North Carolina 2025 Session Status: In Committee 1 D cosponsors

SB 877 — Repeal Service Tax.

Last action — Passed 1st Reading

  1. ✓
    Introduced
  2. 2
    In Committee
  3. 3
    Passed Senate
  4. 4
    Passed House
  5. 5
    To Executive
  6. 6
    Enacted

This bill is in committee in the Senate. Introduced April 28, 2026. It must pass committee before a floor vote.

Next likely step: a committee vote, then a floor vote in the Senate.

Prognosis

Stalled 16% · moderate confidence

Where this bill stands today.

Odds of enactment

Low

How often bills like it became law.

  • In Committee

    Current position in the legislative process.

  • 1 sponsor

    0 primary, 1 co-sponsors signed on.

  • Single-party support

    Sponsorship is currently within one party (1 D).

Prognosis reads this bill's own signals — stage, sponsorship breadth, committee status, recorded votes and cross-state momentum. Odds come from a model trained on which bills have become law.

Bill Text

What changed in the latest version

50 added · 51 removed

Plain-language change summary

In the latest version of Senate Bill 877, some language has been clarified and made more consistent, particularly regarding tax rates and the definitions of certain terms related to property management and installation services. Specifically, the bill now explicitly states how maintenance and installation services must be detailed in invoices, which helps ensure transparency for consumers. These changes are significant because they aim to provide clearer guidelines for both property managers and purchasers, potentially reducing confusion and disputes over sales tax.

