensing: What Trades Need to Know

New York taxes the result of the job, not the trade. If the work qualifies as a capital improvement, the customer pays no sales tax and you pay tax on your materials. Repair, maintenance and installation work is taxable to the customer. Home improvement licensing is local, run by New York City and certain counties, not the state.

## Key takeaways

- Capital improvements aren't taxed to the customer; get a signed Form ST-124 and pay tax on your materials when you buy them.
- Repair, maintenance and installation services are taxable. Charge the 4% state rate plus the local rate for the job location.
- There's no statewide home improvement license. New York City (DCWP) and Suffolk, Nassau, Westchester, Putnam and Rockland counties license contractors.
- State income tax runs from 3.90% to 10.9% for 2026, and New York City residents pay city tax on top.
- Sole proprietors, partnerships and LLCs with no employees don't need workers' comp; once you hire, you do.

## Why is New York different for contractors?

Two quirks shape almost every New York job. The first is sales tax: the Department of Taxation and Finance looks at what the finished work **is**, a permanent capital improvement or a repair, and that one call decides whether the customer pays tax on your labor. The second is licensing. Albany doesn't issue a general contractor or home improvement license. The Attorney General's home improvement fact sheet lists New York City and **Suffolk, Nassau, Westchester, Putnam and Rockland** counties as places where home improvement contractors must be licensed, and it adds that contractors must also follow any other local licensing laws.

So a plumber in Buffalo, a roofer in Hempstead and a remodeler in Brooklyn can face three different rulebooks. Statewide rules still apply everywhere: the Attorney General says home improvement contracts for work over $500 must be written, legible and in plain English, and deposits taken before substantial completion go into an escrow account at a New York bank within five business days, or the contractor posts a bond instead.

## Is contractor labor taxable in New York?

It depends on whether the job is a capital improvement. The department's capital improvements bulletin (TB-ST-104) sets a three-part test. The work must substantially add to the property's value or appreciably prolong its useful life, become part of the real property or be permanently affixed so removal would cause damage, and be intended as a permanent installation. If all three are met, the bulletin says "there is no sales tax due on the charge to the customer."

Repairs and upkeep are a different story. The department's contractors page says repair, maintenance and installation work keeps or restores property "in a condition of fitness, efficiency, readiness, or safety," and for those jobs you "must charge your customer sales tax." The bulletin's examples of taxable work include fixing a broken step and painting existing cabinets. A new roof on a house can be a capital improvement; patching the leak usually isn't.

The rate has two layers. The department says the combined rate equals the state rate, "currently 4%," plus the local rate where the sale happens, and an additional 0.375% applies inside the Metropolitan Commuter Transportation District (MCTD). Check the department's jurisdiction lookup for each job address. For how other states draw the line, see [sales tax on labor vs. materials](https://www.brix.so/learn/sales-tax-on-labor-vs-materials).

## Who pays tax on materials, and which certificates do you use?

On capital improvement work, you do. The bulletin says building materials bought for capital improvement work "are taxable," and the tax you pay "becomes an expense that can be passed through to the customer" in your price. Contractors generally can't use a resale certificate for building materials.

- **Form ST-124, Certificate of Capital Improvement:** the customer completes it and gives it to you. The department says a properly completed ST-124 relieves you of liability for tax on the work.
- **Form ST-120.1, Contractor Exempt Purchase Certificate:** lets you buy certain items tax-free in specific cases. One example from the bulletin: freestanding appliances you supply can be bought exempt, but you must then collect sales tax from the customer on them. You can also use it to buy a subcontractor's taxable services for resale.
- **Registration:** the department says you must register if you make taxable sales, perform taxable services or want to issue exemption documents like ST-120.1. If you only do capital improvement work, you're not required to register.

Buying out of state? Under the department's use tax bulletin (TB-ST-910), you owe use tax on taxable items you bring into New York when no New York tax was paid, generally at the rate where you take delivery or use the item, whichever is higher. Registered vendors report it on the sales tax return; unregistered sole proprietors can use their income tax return or Form ST-140. More on that in [use tax for contractors](https://www.brix.so/learn/use-tax-for-contractors).

