New York – Taxability of Kitchen Installation Services


SALT Report 2108 – The New York Department of Taxation and Finance issued an advisory opinion regarding the taxability of kitchen remodeling services. For a set fee, the Taxpayer will provide a certain number of cabinet doors, drawer fronts, cabinet hardware, countertops, a new faucet, and new molding.  As part of the remodeling project the Taxpayer also provides the following services:

  • Cabinet door and hinge removal,
  • Painting of the existing kitchen cabinet frames,
  • Installation of new cabinet doors and new hidden hinges,
  • Painting of the new cabinet doors and drawer fronts,
  • New cabinet hardware installation,
  • Replacement of old countertops with new countertops,
  • Faucet and sink replacement, and
  • Painting the old cabinet molding

The Taxpayer requested guidance regarding the taxability of the remodeling services it provides for a flat fee.

In their decision, the Department stated that the taxability of receipts derived from remodeling services depends on whether or not the service is a capital improvement.  New York Tax Law §1101(b)(9) defines capital improvements as an addition or alteration to real property which:

  • Substantially adds to the value of the real property or appreciably prolongs the useful life of the real property, and
  • Becomes a part of the real property or is permanently affixed to the real property so that removal would cause material damage to the property or article itself, and
  • Is intended to become a permanent installation

Based on the above, the Department determined that the Taxpayer’s charges for kitchen renovations, when sold as a complete package, qualify as capital improvements and are not subject to sales tax.  However, any items that are added to the package for an additional cost, such as, a backsplash, flooring, or paint must be provided as an integral part of the original package in order for them to qualify as a capital improvement.

For Further Information

New York Commissioner of Taxation and Finance – TSB-A-13(4)S