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FILED SENATE GENERAL ASSEMBLY OF NORTH CAROLINA Apr 28, 2026 S.B.
GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 2025 S 1 SENATE BILL 877 Short Title:
877 SESSION 2025 PRINCIPAL CLERK S D SENATE BILL DRS45491-MCf-295 Short Title:
A BILL TO BE ENTITLED AN ACT TO REPEAL THE SERVICE TAX AND TO MAKE VARIOUS CONFORMING CHANGES NECESSARY TO EFFECTUATE THE REPEAL.
Rules and Operations of the Senate April 29, 2026 A BILL TO BE ENTITLED AN ACT TO REPEAL THE SERVICE TAX AND TO MAKE VARIOUS CONFORMING CHANGES NECESSARY TO EFFECTUATE THE REPEAL.
The general rate oftaxis four and three-quarterspercent (4.75%).Thepercentagerates areas follows:
The general rate oftax is four and three-quarterspercent (4.75%).Thepercentagerates areas follows:
The sales price of or gross receipts derived from repair, maintenance, and installation services to tangible personal property or certain digital property, regardless of whether the tangible personal property or certain digital property is taxed under another subdivision in this section or is subject to a maximum tax under another subdivision in this section.
The sales price of or gross receipts derived from repair, maintenance, and installation services to tangible personal propertyor certain digital property, regardless of whether the tangible personal property or certain digital property is taxed under another subdivision in this section or is subject to a maximum tax under another subdivision in this section.
… (11) Thegeneral rateoftaxapplies to thesalespriceoforthegrossreceipts derived from a service contract.
… (11) Thegeneral rateoftax applies to thesalespriceofor thegrossreceipts derived from a service contract.
*DRS45491-MCf-295* General Assembly Of North Carolina Session 2025 …." SECTION 1.(b) G.S.
*S877-v-1* General Assembly Of North Carolina Session 2025 …." SECTION 1.(b) G.S.
– The bundle includes a service, and the retailer determines an allocated price for each item in the bundle based on a reasonable allocation of revenue that is supported by the retailer's business records kept in the ordinary course of business.
– The bundle includes a service, and the retailer determines an allocated price for each item in the bundle based on a reasonable allocation of revenue that is supported bythe retailer's business records kept in the ordinary course of business.
– A real property contractor is the consumer of the tangible personal property or certain digital property that the real property contractor purchases, installs, or applies for others to fulfill a real property contract and that becomes part of real property or used to fulfill the contract.
– A real property contractor is the consumer of the tangible personal propertyor certain digital propertythat the real property contractor purchases, installs, or applies for others to fulfill a real propertycontract and that becomes part of real propertyor used to fulfill the contract.
A person may substantiate that a transaction is subject to tax as a real property contract or a mixed transaction in accordance with subsection (a) of this section by records that Page 2 DRS45491-MCf-295 General Assembly Of North Carolina Session 2025 establish the transaction is a real property contract or by receipt of an affidavit of capital improvement.
A person may substantiate that a transaction is subject to tax as a real property contract or a mixed transaction in accordance with subsection (a) of this section by records that Page 2 Senate Bill 877-First Edition General Assembly Of North Carolina Session 2025 establish the transaction is a real property contract or by receipt of an affidavit of capital improvement.
Any purchase of tangiblepersonal propertyor certain digitalproperty to fulfill thereal property contract is taxed in accordance with this section.
Any purchase of tangible personal propertyor certain digital propertyto fulfill thereal property contract is taxed in accordance with this section.
DRS45491-MCf-295 Page 3 General Assembly Of North Carolina Session 2025 (3) More than twenty-five percent (25%) of the time spent managing the real property for a billing or invoice period is attributable to repair, maintenance, and installation services taxable under this Article and not excluded by subsection (b) of this section.
Senate Bill 877-First Edition Page 3 General Assembly Of North Carolina Session 2025 (3) More than twenty-five percent (25%) of the time spent managing the real property for a billing or invoice period is attributable to repair, maintenance, and installation services taxable under this Article and not excluded by subsection (b) of this section.
The tax applies to the sales price of or the gross receiptsderivedfromthetaxablerepair,maintenance,andinstallationservices portion of the property management contract.
The tax applies to the sales price of or the gross receiptsderivedfromthetaxablerepair,maintenance,andinstallationservices portion of the propertymanagement contract.
The charges for the taxable repair, maintenance, and installationservices must be separately stated on theinvoice or similar billing document given to the customer at the time of the sale.
The charges for the taxable repair, maintenance, and installationservices must be separatelystatedon theinvoice or similar billing document given to the customer at the time of the sale.
A real property manager acts as a retailer and makes a sale at retail when it provides repair, maintenance, and installation services taxable under this section unless a statutory exemption in G.S.
