Publication 35, Interior Designers and Decorators
Designer Fees and Charges Related to the Sale of Merchandise
Many charges made by interior designers and decorators are subject to sales tax. This page explains how tax applies to sales of merchandise, professional fees, taxable and nontaxable labor, subcontracted work, out-of-state sales, and shipping and delivery charges. Applying tax to work involving improvements to real property, such as residential and commercial buildings, is addressed in Improvements to Real Property.
Do you need a seller’s permit?
As an interior designer or decorator, your work may include services such as design, repair, reupholstering, color coordination, and planning. You may also sell merchandise, including furniture, window coverings, carpeting, home accessories, cabinets, and samples. Generally, if you sell any merchandise to clients, including samples or finished drawings, you must obtain a seller’s permit from us and pay tax on your taxable sales. If you do not sell, install, order, or fabricate any merchandise or transfer finished plans or drawings to clients, you may not need a seller’s permit. For help in determining whether you need a permit, refer to publication 107, Do You Need a California Seller’s Permit?
Sales of merchandise
You generally must pay sales tax on the sale of merchandise to your clients, including the sale of samples and finished drawings or plans you transfer to clients. You owe tax based on the retail selling price of the merchandise, including your markup and any related taxable labor and service charges (see next section).
Please note: Special tax rules apply to the sale of items that you or a subcontractor attach to real property (houses, apartments, commercial buildings, etc.), including carpeting, wallpaper, paint, and cabinets. For information on those situations, see Improvements to Real Property.
The table below is a basic guide showing how sales tax applies to your charges. The remainder of the publication provides essential details to help you apply this basic information.
| Your Charge Is For: | Does Sales Tax Apply? |
|---|---|
| Fees for professional services |
|
| Labor charges |
|
| Sales of merchandise |
|
Fees for professional services
Many designers and decorators charge a fee for professional services. Typical services include consulting, design, layout, selection of color schemes, coordinating furniture and fabrics, supervising installations, etc. The fee may be a negotiated fixed amount or a percentage of the selling price of furnishings, labor, and installation charges.
Tax does not apply to charges for professional services that are not directly related to the sale of merchandise. Be sure to list those charges separately on your invoice.
However, tax does apply to your charges for fees that are directly related to acquiring and providing furnishings and other merchandise you sell to a client. For example, when you charge fees to accompany a client to a showroom to select furniture that the client is buying from you, those fees are taxable.
Please note: Normally, an interior decorator’s selling price of furnishings should be the retail price—that is, the cost to the decorator plus a reasonable markup. However, decorators sometimes invoice for sofas, tables, chairs, carpets, or other goods at their cost and then add a separately stated fee that includes their overhead and profit. If you bill in this manner, your total fee will be considered taxable unless you can clearly establish that a portion of the fee is for nontaxable professional services.
Example: A client contacts you and expresses interest in renovating his office. You show him different carpet, wallpaper, fabric, and paint samples. You also spend a substantial amount of time developing alternative color schemes, colors, and looks. Tax would not apply to your fee for these services because you have not yet sold any merchandise to your client. Now, after reviewing your proposals, the client makes his choice and places an order with you for merchandise. To complete the job, you spend time measuring for draperies, shopping for furniture, and accompanying your client to showrooms. Your charges for those services are taxable because they are a part of your taxable sale of merchandise.
It’s not always easy to determine the line between nontaxable professional services and taxable services related to a sale. If you need help determining whether your professional fees are taxable, call our Customer Service Center.
Labor charges
You may also charge your clients for labor associated with a taxable sale. For purposes of calculating sales tax, labor charges are generally divided into three basic categories: fabrication, repair, and installation. In general, tax applies to charges for fabrication labor, but not to charges for labor considered repair or installation. Nontaxable labor charges should be itemized separately on your invoice. For more information, see Regulation 1526, Producing, Fabricating and Processing Property Furnished by Consumers—General Rules, Regulation 1546, Installing, Repairing, Reconditioning in General, and publication 108, Labor Charges.
