If you run a remodeling or home improvement business in the United States, choosing the correct NAICS classification is not optional. It affects taxes, licensing, loans, government contracts, and even insurance. One of the most misunderstood classifications is NAICS code home improvement, officially listed as NAICS Code 236118 – Residential Remodelers.
This guide explains what NAICS code 236118 covers, who should use it, who should not, and why it matters for your business in 2025 and beyond.
Whether you are applying for an SBA loan, bidding on federal contracts, or simply setting up your business correctly, this article gives you clarity without the jargon.
What Is NAICS Code Home Improvement?
NAICS stands for North American Industry Classification System. It is a standardized system used by US government agencies to classify businesses based on what they actually do.
The naics code home improvement most contractors are looking for is 236118, which applies specifically to residential remodeling and renovation work.
This code is used by:
- The IRS
- Small Business Administration (SBA)
- Federal and state contracting offices
- Banks and lenders
- Insurance providers
Using the wrong code can cause denied loans, rejected bids, or compliance issues.
Overview of NAICS Code 236118 – Residential Remodelers
NAICS Code: 236118
Official Title: Residential Remodelers
Industry: Construction
Sector: Residential Building Construction
This code covers businesses primarily engaged in:
- Remodeling existing residential structures
- Renovating homes and apartments
- Adding or altering interior or exterior features
The key detail is existing residential buildings, not new construction.
What Types of Businesses Qualify Under NAICS 236118?
If your company improves, upgrades, or modifies homes that already exist, you likely fall under the naics code home improvement category.
Qualifying Business Types
- Home remodeling contractors
- Kitchen and bathroom renovation companies
- Basement finishing contractors
- Whole-house renovation firms
- Residential additions and expansions
- Interior renovation specialists
If more than 50 percent of your revenue comes from residential remodeling, this code is usually correct.
Services Included Under NAICS Code Home Improvement
NAICS 236118 includes a wide range of residential renovation activities.
Covered Services
- Kitchen remodeling
- Bathroom remodeling
- Basement renovations
- Home additions
- Interior wall changes
- Flooring upgrades
- Residential structural alterations
- Exterior home improvements (non-specialty)
This code focuses on project-based remodeling, not single-trade specialty work.
Services Excluded
Many contractors mistakenly use NAICS 236118 when they should not.
Not Covered Under 236118
- Plumbing-only services (238220)
- Electrical-only contractors (238210)
- Roofing contractors (238160)
- Painting contractors (238320)
- New residential construction (236115)
If your business only performs one trade, you likely belong under a specialty trade NAICS code, not home improvement.
Why NAICS Code Home Improvement Matters in 2025
Choosing the correct naics code home improvement classification impacts more than paperwork.
Key Business Impacts
- SBA loan eligibility
- Federal and state contract approvals
- Business insurance rates
- Tax reporting accuracy
- Vendor and supplier approvals
Government agencies use NAICS codes to determine whether your business qualifies as small or large under SBA size standards.
NAICS 236118 vs Other Construction NAICS Codes
Understanding how 236118 compares to similar codes prevents costly errors.
| NAICS Code | Description | When to Use |
|---|---|---|
| 236118 | Residential Remodelers | Existing home renovations |
| 236115 | New Single-Family Housing | Ground-up construction |
| 238990 | Specialty Trade Contractors | Niche services |
| 238160 | Roofing Contractors | Roof-only businesses |
If you remodel homes but do not build from scratch, 236118 is usually correct.
NAICS Code 236118 for SBA Loans
The SBA uses NAICS codes to define size standards. For NAICS 236118, the SBA size standard is based on average annual receipts.
Using the wrong code can disqualify your application, even if your business is legitimate.
SBA-Related Uses
- 7(a) loans
- 504 loans
- Disaster relief programs
- Small business certifications
Always match your NAICS code to your primary revenue activity.
Government Contracting and NAICS Codes
Federal, state, and local agencies require NAICS codes when bidding on contracts.
If you are bidding on:
- Housing renovation grants
- Residential rehabilitation programs
- HUD-funded remodeling projects
Then NAICS code home improvement (236118) is commonly required.
Incorrect classification can result in bid rejection without review.
Tax, Licensing, and Insurance Impacts
While the IRS does not assign NAICS codes, it uses them for data analysis and risk profiling.
Insurance companies also review NAICS codes to:
- Determine risk category
- Set premium rates
- Approve coverage
State licensing boards often cross-check your business classification with your NAICS code.
How to Find or Update Your NAICS Code
You can verify or update your NAICS classification through:
- IRS business filings
- SBA profile
- SAM.gov (for contractors)
- State business registration portals
You may list multiple NAICS codes, but one must be marked as primary.
Real-World Examples of NAICS Code 236118 Businesses
Example 1
A Maryland-based company offering full kitchen and bathroom renovations for single-family homes qualifies under NAICS 236118.
Example 2
A residential contractor specializing in basement finishing and home additions uses NAICS code home improvement as their primary classification.
Example 3
A renovation firm managing multi-trade residential remodels but subcontracting plumbing and electrical still qualifies.
Best Practices for Compliance
To strengthen trust and authority:
- Match NAICS code to actual services
- Keep licensing current
- Maintain insurance aligned with classification
- Document project scope clearly
- Use consistent classification across platforms
Consistency is a strong trust signal for lenders and agencies.
Key Takeaways for Home Improvement Contractors
- NAICS code 236118 applies to residential remodeling, not new construction
- Specialty trade contractors should not use this code
- Correct classification impacts loans, contracts, and insurance
- Always align NAICS with your main revenue source
- Review your NAICS code annually as services evolve
Using the right naics code home improvement classification protects your business and improves eligibility across the board.
Final Thought
Choosing the correct naics code home improvement classification is not just a formality. It directly affects your eligibility for SBA loans, government contracts, insurance coverage, and long-term business growth. NAICS Code 236118 is designed for contractors who focus on residential remodeling and renovation, and using it correctly helps position your business as credible and compliant in the US market.
If your services evolve over time, make it a habit to review your NAICS code regularly. Staying accurate today can save you from costly issues tomorrow and open the door to better financing, larger projects, and more trust from clients and agencies alike.
FAQ
What is the NAICS code for home improvement contractors?
The primary NAICS code home improvement contractors use is 236118 – Residential Remodelers, covering residential renovation and remodeling work.
Is NAICS 236118 for new home construction?
No. NAICS 236118 applies only to remodeling existing residential structures. New construction falls under different NAICS codes.
Can I use more than one NAICS code?
Yes. Businesses may list multiple NAICS codes, but one must be designated as the primary code based on revenue.
Does NAICS code affect SBA loan approval?
Yes. The SBA uses NAICS codes to determine size standards and eligibility for loans and programs.
How often should I review my NAICS code?
Review your NAICS code annually or whenever your primary services change significantly.