## Which New York contractor licenses do you need?

**New York contractor licensing by trade (state and New York City)**

| Trade | Agency | License or registration | Link |
| --- | --- | --- | --- |
| General contractor / home improvement | Local: NYC DCWP; Suffolk, Nassau, Westchester, Putnam, Rockland counties | No state license. NYC requires a Home Improvement Contractor license; NYC DOB also runs General Contractor Registration | [NYC HIC license](https://www.nyc.gov/site/buildings/industry/home-improvement-contractor-license.page) |
| Electrical | Local; in NYC, Department of Buildings | Licensed locally, not by the state. NYC issues Master and Special Electrician licenses; check your town elsewhere | [NYC DOB electrician](https://www.nyc.gov/site/buildings/industry/obtain-a-master-and-special-electrician-license.page) |
| Plumbing | Local; in NYC, Department of Buildings | Licensed locally, not by the state. NYC issues the Master Plumber license; check your town elsewhere | [NYC DOB master plumber](https://www.nyc.gov/site/buildings/industry/obtain-a-master-plumber-license.page) |
| HVAC | Local | No state license; check your town or county | Check with your local building department |
| Roofing | Local | No state license; residential roofing may fall under a local home improvement license | [AG home improvement facts](https://ag.ny.gov/home-improvement-fact-sheet) |
| Asbestos work | NYS Department of Labor | Asbestos handling license for businesses that work with asbestos | [NYC Business summary](https://nyc-business.nyc.gov/nycbusiness/description/asbestos-handling-license) |
| Pest control | NYS Department of Environmental Conservation | Business registration for each location plus a certified applicator or technician | [DEC business registration](https://dec.ny.gov/environmental-protection/pesticides/business-agency-information) |
| Public work | NYS Department of Labor | Contractor registration for public projects and certain private projects (since Dec. 30, 2024) | [NYSDOL announcement](https://dol.ny.gov/news/new-york-state-department-labor-announces-new-registry-contractors-and-subcontractors-engaged) |

_Checked 2026-10-19 on NYC DOB, NY Attorney General, NYS DOL, NYC Business and NYSDEC pages. Local rules vary; confirm with the city, town or county where you work._

Outside New York City, start with the county consumer affairs office and the town building department, since each sets its own rules and a license from one county doesn't carry into the next. Inside the city, home improvement work on residential property needs a DCWP license, while plumbing and electrical licenses come from the Department of Buildings. Our [contractor license guide](https://www.brix.so/learn/contractor-license) covers how to research local requirements.

## How does New York tax a contracting business's income?

Sole proprietors and owners of LLCs and S corporations pay personal income tax on business profit. The department's 2026 rate schedule (Form IT-2105-I) starts at **3.90%** on the first $8,500 of taxable income for single filers and tops out at **10.9%** above $25,000,000. New York City residents add city tax of **3.078% to 3.876%**.

- **Estimated payments:** the department says you generally must pay estimated tax if you expect to owe at least $300 of state, city or Yonkers tax after withholding and credits. For 2026, installments are due April 15, June 15 and September 15, 2026, and January 15, 2027.
- **MCTMT:** self-employed people in the MCTD (NYC plus Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk and Westchester) owe 0.60% in Zone 1 or 0.34% in Zone 2 on net self-employment earnings allocated to the zone if those earnings exceed $150,000.
- **LLC filing fee:** for tax year 2025, a single-member LLC disregarded for federal tax with New York-source income pays a $25 fee on Form IT-204-LL. Multi-member LLCs pay $25 to $4,500 based on New York-source gross income.
- **PTET election:** partnerships and S corporations can opt into the pass-through entity tax each year, online, between January 1 and March 15. Sole proprietorships and single-member LLCs (unless treated as S corporations) aren't eligible.

To plan your quarterly checks, see [quarterly estimated taxes for contractors](https://www.brix.so/learn/quarterly-estimated-taxes-for-contractors) or run the numbers in the [quarterly estimated tax calculator](https://www.brix.so/tools/quarterly-estimated-tax-calculator).

