What Services Are Exempt From Sales Tax in Wisconsin?

Wisconsin, like many states, imposes a sales tax on the retail sale of goods and certain services. While tangible personal property is generally subject to sales tax, the taxation of services in Wisconsin operates under a distinct framework. Understanding which services are exempt from this tax is important for both businesses and consumers.

Understanding Service Taxation in Wisconsin

In Wisconsin, services are generally not subject to sales tax unless explicitly listed as taxable in state statutes. This approach contrasts with how tangible personal property is taxed, where most goods are taxable unless specifically exempted. For services, the default position is non-taxable, making the concept of “exempt services” quite broad by design. The state’s general sales tax rate is 5%, with additional local taxes that can vary by county. Businesses providing services must determine if their offerings fall under the limited list of taxable services or remain exempt under this general rule.

Common Exempt Service Categories

Many service categories commonly fall outside the scope of sales tax. Professional services, such as those provided by attorneys, accountants, and medical practitioners, are generally not subject to sales tax. For instance, legal services, including advice and representation, are not taxed. Similarly, accounting services, including tax preparation and financial consulting, typically remain untaxed.

Medical services, encompassing doctor’s visits, hospital stays, and other healthcare treatments, are also exempt from sales tax. This exemption extends to many medical devices and prescription medications. Personal services like haircuts and manicures often do not incur sales tax.

Educational services are another significant category of exempt services. Charges for live in-person educational seminars or classes, whether at a college, technical school, or through online webinars, are generally exempt. This exemption can also cover mandatory educational materials provided incidentally with these services. However, the sale of educational products such as books or pre-recorded videos, even with educational content, is usually taxable as tangible personal property.

Services related to real property construction activities are generally not taxable. Contractors typically pay sales or use tax on materials they purchase for these projects. However, they do not charge sales tax to the customer for the labor and materials on the finished real property improvement.

Services Generally Subject to Sales Tax

While many services are exempt, specific types are explicitly taxable under Wisconsin law. These include:

Certain telecommunications services, such as intrastate, interstate, and international calls, and ancillary services like call forwarding and voicemail.
Landscaping and lawn maintenance services.
Admission and access privileges to amusement, athletic, entertainment, or recreational events.
Boat docking and storage.
Laundry and dry cleaning services.
Repair and service of tangible personal property, particularly when labor is not separately stated from taxable parts.
Parking services for motor vehicles and aircraft.

Resources for Determining Service Taxability

For specific situations, the Wisconsin Department of Revenue (DOR) is the primary resource for determining service taxability. The DOR publishes guides and administrative rules with detailed information on sales and use tax, including specific publications related to services. Businesses and individuals can consult official DOR publications, such as Publication 201, “Wisconsin Sales and Use Tax Information.” If uncertainties persist, contacting the Wisconsin DOR directly for a specific ruling or seeking advice from a qualified tax professional is advisable. Tax professionals can provide tailored guidance based on the unique facts and circumstances of a service transaction.