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Sales Tax CalculatorJanitorial service taxability by state.
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States with no personal income tax as of 2024, Florida, Texas, Nevada, Wyoming, South Dakota, Washington, Alaska, Tennessee (on wages), and New Hampshire (on wages), cleaning operators here keep significantly more of their profits
Source: Federation of Tax Administrators; Tax Foundation State Business Tax Climate Index 2024
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The Opora State Tax Lookup shows personal income tax rates, corporate/franchise tax rates, and nexus rules for any state where your cleaning business operates.
Federal taxes get all the attention, but for profitable cleaning businesses, state income taxes can add 3–13% to the overall tax burden. California's top marginal rate of 13.3% means a cleaning operator earning $300,000 in net income pays $39,900 in California income tax on top of federal taxes: before deductions. Understanding your state's tax structure, and making smart location and entity decisions, can be as impactful as any federal planning strategy.
This guide covers the state tax landscape for cleaning businesses: income taxes, franchise taxes, gross receipts taxes, and how to handle multi-state operations.
No-Income-Tax States: The 9 Exceptions
Nine states impose no personal income tax, providing a significant advantage to cleaning operators who are sole proprietors or pass-through owners:
- Alaska: No personal income tax, no state sales tax on services
- Florida: No personal income tax; corporate income tax of 5.5% (doesn't affect pass-throughs)
- Nevada: No personal income tax; Commerce Tax at 0.051%–0.331% on gross revenue
- New Hampshire: No tax on wages/business income; 5% interest & dividends tax (phasing out)
- South Dakota: No personal income tax; 4.5% sales tax on cleaning services
- Tennessee: No personal income tax on wages (Hall Tax repealed 2021)
- Texas: No personal income tax; Franchise Tax ("margin tax") on gross revenue
- Washington: No personal income tax; Business & Occupation Tax on gross receipts
- Wyoming: No personal income tax, minimal business taxes
Operating in a no-income-tax state saves a Florida cleaning operator $15,000–$25,000+ per year versus operating in California or New York at comparable profit levels.
High-Tax States: What Cleaning Operators Pay
California: Personal income tax rates range from 1% to 13.3% (maximum rate applies above $1M income). Cleaning operators earning $150,000 in net income pay approximately 9.3% California income tax = $13,950. California also imposes:
- LLC fee: $800 minimum annual franchise tax, plus $900–$11,790 tiered fee based on gross receipts
- S-corp: 1.5% franchise tax on net income (minimum $800)
New York: Personal income tax rates from 4% to 10.9% at top incomes. NYC residents pay an additional 3.876% city tax. A New York City cleaning operator earning $200,000 pays approximately $17,200 in state income tax + $7,752 in NYC income tax = $24,952 in state+local income taxes.
New Jersey: Rates from 1.4% to 10.75% at top incomes. New Jersey also has a separate Corporate Business Tax for corporations, and an S-corp is subject to NJ's separate 9% corporate tax at the entity level for New Jersey purposes: the pass-through benefits of the federal S-corp election are partially offset.
Illinois: Flat 4.95% personal income tax. Relatively predictable for cleaning operators; no graduated brackets.
Oregon: Top marginal rate 9.9% (above $125,000 single). No sales tax in Oregon (unique advantage).
| State | Top Rate | Structure | Special Notes for Cleaning Co. |
|---|---|---|---|
| California | 13.3% | Graduated (9 brackets) | LLC fee + S-corp 1.5% franchise tax |
| New York | 10.9% | Graduated (9 brackets) | NYC adds 3.876%; NJ S-corp issues |
| New Jersey | 10.75% | Graduated (7 brackets) | S-corp taxed at 9% entity level (NJ) |
| Oregon | 9.9% | Graduated (4 brackets) | No sales tax; income tax only |
| Minnesota | 9.85% | Graduated (4 brackets) | Cleans services taxable (see sales tax) |
| Massachusetts | 9% (above $1M) | Flat 5% + millionaire surtax | 5% flat rate below $1M; predictable |
| Colorado | 4.4% (flat) | Flat | Clean, simple; SALT deduction limitation |
| Illinois | 4.95% (flat) | Flat | Flat rate regardless of income level |
| Texas | 0% (no income tax) | N/A | Franchise tax on gross revenue; 8.25% sales tax on cleaning |
| Florida | 0% (no income tax) | N/A | Commercial cleaning subject to 6% sales tax |
Gross Receipts Taxes: The Alternative to Income Tax
Several states that don't have traditional income taxes impose gross receipts taxes on business revenue. This affects cleaning companies differently than income tax because gross receipts taxes apply to revenue, not profit.
