Are Optional Maintenance Contracts subject to sales tax?
While Virginia's sales tax generally applies to most transactions, certain items have special treatment in many states when it comes to sales taxes. This page describes the taxability of optional maintenance contracts in Virginia, including parts purchased for use in performing service under optional maintenance contracts. To learn more, see a full list of taxable and tax-exempt items in Virginia.
General Optional Maintenance Contracts
In the state of Virginia, any maintenance contracts that provide only repair labor are considered to be exempt. Any contracts that provide both parts and labor are definitely subject to tax on one-half the total charge for the contract. Contracts which provide only parts are considered to be taxable.
Parts Purchased for Use in Performing Service Under Optional Maintenance Contracts
Sales of parts purchased for use in performing service under optional maintenance contracts are exempt from the sales tax in Virginia.
Back to Virginia Sales Tax Handbook