Publication 62, Locksmiths
Locksmith Tax Basics—Types of Transactions

This section provides basic information on locksmith transactions, particularly those that involve work on personal property, such as automobiles, furniture, and boats. It describes how tax applies to your charges for labor, materials, and supplies. See Work Performed on Real Property: Houses, Stores, Office Buildings, and Apartments for information on how tax applies to jobs involving real property, such as houses and other buildings.

Locksmith transactions, in general

Your locksmith activities generally fall into one of the following basic categories:

• Sales that do not involve labor or services.
• Jobs that involve labor or services only.
• Jobs that involve labor or services and charges for merchandise or materials.

Sales that do not involve labor or services

When you sell merchandise, such as locks, locksets, lubricating spray, and lock parts without providing any labor or services, your sale is usually subject to sales tax. You must pay tax on the sale with your sales and use tax return.

Jobs that involve labor or services only

Some of your work may involve charges for labor or services only. Generally, if you do not furnish any materials in the course of your job and your charge does not include amounts for materials, your work is not taxable. For more information, see Jobs that include repair or installation, and the summary table, Applying Tax to Locksmith Labor and Service Charges.

Jobs that involve labor or services and charges for materials

When your job includes both labor and materials, sales tax may apply to the entire charge or only to your charges for materials. As explained in the following sections, the application of tax will vary depending on the circumstances of the transaction.

Applying tax to labor and service charges

While many businesspeople mistakenly believe that labor and service charges are always exempt from tax, some of the services you perform in your locksmith operations may be taxable. In general, tax applies to charges for fabrication labor, but not to charges for work considered installation or repair.

Fabrication—making new keys and similar work

When you make a new item of personal property and transfer the item to your customer, the labor required to make the item is considered fabrication, and your charges for that work are taxable. Making keys, for example, is considered fabrication. Sales tax applies to all your charges for the work involved in making the item and to your charge for the item itself. This is true whether you charge separate amounts for labor and materials or combine your charges in one lump sum.

Please note: Tax applies to your charges whether you provide the materials or use materials provided by your customer.

Examples of fabrication labor performed by locksmiths include:

• Making new keys by duplication or cutting by code.
• Making an “old key” if necessary to rekey a lock, if you provide the old key to your customer (an “old key” is a new key made in order to open an old lock).
• Installing locks or alarms on new personal property, such as automobiles, desks, safes, and boats. An automobile is considered new if it qualifies as a new vehicle when registered with the Department of Motor Vehicles, and you contract to work on the vehicle within 60 days of its registration date.

You may obtain a copy of Regulation 1526, Producing, Fabricating and Processing Property Furnished by Consumers—General Rules, for further information on fabrication labor.

Repair—opening locks, rekeying locks, and similar work

Other common locksmith jobs involve repair labor. Repair labor is considered to be the repairing or reconditioning of an item to refit or restore it for its original use. Charges for repair labor alone are not taxable. However, tax may apply to the merchandise or material you transfer to your customer as part of your repair job (see summary table, Applying tax to charges for materials when the job involves repair or installation to personal property).

For example, if you repair or replace a broken lock on a customer's used car, your itemized labor or service charges for the repair are considered nontaxable repair labor. Tax will generally apply to your separate charges for the materials you provide in the repair work.

Examples of common locksmith repair jobs include:

• Removing and replacing a lock in order to make a new key.
• Making an “old key” if necessary to rekey a lock (provided you keep the “old key” rather than provide it to your customer).
• Opening locks.
• Replacing locks in used personal property, such as automobiles, desks, safes, and boats.
• Changing a safe's combination or servicing the safe.

Installation—installing locks and similar work

Installation labor is considered to be the installation or application of a ready-made, separate product. For example, if you install an alarm in a used car, your work would be considered installation. Charges for installation labor are not taxable. However, charges for materials you provide in installing a product may be taxable (see summary table, Applying tax to charges for materials when the job involves repair or installation to personal property).

See Regulation 1546, Installing, Repairing, Reconditioning in General, for further information on the application of tax to repair transactions. For information on applying tax to materials used in installation jobs involving real property, see Work Performed on Real Property: Houses, Stores, Office Buildings, and Apartments.

Service charges or trip charges

Your service or trip charge associated with a job or sale may be taxable. For more information, see Other Locksmith Charges, Sales, and Purchases.

For more information on labor charges

See summary table, Applying tax to charges for materials when the job involves repair or installation to personal property, and the examples in the Appendix for information on how tax applies to labor charges for specific locksmith operations. If you don't find the information you need, call our Customer Service Center for assistance at 1-800-400-7115 (TTY:711).

Applying tax to charges for materials—jobs including labor or services performed on personal property

In the course of your work as a locksmith, you commonly furnish or use merchandise and materials, including locks, keys, safes, alarms, locksets, key wafers, and lock components. For certain locksmith jobs, you are considered the retailer of the merchandise and materials you provide, and your charges for materials are taxable. You may issue a resale certificate to your supplier when you buy materials you will sell as a retailer (see Purchases for resale).

In other situations, you are considered the consumer of materials for tax purposes. When you are considered a consumer, your charges for materials are not taxable. Your purchases, however, are subject to tax, and you should not issue a resale certificate to your supplier (see Purchases for resale). If your supplier does not charge you an amount for California tax, you will generally owe use tax on the amount you paid for the materials (see Purchases subject to use tax).

For information on applying tax when you work on real property, such as a house or an office building, see Work Performed on Real Property: Houses, Stores, Office Buildings, and Apartments.

Fabrication of personal property, such as keys

When your job involves fabrication of personal property, such as keys, you are considered the retailer of materials you provide on that job, and tax applies to your charges for them (see Fabrication—making new keys and similar work).

Jobs that include repair or installation

When your job involves repair or installation, you may be considered the consumer of any materials you use rather than the retailer. When you are working on personal property, such as automobiles, boats, or furniture, whether you are considered the retailer or consumer of materials depends on your billing method and may vary depending on the relative value of the materials to your total charge (see table below). Different conditions apply to work performed on real property, such as a house or store, as explained in the next section.

As noted on the previous page, sales tax applies to your separate charges for materials when you perform repair or installation work to personal property. However, if you charge your customer a lump-sum amount, tax applies only if the fair retail selling price of the materials is more than 10 percent of your total charge.

For example, you may repair the locks on a customer's desk and file cabinets, charging your customer $46 for labor and $4 for materials. If your invoice shows a separate $4 charge for materials, you are considered a retailer and your charge for materials is taxable.

On the other hand, you may charge your customer one $50 lump-sum amount for labor and materials. Since $4 is less than 10 percent of your total $50 charge ($50 x 10% = $5), you are considered the consumer of the materials, and sales tax does not apply. You must pay an amount for tax when you buy the materials, or pay use tax with your sales and use tax return. However, if the retail value of the materials was more than $5 (more than 10 percent of your $50 charge), you would be the retailer of the materials and would owe tax on their selling price.

For more information, refer to Regulation 1546, Installing, Repairing, Reconditioning in General.

Supplies

Supplies are considered to be those items you use in your business that do not become a physical part of the final products you sell, install, or repair. Common examples for locksmiths include cleaning solvent, rags, and steel wool. You are considered the consumer of your supplies, and you should expect to pay an amount for tax to your vendor when you buy them. If you do not, you generally must report use tax based on their purchase price (see Purchases subject to use tax).

Revision July 2026