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Dear kxhv8nm6 -
Yes, the service contract is subject to sales tax. Essentially it replaces repair fees that would have been taxable.
The exented warranty on vehicles is taxed as any other taxable item at the standard tax rate. See ruling included below.
Rulings of the Tax Commissioner
Per a Q&A on the VA DMV site see item 13. Per the site, 1/2 of the contract price is subject to tax if it covers parts and labor.