How to Charge Sales Tax on Parts but Not Labor in Excel

To charge sales tax on parts but not labor in Excel, mark every invoice line Taxable, Yes or No, and tax only the Yes lines. Add them up with =SUMIF(E2:E5,"Yes",D2:D5) and multiply by your rate, kept in a cell of its own: =ROUND(H3*H1,2). Labor marked No is never taxed, whatever else changes on the invoice.

The six steps below also cover what a single tax formula gets wrong: a discount, a job at a different rate, a tax-exempt customer, and the tax for a period. The example is an electrical job. A roll of wire and two breakers are taxed; four hours of labor and a trip charge are not. The tax rate, 6.5%, is in H1.

The table

One row per line on the invoice. Amount is =B2*C2, filled down. The totals go in column H.

	A	B	C	D	E
1	Item	Qty	Price	Amount	Taxable
2	12-gauge copper wire (250ft)	1	96.67	96.67	Yes
3	20A circuit breaker	2	21.50	43.00	Yes
4	Standard labor (hours)	4	85.00	340.00	No
5	Trip charge	1	45.00	45.00	No

Step 1: Mark every line Yes or No

Add a Taxable column (E). To keep it to Yes or No, select E2:E5, choose Data, Data Validation, List, and type Yes,No as the source. Each line now says whether it is taxed.

Step 2: Tax only the lines marked Yes

Step 3: Handle a discount

A discount comes off the subtotal, so the taxed part shrinks by the same share. Put the discount’s type in H7 (% or $) and the discount in H8 (10% or 50).

Step 4: Use a different rate for one job

Keep the rate in one cell, H1, and never type it into a formula. For a job where the rate is different, change H1 on that invoice. At 7%, the tax on the discounted parts is $8.80 and the total $481.00.

Step 5: Switch the tax off for an exempt customer

Add an Exempt cell, H14 (Yes or No), and wrap the tax in IF:

Your state’s revenue department says what paperwork an exempt customer has to give you.

Step 6: Add up the tax for a period

Keep a log with one row per invoice: the date in K, the invoice number in L and its tax in M.

	K	L	M
1	Date	Invoice	Tax
2	06/16/2026	INV-1	0.00
3	07/06/2026	INV-2	81.34
4	07/22/2026	INV-3	21.90
5	08/12/2026	INV-4	6.78
6	09/08/2026	INV-5	2.47
7	10/02/2026	INV-6	9.08

Put the period’s first and last days in O1 and O2:

More on SUMIFS: totals with multiple criteria.

Common questions

Is sales tax figured before or after a discount?

It depends on your state and on the kind of discount, so check with your state’s revenue department or your accountant. The sheet can do either. Step 3 taxes the price after the discount; to tax the full price, use the taxed part from Step 2 instead.

Which rate do I charge for a job in another city?

Your state’s rules decide which local rate applies, so check with its revenue department. Keep the rate in one cell, as in Step 4, and each invoice can use the rate its job needs.

Do I charge tax on a trip charge or a service fee?

It depends on your state and on what the fee is for. Put each fee on its own line and mark it Yes or No in the Taxable column, and the tax follows the mark.