Do auto repair shops charge tax on labor?

Whether auto repair shops charge tax on labor depends on state or local law and the nature of the work, explains the Texas Comptroller of Public Accounts. For example, Texas does not tax labor for replacing parts, but the state does tax labor for installing accessories or remodeling a vehicle.

As of June 2015, repair shops in New York State must collect sales tax on labor charges for motor vehicle repair services, according to the New York State Department of Taxation and Finance. However, Boulder, Colorado, does not tax labor if the repair invoice itemizes the labor and parts charges separately. If the invoice does not show labor as a separate item, the sales tax applies to the total invoice, explains the City of Boulder, Colorado.