You’re running jobs across Florida, and your margins are tight. Every dollar counts. But most general contractors don’t realize that how you bill your labor versus materials directly affects your sales tax liability—and many get it backwards, paying tax on labor that should never be taxed, or mishandling lump-sum jobs in ways that trip up their filing. The difference between billing separately and lump-sum can mean the difference between owing tax on only materials and owing tax on your entire contract value. This guide shows you exactly what the Florida Department of Revenue expects and how to structure your quotes, invoices, and DR-15 filing to match.
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Does this apply to your business in Florida?
If you’re a general contractor, construction manager, or specialty trade contractor in Florida and you charge customers for labor, materials, or both, you must file sales tax returns—even if you’re not collecting sales tax on every job. According to the Florida Department of Revenue, labor is generally not taxable when separately stated and invoiced—but materials you purchase and install are taxable. The key is itemizing what your customer pays for labor versus what they pay for materials. Lump-sum contracts (one price for everything) create a default risk: the state treats the entire amount as taxable unless you can prove otherwise with invoices and costs.
How the rate works
Florida’s sales tax is a two-tier system: a statewide rate of 6%, plus a county surtax that varies by county. You don’t choose the rate—it’s set by law for your county and changes only if the county voters approve it. You’ll find your county’s combined rate using the official calculator on floridarevenue.com, which is the most reliable source for the exact percentage you owe.
When you file a DR-15 (the sales tax return most contractors file), you report the taxable sales for that period and the combined rate is applied to them. The county surtax portion goes to the county; the state portion goes to the state. Both come out of your report, so understanding which transactions are taxable and which are exempt is what actually controls your bill—not the rate itself.
How to file step by step
Filing a DR-15 on floridarevenue.com happens in phases. First, you log into your online account (or create one if you haven’t already). The system prompts you to report your sales for the filing period—typically a calendar month, though you may be on a different period depending on your registration.
On the form, you’ll see fields for total sales and taxable sales. This is where your documentation matters: if you invoiced separately for labor and materials, you report only the materials portion as taxable sales. If you have exempt sales (labor, certain services, or sales to exempt customers), you’ll report those separately so the state knows why taxable sales don’t equal total sales.
You then apply the combined rate (state 6% plus your county surtax) to your taxable sales. The system calculates the tax due, and you either pay it online or arrange payment according to the deadline—typically by the 20th of the month following the reporting period. Keep your invoices, purchase orders, and cost records for at least three years in case of an audit.
If you’re unsure about how to categorize a specific transaction or how your county’s combined rate affects your calculations, the step-by-step breakdown is walked through step by step here, which clarifies the role of the Florida Department of Revenue and the filing timeline.
Common mistakes
Mistake 1: Treating labor as always taxable. Many contractors think all income is taxable. In reality, if you bill labor separately on your invoice, it’s not taxable. The risk comes when you lump labor and materials into one price. The state then assumes the whole amount is subject to tax unless you can prove how much was labor versus materials with your cost records and invoices. Fix: always itemize labor and materials on your customer invoices and internally track your costs by job so you can defend the split if audited.
Mistake 2: Paying tax on lump-sum contracts without documentation. You win a $50,000 job quoted as one price, with no breakdown. You pay tax on the full amount. In reality, you may have spent $20,000 on materials and $30,000 on labor—meaning you overpaid tax on $30,000 of labor that wasn’t taxable. Fix: before you bill, separate the labor and material costs in your proposal and on your final invoice. If you’ve already billed lump-sum, document your actual costs now and contact the Department of Revenue or your CPA about whether you can amend past returns.
Mistake 3: Forgetting to file when you have zero sales or no taxable sales. Some contractors skip filing a DR-15 if they had no jobs that month or all jobs were services. The state still expects a return; you simply report zero taxable sales. Missing a filing deadline can trigger penalties or loss of sales tax permit status. Fix: file every month on time, even if it’s a $0 return. Set a calendar reminder for the 20th of the next month and make filing part of your routine.
Mistake 4: Not tracking purchases by job. You buy materials from multiple suppliers throughout the month for different jobs. At tax time, you’re not sure which materials went into which jobs or whether some customers were exempt. This makes it hard to defend your taxable versus non-taxable breakdown if audited. Fix: tag or track every material purchase by job number or customer name, keep receipts, and use your accounting system to tie materials to invoices. This also helps you validate the accuracy of your DR-15 before filing.
Frequently Asked Questions
Do I have to collect sales tax from my customers?
You are responsible for remitting sales tax to Florida, but whether you collect it from your customer is a business decision. Most contractors include sales tax in their bid. If you quote labor and materials separately and charge sales tax only on materials, your customer’s bill is clear and compliant. If you’re unsure whether a customer is exempt (e.g., a government entity), confirm their exempt status before the job starts.
What if I’m a specialty contractor—plumber, electrician, HVAC?
Same rules apply: labor is not taxable when separately stated, materials are taxable. Your DR-15 filing process is identical. The detailed breakdown of Florida sales tax rules for different industries clarifies where your trade fits and what records you need to keep to prove your invoicing structure.
How do I know my county’s sales tax rate?
Use the rate lookup tool on floridarevenue.com or contact your county tax collector’s office. Rates change only if the county holds a referendum and voters approve a surtax change. Check the official rate annually so you’re always applying the correct percentage to your taxable sales.
What happens if I file late or report the wrong amount?
Late filing can result in penalties assessed by the Florida Department of Revenue. If you report incorrectly and don’t have the documentation to support your numbers, you may face a deficiency notice and have to pay back taxes. The best defense is accurate invoicing and timely filing; if you make an error, contact the Department to discuss amendment options as soon as possible.
Do I need a CPA to file my DR-15?
You can file it yourself if your invoicing is clean and well-organized. However, if your business is complex, you have multi-state operations, or you’re unsure about exemptions and categorization, a CPA or tax professional can review your work and reduce the risk of errors. The platform organizes your transaction data so your CPA’s review is faster and cheaper than if they had to manually sort invoices.
This article is for general educational purposes and isn’t a substitute for advice from a licensed CPA or tax attorney. Rules vary by jurisdiction and change over time—always confirm current requirements with the Florida Department of Revenue or your advisor.
This article is for general educational purposes and isn’t a substitute for advice from a licensed CPA or tax attorney. Rules vary by jurisdiction and change over time — always confirm current requirements with the Florida Department of Revenue or your advisor.
For the Florida-specific rules behind this, our Florida sales tax guide breaks down rates, deadlines, and filing steps county by county.