A real propertymanager acts as a retailer and makes a sale at retail when it provides repair, maintenance, and installation services taxable under this section unless a statutory exemption in G.S.
Page 4 DRS45491-MCf-295 General Assembly Of North Carolina Session 2025 …." SECTION 1.(i) G.S.
Page 4 Senate Bill 877-First Edition General Assembly Of North Carolina Session 2025 …." SECTION 1.(i) G.S.
If the amount refunded to the purchaser by thepersondoes not includethesalestax paid, thenthepurchasermay apply to the Department for a refund of the pro rata amount of the tax paid based on the taxable amount of the service contract refunded to the purchaser.
If the amount refunded to the purchaser bythe persondoes not includethesalestax paid, thenthepurchasermayapply to the Department for a refund of the pro rata amount of the tax paid based on the taxable amount of the service contract refunded to the purchaser.
Taxes for which a refund is allowed directly to the purchaser for sales tax paid on a service contract are not an overpayment of tax and do not accrue interest as provided in G.S.
Taxes for which a refund is allowed directlyto the purchaser for sales tax paid on a service contract are not an overpayment of tax and do not accrue interest as provided in G.S.
DRS45491-MCf-295 Page 5 General Assembly Of North Carolina Session 2025 (3) The percentage of the presumed sales price that is equal to the percentage of the service in the contract that is not taxable at the combined general rate, if any part of the service in the contract is not taxable at the combined general rate.
Senate Bill 877-First Edition Page 5 General Assembly Of North Carolina Session 2025 (3) The percentage of the presumed sales price that is equal to the percentage of the service in the contract that is not taxable at the combined general rate, if any part of the service in the contract is not taxable at the combined general rate.
The Page 6 DRS45491-MCf-295 General Assembly Of North Carolina Session 2025 refund allowed under this subsection does not apply to purchases of electricity, telecommunications service, ancillary service, piped natural gas, video programming, or a prepaid meal plan.
The Page 6 Senate Bill 877-First Edition General Assembly Of North Carolina Session 2025 refund allowed under this subsection does not apply to purchases of electricity, telecommunications service, ancillary service, piped natural gas, video programming, or a prepaid meal plan.
… (20) A constituent institution of The University of North Carolina, but only with respect to sales andusetaxpaid byit fortangiblepersonal property orservices that are eligible for refund under this subsection acquired by it through the expenditure of contract and grant funds.
… (20) A constituent institution of The University of North Carolina, but only with respect to sales andusetax paid byit fortangiblepersonal propertyorservices that are eligible for refund under this subsection acquired by it through the expenditure of contract and grant funds.
A general direct pay permit may not be used for purposes identified in subsections (a1), (a2), (a3), or (b) of this section.
A general direct paypermit maynot be used for purposes identified in subsections (a1), (a2), (a3), or (b) of this section.
A person who purchases an item under a direct pay permit DRS45491-MCf-295 Page 7 General Assembly Of North Carolina Session 2025 issued under this subsection is liable for use tax due on the purchase.
A person who purchases an item under a direct pay permit Senate Bill 877-First Edition Page 7 General Assembly Of North Carolina Session 2025 issued under this subsection is liable for use tax due on the purchase.
Where a seller cannot or does not separately state installation charges that are a part of the sales price of tangible personal property or certain digital property for a boat, an aircraft, or a qualified jet engine on the invoice or other documentation given to the purchaser at the time of the sale, tax is due on the total purchase price.
Where a seller cannot or does not separately state installation charges that are a part of the sales price of tangible personal propertyor certain digital propertyfor a boat, an aircraft, or a qualified jet engine on the invoice or other documentation given to the purchaser at the time of the sale, tax is due on the total purchase price.
105-187.3 when applying for a certificate of title for a motor vehicle purchased by the retailer for a limited possession commitment.
105-187.3 when applying for a certificate of title for a motor vehicle purchased bythe retailer for a limited possession commitment.
When a limited possession commitment is sold to another retailer, the seller of the limited possession commitment should provide to the purchaser of the limited possession commitment the documentation showing that theservicecontract andapplicablesales taxes wereseparatelystated at the time the limited possession commitment went into effect and the new retailer must retain theinformation to support an allocationfortaxcomputedonthegrossreceipts subject to highway use tax.
When a limited possession commitment is sold to another retailer, the seller of the limited possession commitment should provide to the purchaser of the limited possession commitment the documentation showing that theservicecontract andapplicablesales taxes wereseparatelystated at the time the limited possession commitment went into effect and the new retailer must retain theinformation to support an allocationfortax computedonthegrossreceipts subject to highway use tax.