Texas Franchise Tax (Margin Tax):
- Based on the lesser of: (a) 70% of total revenue, (b) revenue minus COGS, or (c) revenue minus compensation
- Rate: 0.75% for most businesses (0.375% for businesses with total revenue under $20M using the EZ method)
- For a cleaning company with $500,000 revenue and $350,000 in labor costs: Revenue − Compensation = $150,000 taxable margin × 0.75% = $1,125 franchise tax
- The "no income tax" story is true for cleaning operators; the franchise tax is typically minimal
Washington Business & Occupation (B&O) Tax:
- Applied to gross receipts, not profit
- Rate for "services" category: 1.5% of gross receipts (until revenue hits $500K; then 1.8%)
- A cleaning company with $400,000 in Washington revenue owes $6,000 in B&O tax, regardless of profitability
Nevada Commerce Tax:
- Applied to Nevada gross revenue above $4 million
- Rate varies by business category; service businesses: 0.128%–0.26%
- Most cleaning businesses won't reach the $4M threshold
Multi-State Operations and Nexus
Cleaning businesses expanding into multiple states need to analyze state tax nexus: the connection that obligates tax filing and payment in a state.
Physical nexus: Having employees, equipment, or an office in a state creates tax nexus. If your cleaning crews regularly clean buildings in three states, you likely have nexus in all three.
Economic nexus: Post-*Wayfair*, most states also assert economic nexus based on revenue or transaction volume. Most income tax economic nexus thresholds are $50,000–$100,000 in-state revenue.
State tax compliance for multi-state cleaning operators:
- Identify all states where employees regularly work
- Register for income tax (or commercial activity tax) in each state
- Apportion income by state: typically based on the proportion of revenue generated in each state
- File composite or separate returns for each nexus state
SALT deduction limitation: The Tax Cuts and Jobs Act limited the federal deduction for state and local taxes (SALT) to $10,000 per year for individuals. For cleaning business owners paying $20,000+ in state income taxes, this limitation means the excess state taxes are not federally deductible: increasing the effective combined tax burden.
Frequently Asked Questions
I live in a no-income-tax state but my crews clean buildings in California. Does California still tax me?
Yes. California taxes income sourced within California no matter where you personally live or where your company is headquartered. If your employees are cleaning California buildings, that revenue is California-source income and the proportionate share of your income is subject to California income tax, plus franchise tax if you operate as an LLC. Your home state's lack of an income tax protects your personal residency, not the work your crews perform across the line.
Can I write off the state income taxes my cleaning company pays on my federal return?
Partially, and usually less than operators expect. State income taxes are deductible federally as an itemized deduction, but the SALT cap under TCJA limits that deduction to $10,000 per year. If you're a cleaning operator with meaningful multistate revenue and a real state tax bill, most of what you pay to the states never reduces your federal taxable income at all.
We just picked up our first contract across the state line. Is there paperwork before we start cleaning?
Yes: the term for it is foreign qualification. Before you legally do business in another state you register with that state's Secretary of State or the equivalent agency. Qualification is technically separate from state tax registration, but filing it typically triggers the tax registration too, so plan on both landing at once rather than treating them as unrelated errands.
Texas has no income tax, so why did my accountant mention a franchise tax?
Because Texas replaces the income tax with the franchise tax, better known as the margin tax, and it's assessed on gross revenue less one of three subtractions you choose: cost of goods sold, compensation paid, or a flat 30% of revenue. Cleaning companies run high labor costs, so the revenue-minus-compensation election almost always produces the lowest taxable margin. Run all three before you file rather than defaulting to the 30% option.
How we built this guide
Opora editorial sources from BLS OEWS wage tables, ISSA-447 production rates, NCCI workers' compensation classifications, EPA List N, OSHA 29 CFR standards, and primary state regulatory filings. We don't recycle blog posts; we audit primary documents.
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