Build the sales tax into your cost floor before you name a Florida price

You bid a build-out off the supplier's quote. The quote said $72,000 of material, so $72,000 went on the cost sheet. Add $61,000 of labor at your loaded rate, $18,000 of subs and $4,000 of equipment and you had a $155,000 job. Fifteen percent on top made it $178,250, and you wrote 13 percent margin in the notes.

Then you paid for the material. In Martin County that $72,000 of material cost you $76,680 at the counter: 6 percent state tax is $4,320, and the county's 2026 discretionary sales surtax of 0.5 percent is another $360. Your real cost was $159,680, your profit was $18,570, and your margin was 10.4 percent. One line item you never entered took a fifth of the profit on the job, and it took it before you swung a hammer.

By the end of this page you will have a materials line priced at delivered cost with the tax already inside it, the delivery county's surtax applied at the rate that county actually charges for 2026, the $5,000 single item cap applied so you stop overpricing big equipment, a burden rate carrying the premiums Florida charges rather than the ones you remember, and a markup that produces the margin you meant to keep instead of one three points below it. Written against the 2025 Florida Statutes and the CY2026 discretionary sales surtax table.

Settle the contract type first, because it decides whether the tax is a cost or a charge

Rule 12A-1.051, Florida Administrative Code, sorts construction contracts into two roles, and the role decides which column the sales tax lands in on your estimate.

Lump sum, cost plus, fixed fee, guaranteed price, upset price and time and materials all make you the ultimate consumer of the materials. You pay the tax when you buy, you charge the customer nothing, and the tax is a cost of the job in exactly the way freight and fuel are. Retail sale plus installation and over the counter sale with installation make you a retailer. You buy exempt against your Annual Resale Certificate and collect the tax from the customer, and it never touches your cost floor at all.

Most Florida contractors on most jobs are on the first side of that fork. Notice what that means for an estimate: on a lump sum job the tax is not a line you add at the bottom of the quote, because there is no tax line on that quote. It is a number that has to be sitting inside your material cost before the markup runs, or it comes out of the markup instead. The mechanics of the fork, the itemized-at-inception test that wins you the retailer side, and the public works five factor test are all in who pays the sales tax on a Florida job. This page is what the fork does to your price.

Two habits from the same rule are worth building now. Price the job before you buy anything, because the classification is settled at contract signature and the buying follows it. And stop calling the supplier quote your material cost. It is your material cost minus the tax.

Put the material line in at delivered cost, with the tax already inside it

The fix is one keystroke wide and it is not glamorous. When the supplier quotes $72,000, the number that goes on the material line is what the material will cost you to have, not what the quote says.

Now the markup runs on $76,680 instead of $72,000, and every percentage after that is telling the truth. Fifteen percent of the corrected floor recovers the tax and takes its normal margin on it, which is the entire point: the tax was never meant to be a donation.

This is the single most common way a Florida bid goes quietly thin, and it does not look like a mistake while you are making it. It looks like tidy estimating off a supplier quote. It is why contractors who close far too many jobs, and who end up paying the guy on their own payroll more per hour than they take home, often have nothing wrong with their labor rate at all.

Re-price the same scope for the county the truck unloads in

Here is the part no generic pricing advice covers, because outside Florida it is usually not true. The surtax is sourced to the delivery county. Not your office, not the customer's billing address. Where the material is delivered. So the same drawing set, the same crew and the same supplier quote produce a different cost floor depending on which county the job sits in.

Run the same $72,000 of material into four counties whose 2026 rates the state has published:

Fourteen hundred and forty dollars of spread on one material package, decided by a county line. A contractor carrying one statewide number in their head is wrong on nearly every job, and the error runs in both directions.

Two corrections worth knowing, because both circulate wrongly. The Department of Revenue's general surtax page describes county rates as running 0.5 percent to 1.5 percent, while the CY2026 rate table itself puts Hamilton County at 2.0 percent, being a 1 percent small county surtax through December 31, 2029 plus a 1 percent enhanced fire protection surtax running from January 1, 2025 to December 31, 2036. The rate table wins. And the file itself is a trap: the unsuffixed DR-15DSS at the state's current forms address still serves the prior calendar year, while the CY2026 table lives at the year suffixed name, dr15dss_26.pdf. Bookmark the wrong one and every January you bid with last year's rates.

Your own county's surtax is the one number on this page that has to come from you, and it is the number to check before the estimate goes out rather than after the delivery lands. Palm Beach and Martin both dropped from 1 percent to 0.5 percent for 2026, so a rate you memorized in 2025 is already stale in two counties.

The sourcing rule also cuts the other way, and it is a lever rather than a leak. Material delivered to a jobsite in a county with no surtax carries no surtax. The same material picked up at a counter in a 1 percent county is delivered in that county. On a Citrus County job with a large material package, where the truck unloads is a pricing decision worth writing into the purchase order.

Stop applying one combined rate to a big ticket unit

The surtax applies only to the first $5,000 of the sales price of a single item of tangible personal property. The 6 percent state tax has no such cap. That makes the effective rate on a job depend on the shape of the material list, not just its total.

Take three deliveries into Hamilton County at the state's highest 2026 surtax rate:

Apply a flat 8 percent to that rooftop unit and you have loaded $3,680 of tax into a bid that will actually carry $2,860. Eight hundred and twenty dollars of phantom cost, on a line you are competing on. Do it across a mechanical package and you lose bids to people whose arithmetic is not better than yours, only less cautious.