The tax is imposed on a retailer, but is to be added to the limited Page 8 DRS45491-MCf-295 General Assembly Of North Carolina Session 2025 possession commitment of a motor vehicle and thereby be paid by the person who enters into a limited possession commitment with a retailer.
The tax is imposed on a retailer, but is to be added to the limited Page 8 Senate Bill 877-First Edition General Assembly Of North Carolina Session 2025 possession commitment of a motor vehicle and thereby be paid by the person who enters into a limited possession commitment with a retailer.
… DRS45491-MCf-295 Page 9 General Assembly Of North Carolina Session 2025 (59) Interior design services provided in conjunction with the sale of tangible personal property.
… Senate Bill 877-First Edition Page 9 General Assembly Of North Carolina Session 2025 (59) Interior design services provided in conjunction with the sale of tangible personal property.
A motor vehicle emissions and safety inspection fee imposed pursuant to G.S.
A motor vehicle emissions and safetyinspection fee imposed pursuant to G.S.
Page 10 DRS45491-MCf-295 General Assembly Of North Carolina Session 2025 h.
Page 10 Senate Bill 877-First Edition General Assembly Of North Carolina Session 2025 h.
This exemptiondoes not apply to charges billedto acustomerforrepair,maintenance,andinstallation services or a contribution in aid of construction and are included in the gross receipts derived from items subject to the combined general rate under G.S.
This exemption does not apply to charges billedto acustomerforrepair,maintenance,andinstallation services or a contribution in aid of construction and are included in the gross receipts derived from items subject to the combined general rate under G.S.
DRS45491-MCf-295 Page 11 General Assembly Of North Carolina Session 2025 … (61c) Installation charges that are a part of the sales price of tangible personal property purchased by a real property contractor to fulfill a real property contract for an item that is installed or applied to real property, provided the installation charges are separately stated and identified as such on the invoice or other documentation given to the real property contractor at the time of the sale.
Senate Bill 877-First Edition Page 11 General Assembly Of North Carolina Session 2025 … (61c) Installation charges that are a part of the sales price of tangible personal property purchased by a real property contractor to fulfill a real property contract for an item that is installed or applied to real property, provided the installation charges are separately stated and identified as such on the invoice or other documentation given to the real property contractor at the time of the sale.
Theexemption includesanylaborcosts provided by thereal property contractor, including employees' wages, or labor purchased from a third party that would otherwise be included in the definition of "purchase price." (61d) Installation charges thatareapartofthesalesprice oforgrossreceipts derived from repair, maintenance, and installation services or installation charges only purchased by a real property contractor to fulfill a real property contract, provided the installation charges are separately stated and identified as such on the invoice or other documentation given to the real property contractor at the time of the sale.
Theexemption includesanylaborcosts provided bythereal property contractor, including employees' wages, or labor purchased from a third party that would otherwise be included in the definition of "purchase price." (61d) Installation charges thatareapartofthesalesprice oforgrossreceipts derived from repair, maintenance, and installation services or installation charges only purchased by a real property contractor to fulfill a real property contract, provided the installation charges are separately stated and identified as such on the invoice or other documentation given to the real property contractor at the time of the sale.
(62a) A replacement item, a repair part, or repair, maintenance, and installation services item or repair part used to maintain or repair tangible personal property or a motor vehicle pursuant to a manufacturer's warranty or a dealer's warranty.
(62a) A replacement item, a repair part, or repair, maintenance, and installation services item or repair part used to maintain or repair tangible personal propertyor a motor vehicle pursuant to a manufacturer's warrantyor a dealer's warranty.
Page 12 DRS45491-MCf-295 General Assembly Of North Carolina Session 2025 …." SECTION 2.(b) G.S.
Page 12 Senate Bill 877-First Edition General Assembly Of North Carolina Session 2025 …." SECTION 2.(b) G.S.
– Aqualifyingfarmeris apersonwho has anannual incomefrom farming operations for the preceding taxable year of ten thousand dollars ($10,000) or more or who has an average annual income from farming operations for the three preceding taxable years of ten thousand dollars ($10,000) or more.
–Aqualifyingfarmeris apersonwho has an annual incomefrom farming operations for the preceding taxable year of ten thousand dollars ($10,000) or more or who has an average annual income from farming operations for the three preceding taxable years of ten thousand dollars ($10,000) or more.
105-164.28A is exempt from sales and use tax to the same extent as if purchased directly by the person who holds the exemption certificate.
105-164.28A is exempt from sales and use tax to the same extent as if purchased directlyby the person who holds the exemption certificate.
