Is labor for slab sawing and hydrohammer breaking taxable in Texas when performed as part of a new construction contract?

Plain-English summary

A contractor asked the Comptroller about sales tax on slab sawing and hydrohammer breaking services (cutting/breaking concrete surfaces like roads, bridges, tunnels, and slabs). The Comptroller's answer: labor for slab sawing or hydrohammer breaking performed on a contract that qualifies as new construction is not taxable. The contractor is still required to pay sales and use tax on all equipment it buys, leases, or rents to use on the job — that tax obligation applies regardless of whether the labor itself is taxed.

Note: the letter's title contrasts new construction against nonresidential remodeling/repair contracts, but the available text of the letter only affirmatively addresses the new-construction side of that contrast — it doesn't state the tax treatment for slab sawing/hydrohammering performed under a remodeling or repair contract.

What this means for you

Concrete cutting, sawing, and demolition contractors

If your slab sawing or hydrohammer breaking work is part of a new construction project, don't charge tax on your labor — but you'll still owe sales/use tax on the saws, hydrohammers, and other equipment you purchase, lease, or rent for the job, since equipment costs are a separate tax question from labor taxability.

General contractors hiring concrete-cutting subcontractors

Confirm whether your project qualifies as new construction before assuming slab sawing/hydrohammering labor is nontaxable — this letter's holding is specifically tied to new-construction contracts, and doesn't confirm the same treatment for remodeling or repair work.

Accountants and tax professionals

This letter doesn't resolve the remodeling/repair side of the question despite the subject line framing it as a comparison — if a client's project is remodeling or repair rather than new construction, treat that as an open question requiring separate confirmation rather than assuming the same nontaxable result applies.

Common questions

Q: Is slab sawing labor taxable on a new construction project in Texas?
A: No — labor for slab sawing or hydrohammer breaking on a new construction contract is not taxable.

Q: Does the contractor owe tax on equipment used for slab sawing?
A: Yes — the contractor must pay sales and use tax on all equipment bought, leased, or rented for use on the job, regardless of whether the labor itself is taxed.

Q: Is slab sawing labor taxable on a remodeling or repair contract?
A: This letter doesn't say — its holding is limited to new construction contracts.

Citations and references

No specific statute or rule section was cited in the available text of this letter.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200007459L

Original ruling text

July 7, 2000

From: Emilio Lerma

To: **

Subject: Slab sawing and hydrohammer breaking

Dear Sir or Madam:

Thank you for your e-mail regarding sales tax on your service.

Sales tax is not due on slab sawing or hydrohammering labor performed on
contracts qualifying as new construction. You must pay sales and use tax on all
equipment bought, leased, or rented for use on the job.

This opinion is rendered based on the facts presented. Other facts though
similar, may yield different results.

If you have any questions or require additional information, you may call
1-800-531-5441, extension 6-5809. You may write to Tax Policy Division, P. O.
Box 13825, Austin, Texas 78711-3825. You may also submit inquiries to our tax
help Internet address at .

Sincerely,

Emilio S. Lerma
Tax Policy Division