How sales tax works on home repairs and remodels in North Carolina
North Carolina taxes some home projects and not others. Whether your project is taxed depends on what the work is, not on who does it. This page explains the difference in plain English, so you know why your HomeCloud invoice does or doesn't include sales tax.
The short version
- Repairs, maintenance and installations are taxed. Fixing a roof leak, replacing a water heater or swapping a faucet is taxed like a purchase.
- Bigger improvements are not taxed to you. A full roof replacement, a new HVAC system, new siding, painting and a bathroom remodel count as what the state calls a "capital improvement." You don't pay sales tax on the job. Instead, the contractor pays tax on the materials it buys.
- Some services are exempt. Pressure washing, window washing, gutter cleaning and general cleaning are not taxed.
- The rate depends on the county where the house is, from 6.75% to 8.25% in North Carolina.
What counts as a capital improvement
The North Carolina Department of Revenue treats these as capital improvements:
- New construction, reconstruction or remodeling
- Replacing or installing a roof, siding, a septic system or an HVAC unit, or a driveway or landscaping
- Painting or wallpapering, unless it is a small part of a repair
- Other work that needs a building permit, except for replacing individual items like a water heater or an electrical part
Everything else done to a home, such as repairing, maintaining, installing or replacing a part, is generally a taxable repair service.
Examples side by side
| The work | How North Carolina treats it |
|---|---|
| Fix a roof leak or replace some shingles | Taxed (repair) |
| Replace the whole roof | Not taxed to you (capital improvement) |
| Repair an HVAC system or replace a part | Taxed (repair) |
| Replace the HVAC system | Not taxed to you (capital improvement) |
| Replace a water heater | Taxed (repair and installation) |
| Replace a faucet, toilet or other plumbing fixture | Taxed (repair and installation) |
| Remodel a bathroom | Not taxed to you (capital improvement) |
| Paint interior rooms or the exterior | Not taxed to you, unless the painting is part of a repair |
| Install a vapor barrier in a crawl space | Taxed (installation) |
| Pressure wash the house, wash windows, clean gutters | Not taxed (exempt) |
These follow the state's Services to Real Property Taxability Chart. The details of a specific job can change the answer, which is why HomeCloud reviews each project.
Jobs that include both
Many projects mix the two, like a bathroom remodel that also includes fixing a leaking valve somewhere else in the house. North Carolina has a rule for that:
- If the taxable repair work is 25% or less of the contract price, the whole contract is treated as a capital improvement and you aren't charged sales tax.
- If it's more than 25%, sales tax is charged on the repair portion only.
Why your rate depends on where the house is
The state rate is 4.75%. Each county adds its own local rate, and four counties add a 0.5% transit tax. The rate that applies is the one for the county where the work is done, not where you live or get your mail.
Rates in the areas HomeCloud serves most:
| County | Cities | Total rate |
|---|---|---|
| Wake | Raleigh, Cary | 7.25% (includes 0.5% transit tax) |
| Durham | Durham | 7.5% (includes 0.5% transit tax) |
| Orange | Chapel Hill | 7.5% (includes 0.5% transit tax) |
| Chatham | Pittsboro | 7% |
| Johnston | Clayton, Smithfield | 6.75% |
| Mecklenburg | Charlotte | 8.25% (includes 0.5% transit tax) |
| Union | Monroe, Waxhaw | 6.75% |
| Cabarrus | Concord | 7% |
| Gaston | Gastonia | 7% |
| Iredell | Mooresville | 6.75% |
| Guilford | Greensboro, High Point | 6.75% |
Mecklenburg County's rate went up by 1% on July 1, 2026.