## When do New York contractors need workers' comp?

As soon as you have anyone working for you. The Workers' Compensation Board says "virtually all employers" in the state must cover their employees, and that includes part-time workers, family members and volunteers. A sole proprietor, partnership or LLC with no employees doesn't need coverage. A one- or two-person corporation is exempt only if those people own all the stock, hold all the offices and there are no other employees, subcontractors or unpaid volunteers.

Construction has an extra wrinkle. Under the Construction Industry Fair Play Act, a worker doing services for a contractor is presumed to be the contractor's employee unless a strict independent contractor test is met. The Board also notes that general contractors often require subs to show their own policy, so many one-person shops buy coverage just to get on jobs. See [workers' compensation basics](https://www.brix.so/learn/workers-compensation).

> **Check local rules and get a pro**
>
> Sales tax rates change by county and city, and licensing changes town by town in New York. This page summarizes state and New York City guidance; it isn't tax or legal advice. Have a CPA who works with New York contractors review your contracts, certificates and estimated payments.

Working across the river or north of the state line? Compare the rules in [New Jersey](https://www.brix.so/taxes/new-jersey), [Connecticut](https://www.brix.so/taxes/connecticut) and [Pennsylvania](https://www.brix.so/taxes/pennsylvania).

BRIX tracks sales tax on your quotes and invoices, syncs with QuickBooks, and keeps your local licenses and permits in one place with reminders before renewals lapse. BRIX doesn't decide whether a job is a capital improvement, file returns or give tax advice; your CPA makes those calls.

- [Bookkeeping and tax help](https://www.brix.so/features/bookkeeping-taxes): Keeps expenses categorized, tracks 1099 subcontractors and sales tax, and reminds you of quarterly estimated tax dates. BRIX does not file taxes or give tax advice.
- [Invoicing and payments](https://www.brix.so/features/invoicing-payments): Turns finished jobs into invoices and politely chases unpaid ones until the money is in your account.
- [QuickBooks sync](https://www.brix.so/integrations/quickbooks): Syncs customers, invoices and payments with QuickBooks so the books match the jobs.
- [Compliance and permit tracking](https://www.brix.so/#use-cases): Tracks licenses, safety documents and permits and flags renewals before they lapse.

## Frequently asked questions

### Do New York contractors charge sales tax on labor?

Only on taxable work. Repair, maintenance and installation services are taxable, so you charge tax on the full bill. If the job qualifies as a capital improvement under the department's three-part test, the customer pays no sales tax and you pay tax on the materials instead.

### What is Form ST-124 used for?

Form ST-124 is the Certificate of Capital Improvement. Your customer completes it to document that the job is a capital improvement. The department says a properly completed ST-124 relieves you of liability for tax on the work, so keep it with the job file.

### Can I buy materials tax-free with a resale certificate in New York?

Generally no. Contractors pay tax on building materials for capital improvement work and build that cost into their price. Form ST-120.1 allows exempt purchases only in specific cases, such as freestanding appliances you then sell to the customer with tax.

### Does New York State issue a general contractor license?

No. The Attorney General's fact sheet lists New York City and Suffolk, Nassau, Westchester, Putnam and Rockland counties as places where home improvement contractors must be licensed. Elsewhere, check with your town or county, since rules vary locally.

### Who licenses plumbers and electricians in New York City?

The NYC Department of Buildings issues the Master Plumber license and the Master and Special Electrician licenses. Home improvement contractor licenses in the city come from the Department of Consumer and Worker Protection (DCWP), not DOB.

### Do I need workers' comp as a one-person contracting business in New York?

Not if you're a sole proprietor, partnership or LLC with no employees. Once you hire anyone, including part-time help or family, you must carry coverage. Many general contractors still require proof of coverage from subs, so check your contracts.

