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