The Case for Taxing Services

What services to tax? According to a 2017 Federation of Tax Administrators survey of service taxation, professional services (doctors, lawyers) are taxed in only 7 states. Only Hawaii and New Mexico have broad-based sales taxes that include most all the services that were tracked by the survey. Delaware and Washington tax a large number of services, mainly through their low-rate business gross receipts taxes. South Dakota and West Virginia are the only other states to tax more than 100 services. These states and Texas, which taxes land surveying, are also the only states to tax any of the professional services tracked by the survey.

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