## Related

- [Do Contractors Charge Sales Tax on Labor or Materials?](https://www.brix.so/learn/sales-tax-on-labor-vs-materials)
- [What Is Use Tax for Contractors?](https://www.brix.so/learn/use-tax-for-contractors)
- [What Is a Contractor License?](https://www.brix.so/learn/contractor-license)
- [What Is Workers' Compensation Insurance?](https://www.brix.so/learn/workers-compensation)
- [Quarterly Estimated Taxes for Contractors: How They Work in 2026](https://www.brix.so/learn/quarterly-estimated-taxes-for-contractors)
- [Quarterly Estimated Tax Calculator for Self-Employed Contractors (2026)](https://www.brix.so/tools/quarterly-estimated-tax-calculator)
- [New Jersey Contractor Taxes and Licensing: A Guide for Trades](https://www.brix.so/taxes/new-jersey)
- [Connecticut Contractor Taxes and Licensing: What Every Trade Should Know](https://www.brix.so/taxes/connecticut)
- [Pennsylvania Contractor Taxes and Licensing: What Trades Need to Know](https://www.brix.so/taxes/pennsylvania)
- [Self-Employment Tax Calculator (2026)](https://www.brix.so/tools/self-employment-tax-calculator)

## Sources

- [New York State Department of Taxation and Finance — Tax Bulletin TB-ST-104, Capital improvements](https://www.tax.ny.gov/pubs_and_bulls/tg_bulletins/st/capital_improvements.htm) (checked 2026-10-19)
- [New York State Department of Taxation and Finance — Contractors/repair persons](https://www.tax.ny.gov/pubs_and_bulls/publications/sales/contractors.htm) (checked 2026-10-19)
- [New York State Department of Taxation and Finance — Sales tax rates, additional sales taxes, and fees](https://www.tax.ny.gov/pubs_and_bulls/tg_bulletins/st/sales_tax_rates_additional_sales_taxes_and_fees.htm) (checked 2026-10-19)
- [New York State Department of Taxation and Finance — TB-ST-910, Use tax for businesses](https://tax.ny.gov/pubs_and_bulls/tg_bulletins/st/use_tax_for_businesses.htm) (checked 2026-10-19)
- [New York State Department of Taxation and Finance — Form IT-2105-I (2026), estimated tax instructions and rate schedules](https://www.tax.ny.gov/pdf/current_forms/it/it2105i.pdf) (checked 2026-10-19)
- [New York State Department of Taxation and Finance — Form IT-204-LL-I, LLC and LLP filing fee](https://www.tax.ny.gov/pdf/current_forms/it/it204lli.pdf) (checked 2026-10-19)
- [New York State Department of Taxation and Finance — Pass-through entity tax (PTET)](https://www.tax.ny.gov/bus/ptet/) (checked 2026-10-19)
- [New York State Attorney General — Home improvement fact sheet](https://ag.ny.gov/home-improvement-fact-sheet) (checked 2026-10-19)
- [NYC Department of Buildings — Home Improvement Contractor License](https://www.nyc.gov/site/buildings/industry/home-improvement-contractor-license.page) (checked 2026-10-19)
- [NYC Department of Buildings — Contractors](https://www.nyc.gov/site/buildings/industry/contractors.page) (checked 2026-10-19)
- [NYC Department of Buildings — Obtain a Master Plumber License](https://www.nyc.gov/site/buildings/industry/obtain-a-master-plumber-license.page) (checked 2026-10-19)
- [NYC Department of Buildings — Obtain a Master & Special Electrician License](https://www.nyc.gov/site/buildings/industry/obtain-a-master-and-special-electrician-license.page) (checked 2026-10-19)
- [NYC Business — Asbestos Handling License](https://nyc-business.nyc.gov/nycbusiness/description/asbestos-handling-license) (checked 2026-10-19)
- [New York State Department of Labor — New registry for contractors and subcontractors on public work](https://dol.ny.gov/news/new-york-state-department-labor-announces-new-registry-contractors-and-subcontractors-engaged) (checked 2026-10-19)
- [New York State DEC — Pesticide business registration](https://dec.ny.gov/environmental-protection/pesticides/business-agency-information) (checked 2026-10-19)
- [New York State Workers' Compensation Board — Workers' compensation coverage requirements](https://www.wcb.ny.gov/content/main/coverage-requirements-wc/wc-coverage-required.jsp) (checked 2026-10-19)

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Written by BRIX Editorial Team. Last updated 2026-10-19. General information, not tax, legal or financial advice.
Canonical: https://www.brix.so/taxes/new-york