Fabrication labor
When you make a new item or change the form or function of an existing item and then sell it to your client, the labor is considered fabrication labor. Alteration of new items includes any work performed on new items, such as garments, bedding, draperies, or other personal and household items, to meet the requirements of your customer. Your work may involve adding or removing material from the item, rearranging, restyling, or otherwise altering the item. Alterations such as these result in the creation or production of a new item or constitute a step in the creation or production of a new item for your customer. Tax applies to your charges for fabrication labor, whether you provide the materials or use materials provided by your client.
Examples of taxable fabrication labor include:
- Quilting new fabric.
- Converting a vase to a lamp.
- Making bedspreads, draperies, slipcovers, and pillows from fabric provided by you or your client.
- Making an area rug from carpet remnants.
- Converting an old love seat into separate chairs.
- Cutting and sewing materials to be used in reupholstering (see Furniture reupholstering).
- Dyeing a client’s new rug or other new fabrics.
Repair labor
Repair labor is the repairing, refinishing, or reconditioning of an item to refit or restore it for its original use. Alteration of used items includes mending, shortening or lengthening, taking in or letting out, or otherwise altering used items such as bedding, draperies, or other personal and household items. When your alterations merely refit or repair an item for which the item was created or produced, charges for the alteration of used items are not subject to tax.
Examples of nontaxable repair labor include:
- Refinishing or putting a faux finish on a client’s antique table.
- Cleaning a client’s used rug.
- Dyeing a client’s used rug.
- Relining old draperies.
For more information on repair and fabrication labor, refer to Regulation 1526, Producing, Fabricating and Processing Property Furnished by Consumers—General Rules.
Installation labor
Installation labor is the labor required to install an item after it has been delivered to the client’s premises. It does not include any work performed prior to installation. Charges for installation labor are not taxable. However, tax generally applies to charges for materials you provide when installing a product, such as nails, bolts, screws, cables, etc.
Examples of exempt installation labor include:
- Hanging draperies after delivery to the job site.
- Hanging paintings and other artwork.
- Connecting an appliance to a power source.
- Relining old draperies.
Applying tax to typical interior decorator sales that include labor
Draperies
When you fabricate and then install new draperies, all labor up to the point of installation is taxable fabrication labor. This includes taking measurements at the client’s premises, cutting and sewing fabric, fireproofing or otherwise treating the fabric or other materials, shirring, lining, pleating, and pressing. The amount you charge for hanging the draperies is nontaxable installation labor and should be itemized as such on your invoice. Your charges for the draperies themselves and any installation hardware, including rods, brackets, etc., are taxable.
Clients may also contract with you to have their draperies cleaned, resized, relined, fireproofed, and installed at a new location. All of these services would be nontaxable repair and installation labor. Only the selling price of the lining and charges for installation hardware would be taxable.
For information on applying tax to the sale and installation of blinds and shutters, see Sale and installation of blinds and shutters.
Furniture reupholstering
Furniture reupholstering generally involves sales of materials as well as fabrication, repair, and installation labor. Sales tax applies to your charges for materials and parts such as fabric, foam rubber, springs, cushions, legs, and casters. Tax also applies to your charges for items commonly referred to as “findings.” These items include merchandise with small unit values such as brads, buttons, tacks, twine, and thread. You may choose to either itemize your charge for findings or use the alternative invoicing method described below under Invoicing options.
Fabrication or repair labor?
When you reupholster furniture, your charges for cutting and sewing materials for coverings, including seat and back cushions, are taxable fabrication labor. However, stripping old materials, applying new materials, retying springs, and refinishing or applying faux finishes are nontaxable repair labor.
Invoicing options
You may use one of two methods to invoice your clients for reupholstery work. You may either:
- Itemize your charge for all materials and findings used, charges for fabrication labor, and charges for nontaxable repair labor, or
- List one charge for materials (do not include findings), separate from total labor charges. If you use this method, you may claim 80 percent of your total labor as nontaxable (see example below). The remaining 20 percent will be considered taxable charges for fabrication labor and findings.
