# Pennsylvania Contractor Taxes and Licensing: What Trades Need to Know

Pennsylvania has no statewide license for most construction trades. Instead, home improvement contractors register with the Attorney General, and cities like Philadelphia and Pittsburgh license electricians and plumbers. On taxes, a construction contractor owes the 6% sales or use tax on the materials it installs, and building repair labor on real estate isn't taxed.

## Key takeaways

- The state doesn't license most contractors. Electrical, plumbing and HVAC licensing happens at the city, borough, township or county level.
- Doing $5,000 or more of home improvement work a year means registering with the Attorney General, at $100 every two years.
- You pay the 6% state rate (7% in Allegheny County, 8% in Philadelphia) on materials you install in a real estate structure.
- Building maintenance, cleaning, pest control and lawn care are taxable services. Building repair on real estate isn't.
- Personal income tax is a flat 3.07%, but most towns and school districts add a local earned income tax.

## Why is Pennsylvania different for contractors?

Most of the rules that matter are local. The Department of Labor & Industry (L&I) says the Commonwealth "currently has no licensure or certification requirements for most construction contractors." Some of Pennsylvania's 2,562 municipalities license home improvement contractors, electricians and plumbers on their own, and L&I keeps no list of which ones do. You find out by calling the town where the job is.

What the state does require is a **Home Improvement Contractor (HIC) registration** with the Office of Attorney General if you perform at least $5,000 of home improvements a year. The AG says the fee is now $100 every two years, and its online registration system has been working again since April 24, 2026. Local taxes stack on top: Philadelphia and Allegheny County add sales tax, and nearly everywhere has a local earned income tax.

If you also work across the line, compare these rules with [New York](https://www.brix.so/taxes/new-york), [New Jersey](https://www.brix.so/taxes/new-jersey) and [Maryland](https://www.brix.so/taxes/maryland), which all license or register trades differently.

## Is contractor labor taxable in Pennsylvania?

Repair and construction labor on real estate generally isn't. The Department of Revenue's Retailer's Information Guide (REV-717, 02-26) says "building repair services on buildings or other property that is permanently affixed to realty are nontaxable." The department defines a construction contract as one for "the construction, reconstruction, remodeling, renovation or repair" of a real estate structure, and the tax lands on your materials instead of the customer's bill.

REV-717 does list these services as taxable in Pennsylvania:

- **Building maintenance or cleaning:** routine, periodic work that keeps a building in satisfactory operating condition, like janitorial work. REV-717 points to Sales and Use Tax Bulletin 2025-01 for where maintenance ends and repair begins.
- **Disinfecting or pest control** on real property or tangible personal property in the state.
- **Lawn care:** fertilizing, mowing, dethatching, applying herbicides or insecticides and raking.

The state sales tax rate is **6%**. The department adds a 1% local tax in **Allegheny County** (7% total) and a 2% local tax in **Philadelphia** (8% total). For the broader picture of how states split labor and materials, see [sales tax on labor vs. materials](https://www.brix.so/learn/sales-tax-on-labor-vs-materials).

## Do Pennsylvania contractors pay sales tax on materials?

Yes. REV-717 says construction contractors "are required to pay tax on all property (including materials, equipment, components and supplies) that is furnished and installed in the performance of construction activities." The regulation at 61 Pa. Code § 31.12 adds that a contractor doing only construction work pays the tax to its supplier when it buys. The department's own shorthand: a construction contractor "owes tax on all components of a real estate structure."

There's one big exception. On a construction contract with an exempt entity, such as a purely public charity, the federal government, the Commonwealth, a county, city, borough, township or school district, or a qualified Keystone Opportunity Zone business, you can buy items in the **building machinery and equipment (BME)** category tax free. You give the supplier **Form REV-1220**, the Pennsylvania exemption certificate, and attach a list of the items you claim qualify. BME covers things like generation, storage, conditioning and distribution equipment. Ordinary materials on those jobs are still taxable to you.

