Hi @sriedle — welcome to the seller community!

Thanks for bringing this up. You can designate which items are taxed and which ones aren't.

In this case — from your Invoices tab, head to the row where you've added the amount for labor. You'll want to click on Customize > uncheck any taxes from the pop-up window > Done. Next, you should see that the "Sales Tax" total in the lower right corner of the invoice editor will include only the cost of the product. Once your buyer pays the invoice, the taxes collected will also be recorded in your online Square Dashboard summaries and reports.

Learn more about editing invoices in our Support Center: Resend, Edit, or Cancel Invoices.

Hope this helps clear things up! Please don't hesitate to reply if I'm missing the mark or if you have any other questions. 🙂