Florida Sales Tax For Contractors On Materials And Lump Sum Jobs

Florida contractor sales tax can feel backward at first. You buy the materials, you do the work, and the customer pays the bill. So why do you often pay sales tax on materials, but you don't charge sales tax to the customer?

In Florida, the answer usually comes down to one big dividing line: are you improving real property (a building or land), or are you selling tangible personal property (an item) with installation?

This guide explains how sales tax and use tax apply to contractor materials in Florida, how lump sum and time-and-materials jobs are treated, and how to invoice in a way that won't cause trouble in an audit.

For most real property jobs in Florida (build, remodel, repair, install fixtures that become part of the building), the contractor is treated as the final consumer of the materials. That means you typically pay sales tax when you buy materials from your supplier, then you build that cost into your price.

Florida's Department of Revenue (DOR) summarizes sales and use tax basics here: Florida Sales and Use Tax. For contractor-specific guidance, keep this DOR publication bookmarked: Sales and Use Tax on Building Contractors (GT-800007).

Sales tax is what your vendor charges you at checkout when the sale is taxable in Florida.

Use tax is what you owe when tax should've been charged, but wasn't. This comes up a lot when you buy online or from an out-of-state supplier that doesn't charge Florida tax.

A simple example:

• You buy $2,000 of tile online.
• The seller doesn't charge Florida tax.
• You still owe Florida use tax on the cost (plus any county surtax that applies).

If you don't track use tax during the year, it often shows up later as an audit assessment, with penalties and interest added.

Florida's state sales tax rate is 6% as of February 2026. Many counties add a discretionary surtax, so the combined rate can be higher depending on the job location and sourcing rules.

Many contractors assume "lump sum" is the tax reason they don't charge sales tax. In Florida, that's usually not the real reason.

For improvements to real property, lump sum and time-and-materials (T&M) contracts generally land in the same place :

• You pay tax on materials when you buy them.
• You normally do not add a sales tax line to the customer invoice for the real property job.

Florida lays out the framework for contractor transactions in the sales and use tax rules. The official rules index is here: Florida Administrative Code, Chapter 12A-1 (look for the contractor-related rules within the chapter).

Let's say you bid a kitchen remodel at $18,000 lump sum.

• Materials cost you $7,500.
• Your suppliers charge you $525 in tax (assuming 7% combined rate).
• You invoice the customer $18,000.

A clean invoice often looks like:

• "Kitchen remodel per contract": $18,000
• No "sales tax" line (because you already paid tax on materials)

If you want to show transparency, you can attach a schedule of values for progress billing. Just be careful about how you label it.

Now assume the same remodel is billed T&M:

• Labor: $9,000
• Materials and supplies: $7,500 (your cost, plus markup)
• Contract total: $18,000

In most real property situations, the invoice still should not show Florida sales tax as a separate charge.

If you're trying to set up your sales tax account, filing schedule, and recordkeeping, this walkthrough can help: Florida sales tax for Fort Myers service businesses.

There is a structure Florida recognizes where the contractor acts more like a retailer of materials and separately states installation. It's often called a "separated contract" approach in practice, and it has strict documentation expectations.

If you go this route, the usual concept is:

• Buy materials for resale (using a resale certificate when allowed).
• Charge the customer sales tax on the materials portion you sell them.
• Installation labor may be treated differently depending on what's being installed and whether the transaction is treated as a taxable sale of an item.

Florida DOR has addressed when a lump sum contract is required versus a retail sale plus installation type structure in this Technical Assistance Advisement: DOR guidance on lump sum vs retail sale plus installation.

You install a sign package that's treated as a taxable sale of tangible personal property with installation:

• Materials sold: $4,000
• Installation labor: $1,500
• Sales tax (7% on materials): $280
• Customer total: $5,780

Invoice format (simplified):

• "Materials (sign components)": $4,000
• "Installation labor": $1,500
• "FL sales tax on materials": $280

This is also where good system setup matters, especially if you use Square, Clover, or Shopify to take payments: Fort Myers sales tax POS setup checklist.

Use this as a fast gut-check before you quote the job and again before you invoice.

Practical decision tree (3 steps):

1. Decide if it's real property improvement or a retail sale of an item.
2. Match your purchasing method (tax-paid vs resale) to that decision.
3. Invoice in a way that matches the structure you chose.

A few habits reduce surprises later.

• Job file notes : Document job location, scope, and what was installed.
• Material purchasing support : Keep vendor invoices showing tax paid, or track accrued use tax.
• Use tax routine : Review purchases monthly for vendors that didn't charge Florida tax.
• Clear invoice language : Avoid sloppy labels like "materials sold" unless you truly structured a retail sale.
• Surtax awareness : Confirm county surtax treatment for big material purchases and job locations.
• Exempt jobs documentation : Don't assume "government job" means tax-free without the required forms.

• Using a resale certificate for materials that go into real property jobs.
• Missing use tax on online and out-of-state purchases.
• Inconsistent invoices (sometimes charging tax, sometimes not, for the same type of job).
• Poor separation of retail sales vs real property work in your bookkeeping.
• No support for exemptions (especially on public sector projects).

Florida contractor sales tax usually works like this: if you're improving real property, you're the consumer, so you pay tax on materials and don't add sales tax to the customer invoice for lump sum or T&M jobs. Once you shift into selling an item with installation, the tax result can flip, and invoicing matters a lot.

If you want a second set of eyes on your invoices, resale certificate use, and use tax tracking, get help before an audit forces the issue. This article is general information , not legal or tax advice, and the right answer can change based on your exact facts and documents.