If you also sell goods at retail, such as appliances you deliver without permanently installing, § 31.12 says you must hold a sales tax license and collect tax on those sales. Buying materials out of state without paying Pennsylvania tax? The department says use tax applies at the same rate as sales tax, reported through myPATH. More on that in [use tax for contractors](https://www.brix.so/learn/use-tax-for-contractors).

## Do you need a contractor license in Pennsylvania?

Not from the state, for most trades. Here's what exists at the state level, and where local licensing takes over.

**Pennsylvania state licenses and registrations for common trades**

| Trade | Agency | License or registration | Link |
| --- | --- | --- | --- |
| General contractor / home improvement | Office of Attorney General, Bureau of Consumer Protection | HIC registration if you do $5,000+ of home improvements a year; no state GC license | [HIC registration](https://www.attorneygeneral.gov/home-improvement-contractor-registration/) |
| Electrical | Local only | No state license; check your town (Philadelphia and Pittsburgh license electrical work) | [L&I contractor licensing](https://www.pa.gov/agencies/dli/programs-services/labor-management-relations/bureau-of-occupational-and-industrial-safety/uniform-construction-code-home/contractor-licensing) |
| Plumbing | Local only | No state license; check your town or county (Allegheny County Health Department licenses plumbers there) | [ACHD Plumbing Program](https://alleghenycounty.us/Services/Health-Department/Plumbing-Program) |
| HVAC | Local only | No state license; check your town | [L&I contractor licensing](https://www.pa.gov/agencies/dli/programs-services/labor-management-relations/bureau-of-occupational-and-industrial-safety/uniform-construction-code-home/contractor-licensing) |
| Roofing | Local only | No state trade license; residential jobs may still need HIC registration; check your town | [HIC registration](https://www.attorneygeneral.gov/home-improvement-contractor-registration/) |
| Crane operation | State Board of Crane Operators (Dept. of State) | Crane operator license | [L&I contractor licensing](https://www.pa.gov/agencies/dli/programs-services/labor-management-relations/bureau-of-occupational-and-industrial-safety/uniform-construction-code-home/contractor-licensing) |
| Asbestos and lead abatement | L&I Certification, Accreditation and Licensing Division | Worker and contractor certification | [L&I contractor licensing](https://www.pa.gov/agencies/dli/programs-services/labor-management-relations/bureau-of-occupational-and-industrial-safety/uniform-construction-code-home/contractor-licensing) |

_Checked 2026-10-19 against L&I and Attorney General pages. Local rules vary by municipality._

The two biggest cities run their own systems. **Philadelphia** requires a contractor license from L&I for construction, demolition or repair work, at $126 a year. You'll need a Business Income and Receipts Tax (BIRT) account, a Commercial Activity License, OSHA 30-trained supervisors, and insurance of at least $500,000 general liability per occurrence, $300,000 auto liability, and workers' comp. Electrical and plumbing work need separate specialized licenses. If you only work on existing one- or two-family homes and don't need a specialized license, the city says to register with the state as an HIC instead. **Pittsburgh** requires an Electrical Trade License for electrical work in the city, and the Allegheny County Health Department licenses apprentice, journeyman and master plumbers. Elsewhere, ask the borough or township. See [contractor licenses](https://www.brix.so/learn/contractor-license) for the general picture.

## How does Pennsylvania tax your business income?

The Department of Revenue says personal income tax is levied at a flat **3.07%**, including on income passed through from partnerships, S corporations and certain LLCs. Losses in one income class can't offset income in another class.

C corporations pay the **corporate net income tax**, which the department lists at 7.49% for 2026 and 6.99% for 2027, as part of a scheduled step-down. Ask a CPA whether any pass-through entity election applies to you, since we couldn't confirm one on the department's site.