A person that purchases one of the items allowed an exemption under this subsection must provide an exemption certificate to the retailer that includes the name of the wildlife manager certificate holder and the DRS45491-MCf-295 Page 13 General Assembly Of North Carolina Session 2025 exemption number issued to the wildlife manager by the Department pursuant to G.S.
A person that purchases one of the items allowed an exemption under this subsection must provide an exemption certificate to the retailer that includes the name of the wildlife manager certificate holder and the Senate Bill 877-First Edition Page 13 General Assembly Of North Carolina Session 2025 exemption number issued to the wildlife manager by the Department pursuant to G.S.
The term does not include the repair, Page 14 DRS45491-MCf-295 General Assembly Of North Carolina Session 2025 replacement, or installation of electrical or plumbing components, water heaters, gutters, and similar individual items that are not part of new construction, reconstruction, or remodeling.
The term does not include the repair, Page 14 Senate Bill 877-First Edition General Assembly Of North Carolina Session 2025 replacement, or installation of electrical or plumbing components, water heaters, gutters, and similar individual items that are not part of new construction, reconstruction, or remodeling.
– A person who does not have a place of business in this State, is registered for sales and use tax purposes in a taxing jurisdiction outside the State, and is engaged in the business of acquiring, by purchase, consignment, or otherwise, tangible personal property or certain digital property and selling the property outside the State or in the business of providing a service.State.
– A person who does not have a place of business in this State, is registered for sales and use tax purposes in a taxing jurisdiction outside the State, and is engaged in the business of acquiring, bypurchase, consignment, or otherwise, tangible personal property or certain digital property and selling the property outside the State or in the business of providing a service.State.
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– Atransaction comprisedofmultipleservices performedbyone or more persons to restore, improve, alter, or update real property that may otherwise be subject to tax as repair, maintenance, and installation services if DRS45491-MCf-295 Page 15 General Assembly Of North Carolina Session 2025 separately performed.
– Atransaction comprisedofmultipleservices performedbyone or more persons to restore, improve, alter, or update real property that may otherwise be subject to tax as repair, maintenance, and installation services if Senate Bill 877-First Edition Page 15 General Assembly Of North Carolina Session 2025 separately performed.
This activitymayinclude replacing orputting togetherwhat is torn or broken.
This activitymayinclude replacing orputtingtogether what is torn or broken.
To troubleshoot, identify, or attempt to identify the source of a problem for the purpose of determining what is needed to restore property or a motor vehicle to proper working order or good condition.
To troubleshoot, identify, or attempt to identify the source of a problem for the purpose of determining what is needed to restore propertyor a motor vehicle to proper working order or good condition.
To install, apply, connect, adjust, or set into position tangible personal propertyorcertain digitalproperty.Theterm includes floorrefinishing and the installation of carpet, flooring, floor coverings, windows, doors, cabinets, countertops, and other installations where the item being installed may replace a similar existing item.
To install, apply, connect, adjust, or set into position tangible personal propertyorcertain digital property.Theterm includes floorrefinishing and the installation of carpet, flooring, floor coverings, windows, doors, cabinets, countertops, and other installations where the item being installed may replace a similar existing item.
… Page 16 DRS45491-MCf-295 General Assembly Of North Carolina Session 2025 (235) Sale or selling.
… Page 16 Senate Bill 877-First Edition General Assembly Of North Carolina Session 2025 (235) Sale or selling.
DRS45491-MCf-295 Page 17
Senate Bill 877-First Edition Page 17
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Action History

  1. Passed 1st Reading

  2. Ref To Com On Rules and Operations of the Senate

  3. Filed

Sponsors

Sponsorship breakdown

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0 sponsors · 1 co-sponsors · 178 not signed on

Sponsors (0)

None.

Co-sponsors (1)

Not signed on (178)

178 members have not signed on to this bill.

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"Not signed on" means a member has not sponsored or co-sponsored this bill — it does not imply opposition. Members flagged Voted No have a recorded No vote on this bill.

Whip count is in markup. Polling the chamber and every recorded vote this session. Only the first open is slow. It’s instant for you after this. Calling the roll · Tallying · Engrossing

Subjects

taxation
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Frequently asked questions

Who sponsors SB 877?
SB 877 is sponsored by Kandie D. Smith (Democratic).
What is the current status of SB 877?
This bill is in committee in the Senate. Introduced April 28, 2026. It must pass committee before a floor vote.
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