Missouri and Kansas Contractor Sales Tax Across State Line

Materials: the contractor is the consumer

In both states, a contractor is generally the final user of the materials that go into a real property improvement. The supplier charges you sales tax when you buy them, it is not a sale for resale, and on a lump-sum job that tax belongs in your bid.

Labor: where the two states part ways

Missouri generally does not tax construction labor. Kansas exempts labor on residential property and on commercial original construction, but taxes labor on commercial remodeling and repair. Each contractor and sub collects tax on its own taxable labor; a general contractor cannot take over a sub's tax, and if tax is not stated separately the contract has to say that all applicable sales taxes are included.

Kansas original construction: a new building or facility
Adding a room or floor
Finishing an unfinished area for the first owner
Rebuilding after specified disasters
Bridges and highways

Missouri project exemptions

When you build for a qualifying exempt entity, that entity issues a Project Exemption Certificate (Form 5060) together with a copy of its Missouri sales and use tax exemption letter, and you buy the materials that go into the project tax-free. Tools and equipment that stay intact do not qualify, and the entity is responsible for the certificate's accuracy. Which entities can issue one is set by the Department of Revenue; check the entity's letter before you bid without tax.

Kansas project exemptions

In Kansas, the Department of Revenue issues a numbered project exemption certificate at the exempt entity's request. It lets you buy materials tax-free, skip tax on your labor and rent construction equipment tax-free for that project. It is prospective only, from the date the Department receives the application, and at completion you give the entity a PR-77 certification and keep the invoices for five years.

Three illustrative jobs

A school addition in Missouri for a district with an exemption letter: materials bought on its Form 5060, no tax on labor. An office remodel in Overland Park: tax paid on materials and collected on your labor, because remodeling is taxable in Kansas. A new warehouse in Lenexa: tax paid on materials, labor exempt as original construction. Illustrative examples, not advice for your job.

What to put in your bid

Say in the bid and the contract whether tax is included, which state's rules apply and whether an exemption certificate is expected before you buy materials. Local rates change by job site and quarter, so price from the state rate lookups, not last year's job. Our construction tax work keeps both states straight.

Sources

Figures checked against the sources above in October 2026. Rules change; confirm with the agency, your CPA or counsel before you act. This guide is general information, not tax or legal advice.

Up one level Construction tax Returns and planning for contractors who work on both sides of State Line.

Contractor sales tax on both sides of State Line.