Estimated payments: the department's Personal Income Tax Guide says you must pay in installments if income not subject to employer withholding is reasonably expected to exceed **$9,500**. Payments are due April 15, June 15, September 15 and January 15. Plan for the local side too. Under Act 32, the Department of Community and Economic Development (DCED) says employers withhold the **local earned income tax (EIT)** and Local Services Tax, and its address lookup shows the rate for any municipality. If you're self-employed, ask your local tax collector how to file and pay. Philadelphia runs its own city taxes, including BIRT. Use the [quarterly estimated tax calculator](https://www.brix.so/tools/quarterly-estimated-tax-calculator) and our guide to [quarterly estimated taxes for contractors](https://www.brix.so/learn/quarterly-estimated-taxes-for-contractors) to plan.

## Who needs workers' comp in Pennsylvania?

Any employer with at least one employee, part-time and family members included. L&I says coverage is "mandatory for any employer that employs at least one employee." A sole proprietor or general partner is excluded only when there are no other employees. Certain executive officers can be excluded too, such as owner-officers of an S corporation or officers owning at least 5% of a C corporation, through the carrier or the Bureau.

Going without coverage is a crime. L&I lists a possible $2,500 fine and up to a year in prison for each day as a misdemeanor, and up to $15,000 and seven years for each day as a felony when intentional.

Construction has its own test for who counts as an independent contractor. Under the **Construction Workplace Misclassification Act (Act 72)**, L&I says a worker is only independent if they have a written contract, are free from your control, and run an independent business. That last part requires their own tools, profit-or-loss risk, a separate business location, and liability insurance of at least **$50,000** for the contract term. Fail the test and that sub is your employee for comp purposes. More in [workers' compensation](https://www.brix.so/learn/workers-compensation).

> **Local rules decide a lot in Pennsylvania**
>
> This page summarizes state and city guidance as of October 2026. It isn't tax or legal advice. Your borough, township or county may have its own licensing, permits and local taxes, and Bulletin 2025-01 draws fine lines between taxable maintenance and nontaxable repair. Have a Pennsylvania CPA review how you price and invoice before you rely on any of this.

BRIX tracks sales tax on your quotes and invoices, syncs with QuickBooks, and keeps your HIC registration and city licenses on a list that flags renewals before they lapse. BRIX doesn't determine taxability, file returns or give tax advice.

- [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

### Does Pennsylvania require a general contractor license?

No. The Department of Labor & Industry says the state has no licensure requirement for most construction contractors. If you do at least $5,000 of home improvement work a year, you must register with the Attorney General as a Home Improvement Contractor. Cities like Philadelphia and Pittsburgh add their own licenses.

### Do I charge sales tax on a kitchen remodel in Pennsylvania?

A remodel is a construction contract on a real estate structure, so the Department of Revenue treats you as owing tax on the materials, cabinets and components you install. You pay the 6% (or 7% or 8% locally) when you buy them. Labor to repair or remodel real estate isn't a taxable service.

### How much does Pennsylvania HIC registration cost?

The Attorney General's office says the fee is $100 every two years for new and renewal applications, and it's non-refundable. You need to register if you perform at least $5,000 of home improvements per year. Approved contractors get a PA registration number by email.

### Is lawn care or pest control taxable in Pennsylvania?

Yes. The Department of Revenue's REV-717 guide lists lawn care services and disinfecting or pest control services as taxable when performed in Pennsylvania. Building maintenance and cleaning services are taxable as well. Building repair on property permanently affixed to real estate is not.

### Can I buy materials tax free for a school or church job in Pennsylvania?

Only items in the building machinery and equipment category, on a construction contract with an exempt entity like a school district or a purely public charity. You give your supplier Form REV-1220 with a list of the qualifying items. Other materials on the job are still taxable to you.

### Do Pennsylvania electricians and plumbers need a state license?

No state license exists for either trade. Licensing is local, so check with the municipality where you work. Philadelphia requires separate electrical and plumbing licenses, Pittsburgh requires an Electrical Trade License, and the Allegheny County Health Department licenses plumbers in that county.