The cap does not reach services, admissions, transient rentals or prepaid calling arrangements. On a construction estimate, read that as: it is a cap on things, one thing at a time. A single unit gets the cap. Four hundred sheets of drywall are four hundred items and every one of them is far below it.

<!-- Capture belongs here later: a Florida quote with a mechanical line and a drywall line side by side, the tax panel showing the surtax base capped on the unit and uncapped on the sheets. Florida tenant, Hamilton County jobsite. -->

Load the burden with what Florida actually charges, and stop calling it a low tax state

The sales tax is the part that hides in materials. The rest of the floor hides in labor, and Florida has its own version of that too.

Workers compensation is the big one and it is yours to know. Comp is rated per $100 of payroll against the class code your crew works under, and a roofing code and a clerical code are not in the same universe. Your rate is a fact about your company, your experience modification and your carrier, so it is a number you get from your policy and put in your burden, not one you borrow from an article. What is worth knowing is what the exemption does and does not do. A construction certificate of election to be exempt costs $50 and lasts two years under s.440.05(8)(a), with a maximum of three officers or members at 10 percent or more ownership. It takes your labor off the premium count. It does nothing for the crew, and paying helpers on a 1099 does not either. The order the filings have to happen in is in the Florida workers comp exemption.

Reemployment tax is small per head and it front loads. The initial rate for a new employer is 2.7 percent, and only the first $7,000 of wages paid to each employee in a calendar year is taxable. That is $189 per employee per year at the initial rate. Eight on the books is $1,512, which is not the number that ruins you. The shape of it matters more than the size: because the base resets per employee rather than per payroll dollar, a crew that turns over three times charges you the first $7,000 three times. Turnover is a burden line, not just a scheduling headache.

Corporate income tax exists here. The Florida rate is 5.5 percent for tax years on or after January 1, 2022, and it reaches corporations, LLCs classified as corporations, and S corporations that pay federal income tax on line 23c of Federal Form 1120S. An LLC classified as a partnership with a corporate owner files Form F-1065 and the corporate owner files its own return.

Which is the answer to the sentence that makes Florida contractors bid low. The Department of Revenue's own list of the taxes it administers runs to nineteen entries. Corporate income is on it. Personal income is not, and that is a real advantage, but look at where the advantage lands: it is on what you keep, after the job earns something. It is not a discount you owe the customer, and it does not pay the 6 percent you handed over at the supply house, the surtax on top of it, the comp premium, or the 2.7 percent on the first $7,000 of every new hire. A state that taxes you less on profit is a state where making a profit is the whole point.

Turn the finished cost floor into a price you keep something on

Now stack it and price it once. Same build-out, Martin County, with the tax where it belongs:

Add 15 percent and the price is $183,632, the profit is $23,952, and the margin is 13.0 percent. Not 15. Markup is measured against cost and margin is measured against price, the price is always the bigger number, so the margin is always the smaller percentage. Add 20 percent to cost and you keep 16.7 percent. To actually keep 20 percent of the price on this job you need to add 25 percent, which puts it at $199,600.

That gap is the second most expensive arithmetic error in the trade, right behind bidding off the pre tax supplier quote, and the two compound: a contractor who lost $4,680 of tax into the cost floor and then took a markup they believed was a margin is roughly six points below where they thought they were. The markup and margin calculator does the conversion in both directions and shows the shortfall in dollars on the job in front of you. It carries no jurisdiction because the arithmetic is identical in Florida, Texas and everywhere else, which makes it the one number on this page you never have to look up by county.

What it costs

There is no monthly subscription. The platform fee is 2.5% of each invoice processed through AEC Stack, collected on payment due dates.

Everything below is somebody else's charge, and every one of them belongs in a bid rather than in a surprise:

Put the floor on the quote while the price is still a draft

Every number above is knowable before you sign anything, which is the only reason this is a pricing problem rather than a regret.

On a Florida quote or invoice, the tax panel asks which of the 12A-1.051 contract types this is, in the rule's own words, and resolves the fork on that document. Pick lump sum, cost plus, fixed fee, guaranteed price, upset price or time and materials and it returns no tax line and says on the document that you are the ultimate consumer of the materials, which is your cue to have the tax inside the material line rather than under it. Pick retail sale plus installation and it asks whether the incorporated materials were itemized and priced in the contract before work began, and answers no by reverting the contract to real property treatment in front of you, in writing, while the quote is still a draft.

Then it asks which county the job is delivered into, applies that county's surtax, holds the surtax base to the first $5,000 of each line and shows the arithmetic when the cap bites. Where a county's 2026 rate is not yet in the published table it says the rate is missing and marks the total incomplete rather than quietly treating missing as zero, which is the difference between a number you can bid on and a number you find out about later. The quote itself carries labor, material, equipment, subcontractor and allowance as separate line types with a markup column on each, so the corrected material figure and the markup that runs on it are two things you can see at the same time.

Open the quote you are working on this week, find the material line, and check whether the number in it is the supplier's quote or what the material will actually cost you delivered into that county. If it is the supplier's quote, you have just found your margin sitting in the wrong column with the job still unsigned. Put the corrected figure through the markup and margin calculator before you send it, and price the next one inside your own quote builder, where the county surtax is already carried into the material line.