Hello @FamilyCreation1 

The best way to accomplish this would be to have the Pen and the Labor as two separate Line Items. Doing it this way will allow you to have your Tax rate applied to the Pen but not to the Labor. To do this you will need to head over to your Sales Taxes and adjust the taxable items to exclude the item called Labor.

Here's How to Create Sales Tax Online

1. Go to Account & Settings from your online Square Dashboard.
2. Click Business information > Sales taxes.
3. Click Create tax.
4. Enter the tax name, rate and select the location.
5. Choose All taxable items to apply the tax to all current and future taxable items in your library, or choose Select items to pick specific items. You can also apply the tax to custom amounts and include a service charge.
6. Choose Add an exemption rule to specify when this tax shouldn't be applied.
7. Choose Include tax in item price to show one amount: the combined sales tax and item price. If toggled off, the tax will display as a separate line item.
8. Click Save.

I hope this information is helpful!