### Do I need workers' comp if I hire one helper in Pennsylvania?

Yes. Labor & Industry says coverage is mandatory once you employ at least one employee, including part-time workers and family members. Sole proprietors are excluded only when they have no other employees. Penalties for going uninsured can reach $2,500 a day as a misdemeanor.

## 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 York Contractor Taxes and Licensing: What Trades Need to Know](https://www.brix.so/taxes/new-york)
- [New Jersey Contractor Taxes and Licensing: A Guide for Trades](https://www.brix.so/taxes/new-jersey)
- [Maryland Contractor Taxes and Licensing: A Guide for Trades](https://www.brix.so/taxes/maryland)
- [Self-Employment Tax Calculator (2026)](https://www.brix.so/tools/self-employment-tax-calculator)

## Sources

- [Pennsylvania Department of Revenue — Sales, Use and Hotel Occupancy Tax](https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/sales-use-and-hotel-occupancy-tax) (checked 2026-10-19)
- [Pennsylvania Department of Revenue — Retailer's Information Guide (REV-717, 02-26)](https://www.pa.gov/content/dam/copapwp-pagov/en/revenue/documents/formsandpublications/formsforbusinesses/sut/documents/rev-717.pdf) (checked 2026-10-19)
- [Pennsylvania Department of Revenue — Building Machinery and Equipment](https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/sales-use-and-hotel-occupancy-tax/building-machinery-and-equipment) (checked 2026-10-19)
- [Pennsylvania Code — 61 Pa. Code § 31.12, Contractors](https://www.pacodeandbulletin.gov/secure/pacode/data/061/chapter31/s31.12.html) (checked 2026-10-19)
- [Pennsylvania Department of Revenue — Personal Income Tax](https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/personal-income-tax) (checked 2026-10-19)
- [Pennsylvania Department of Revenue — PIT Guide: Withholding, Estimated Payments, Penalties](https://www.pa.gov/agencies/revenue/forms-and-publications/pa-personal-income-tax-guide/income-subject-withholding-estimated-payments-penalties-interest-other-additions) (checked 2026-10-19)
- [Pennsylvania Department of Revenue — Corporate Net Income Tax](https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/corporation-taxes/corporate-net-income-tax) (checked 2026-10-19)
- [Pennsylvania DCED — Local Income Tax Information (Act 32)](https://dced.pa.gov/local-government/local-income-tax-information/) (checked 2026-10-19)
- [Pennsylvania Department of Labor & Industry — Contractor Licensing](https://www.pa.gov/agencies/dli/programs-services/labor-management-relations/bureau-of-occupational-and-industrial-safety/uniform-construction-code-home/contractor-licensing) (checked 2026-10-19)
- [Pennsylvania Office of Attorney General — Home Improvement Contractor Registration](https://www.attorneygeneral.gov/home-improvement-contractor-registration/) (checked 2026-10-19)
- [City of Philadelphia — Get a contractor license](https://www.phila.gov/services/permits-violations-licenses/get-a-license/trade-licenses/get-a-contractor-license) (checked 2026-10-19)
- [City of Pittsburgh — Electrical Trade License](https://www.pittsburghpa.gov/Business-Development/Permits-Licenses-and-Inspections/Licenses/Trade-Licenses/Electrical-Trade-License) (checked 2026-10-19)
- [Allegheny County Health Department — Plumbing Program](https://alleghenycounty.us/Services/Health-Department/Plumbing-Program) (checked 2026-10-19)
- [Pennsylvania Department of Labor & Industry — Workers' Compensation Employer Information (LIBC-200)](https://www.pa.gov/agencies/dli/resources/for-employers-and-educators/workers--compensation-for-employers/libc-200-employer-information) (checked 2026-10-19)
- [Pennsylvania Department of Labor & Industry — Employee or Independent Contractor](https://www.pa.gov/agencies/dli/resources/compliance-laws-and-regulations/covered-employment/employee-or-independent-contractor) (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/pennsylvania