Alabama Contractor Sales Tax 2026: Labor, Materials, Rules

Alabama sales tax for contractors 2026. Labor taxable? Materials? Real rules from state revenue department.

Alabama Contractor Sales Tax 2026

Alabama sales tax for contractors 2026. Labor taxable? Materials? Real rules from state revenue department.

Alabama sales tax rate for contractors

  • Combined rate: 4% + local (~9.2% combined avg)
  • Construction labor taxable: NO - real property labor is exempt
  • Tax authority: Alabama Department of Revenue

How Alabama treats contractor labor

Contractor labor on real property is exempt; contractor pays sales tax on materials at purchase.

Alabama-specific rules

Lump-sum contracts: contractor consumes materials and pays tax at purchase. Time-and-materials may be treated differently. State imposes a 1.5% rental tax on equipment rentals.

Alabama mechanics lien rights

Beyond sales tax, Alabama contractor billing must respect the mechanics lien deadline of 6 months from last work (4 months for laborers). Preliminary notice: Notice to owner required before residence lien.

Alabama contractor licensing

Alabama Licensing Board for General Contractors - required for licensed work. $300 application + exam. Board: https://genconbd.alabama.gov.

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Alabama contractor resources by trade