All 100 North Carolina counties
| County | Rate | County | Rate | County | Rate | County | Rate |
|---|---|---|---|---|---|---|---|
| Alamance | 6.75% | Cumberland | 7% | Johnston | 6.75% | Randolph | 7% |
| Alexander | 7% | Currituck | 6.75% | Jones | 7% | Richmond | 6.75% |
| Alleghany | 7% | Dare | 6.75% | Lee | 7% | Robeson | 7% |
| Anson | 7% | Davidson | 7% | Lenoir | 6.75% | Rockingham | 7% |
| Ashe | 7% | Davie | 6.75% | Lincoln | 7% | Rowan | 7% |
| Avery | 6.75% | Duplin | 7% | Macon | 6.75% | Rutherford | 7% |
| Beaufort | 6.75% | Durham | 7.5%* | Madison | 7% | Sampson | 7% |
| Bertie | 7% | Edgecombe | 7% | Martin | 7% | Scotland | 6.75% |
| Bladen | 6.75% | Forsyth | 7% | McDowell | 6.75% | Stanly | 7% |
| Brunswick | 6.75% | Franklin | 6.75% | Mecklenburg | 8.25%* | Stokes | 6.75% |
| Buncombe | 7% | Gaston | 7% | Mitchell | 6.75% | Surry | 7% |
| Burke | 6.75% | Gates | 6.75% | Montgomery | 7% | Swain | 7% |
| Cabarrus | 7% | Graham | 7% | Moore | 7% | Transylvania | 6.75% |
| Caldwell | 6.75% | Granville | 6.75% | Nash | 6.75% | Tyrrell | 6.75% |
| Camden | 6.75% | Greene | 7% | New Hanover | 7% | Union | 6.75% |
| Carteret | 6.75% | Guilford | 6.75% | Northampton | 6.75% | Vance | 6.75% |
| Caswell | 6.75% | Halifax | 7% | Onslow | 7% | Wake | 7.25%* |
| Catawba | 7% | Harnett | 7% | Orange | 7.5%* | Warren | 6.75% |
| Chatham | 7% | Haywood | 7% | Pamlico | 6.75% | Washington | 7% |
| Cherokee | 7% | Henderson | 6.75% | Pasquotank | 7% | Watauga | 6.75% |
| Chowan | 6.75% | Hertford | 7% | Pender | 6.75% | Wayne | 6.75% |
| Clay | 7% | Hoke | 6.75% | Perquimans | 6.75% | Wilkes | 7% |
| Cleveland | 6.75% | Hyde | 6.75% | Person | 6.75% | Wilson | 6.75% |
| Columbus | 6.75% | Iredell | 6.75% | Pitt | 7% | Yadkin | 6.75% |
| Craven | 6.75% | Jackson | 7% | Polk | 6.75% | Yancey | 6.75% |
* Includes the 0.5% transit tax.
Rates as of October 2026, from the North Carolina Department of Revenue's current sales and use tax rates. Rates can change. Check that page for the latest.
The capital improvement affidavit (Form E-589CI)
When a project is a capital improvement, the paperwork that documents it is Form E-589CI, Affidavit of Capital Improvement. It states that the work is a capital improvement, so it isn't taxed as a repair.
Please read this part. The form is only for work that truly is a capital improvement. Under North Carolina law, the person who signs and issues the affidavit is responsible for any additional tax if the work turns out to be a taxable repair. So it isn't a way to avoid tax on repair work. HomeCloud will tell you when your project qualifies and give you the form when it does.
How HomeCloud handles sales tax on your project
- We look at each project under North Carolina's rules: repair, capital improvement, a mix, or exempt.
- Sales tax, when it applies, shows on your invoice at your county's rate.
- If your project qualifies as a capital improvement, we'll send you Form E-589CI to review and sign.
- If something on your invoice doesn't look right, contact us at support@gethomecloud.com and we'll walk through it with you.
Georgia and Texas
This page covers North Carolina only. Georgia and Texas have their own rules.
This page is general information, not tax advice. It is based on the North Carolina Department of Revenue's guidance on real property contracts, its Services to Real Property Taxability Chart and N.C. General Statute 105-164.4H. For advice about your situation, talk to a tax professional.