Taxable and Non-Taxable Labor for Auto Repairs and Service

Reporting sales tax is a routine part of doing business in California. Business and Professions Code section 9884.8 requires that automotive repair dealers list parts and labor separately on automotive repair invoices. While most labor for repairs and service is non-taxable, there are some exceptions. Knowing what types of labor are subject to tax can help a business avoid complications in the event of a sales tax audit or review of records by other state agencies.

Service labor—work performed for maintenance or repairs—is non-taxable. An example of service work is the labor involved in changing the oil on a vehicle or rotating the tires. While the labor is non-taxable, sales tax does apply to any products used or sold for service work jobs. For example, sales tax is applied to the oil used for an oil change but not to the labor to perform the oil change.

Fabrication labor—work done in creating, assembling, or producing a part—is also subject to sales tax. Modifying a part or system is considered fabrication. For example, a custom auto body shop that fabricates a bumper for a vintage vehicle and installs it on the vehicle must charge tax on the labor as well as on the parts and materials used to make the bumper.

To assist automotive repair dealers (ARDs) with sales and use tax laws and regulations, the California Department of Tax and Fee Administration (CDTFA) website has a comprehensive Tax Guide for Auto Repair Garages webpage, which includes the recently published Auto Repair Garages and Service Stations guide. CDTFA also offers a free Sales and Use Tax webinar to educate ARDs on taxability of parts and labor. To learn more, visit

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