Example: You can invoice a client using the second invoicing method for a reupholstery job with total charges of $150 for labor and findings. Twenty percent of the total $150 labor charge is considered taxable labor and findings ($150 × 20% = $30).
Reupholster chair
| Item | Amount |
|---|---|
| Fabric and other materials | $450.00 |
| Taxable labor and findings | + $30.00 |
| Taxable total | =$480.00 |
| Sales tax | × 8.25% |
| Sales tax total | =$39.60 |
| Nontaxable repair labor | + $120.00 |
| Total due | =$639.60 |
For more information on applying tax to reupholstery jobs, see Regulation 1550, Reupholsterers.
Notes
- Please note: Even though this and other examples show tax calculated at a rate of 8.25 percent, you should use the rate in effect at your business location. For more information, see California City and County Sales and Use Tax Rates for current tax rates.
Subcontracted work
You may subcontract out work, including sewing, upholstery, custom furniture production, picture framing, etc. When you contract with your client to provide an item custom-made by a subcontractor, your charge for that item and the labor to make it is taxable. However, if the subcontractor performs repair or installation labor as part of your contract, your charges for that work are not taxable.
Decorators and designers sometimes encounter difficulty in properly billing and reporting taxable and nontaxable charges because their subcontractors do not furnish them with a breakdown of materials, repair labor, and installation labor. The subcontractors may assume that because their sale to you is a sale for resale, no breakdown is necessary. For your own protection, we urge you to insist on accurate and itemized billings from subcontractors.
Example: A client hires you to redecorate a bedroom. You subcontract with Frank’s Fine Fabrics to make draperies and pillows, and to install the draperies. Your invoice from Frank’s says:
| Item | Amount |
|---|---|
| Throw pillows (2) | $100.00 |
| Make and hang draperies | + $850.00 |
| Total resale | =$950.00 |
You should ask Frank’s to itemize his charge for hanging the draperies so that you can itemize the nontaxable installation labor charge on your invoice to the client. Your charge for the pillows and the draperies would be taxable, but tax would not apply to your charge for hanging the draperies.
Sales of products delivered outside California
Sales tax generally does not apply to your transaction when you sell a product and ship it directly to the purchaser at an out-of-state location, for use outside California.
Please note: You must ship the item directly to the out-of-state destination using your own delivery vehicle, the U.S. Mail, common or contract carrier, a customs broker, or a forwarding agent. If the purchaser or their representative takes possession of the item inside California, even temporarily, your sale does not qualify for this tax exemption.
In addition, if you deliver an item to a known California resident at an out-of-state location, you should apply tax unless the buyer states, in writing, that they are purchasing the item for use outside California.
To claim an exemption for an interstate sale, you must retain records of delivery or shipment, such as shipping invoices, postage receipts, etc.
For more information on sales in interstate commerce, see Regulation 1620, Interstate and Foreign Commerce and publication 101, Sales Delivered Outside California.
Shipping and delivery charges
Tax does not apply to charges for shipping or delivery for nontaxable sales. For taxable sales, your charges for shipping or delivery are generally not taxable if all the following conditions apply:
- The charges are separately stated on your invoice.
- A contract or common carrier, or the U.S. Mail, makes the delivery.
- Your charges to the client for delivery do not exceed the amount you pay to the carrier.
- Charges are for transportation directly to the client. Charges for delivery from the factory or dealer to your place of business or other intermediate point are generally taxable.
Please note: If you deliver goods using your own vehicle or sell them for a price that includes delivery charges, the delivery charge is usually taxable.
Your invoice should use terms such as delivery, shipping, freight, or postage to represent delivery charges. Other related charges, including handling, are generally taxable. If you charge a single amount that combines delivery and a related handling charge, for example, shipping and handling, you must apply tax to the handling portion of the charge. The shipping portion is not taxable if it meets the criteria listed above. It is important to keep good records that fully document your shipping costs.
For more information, see Regulation 1628, Transportation Charges, and publication 100, Shipping and Delivery Charges.
Revision July 2026