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By Ivana Kotorchevikj

Last updated: January 8, 2025

Compliance and security

We can all agree that tax laws are confusing, and when it comes to spa services in California, they can feel downright overwhelming.

What’s taxable? What isn’t? Getting these things wrong can lead to penalties, lost revenue, or even legal trouble.

Understanding which services are taxable and which aren’t helps you stay compliant and avoid fines. But more importantly, it enables you to set better prices and manage your finances more effectively.

As they say, knowledge is power, and taxes aren’t so scary if you know your way around them.

In this article, we’ll break down the taxable and nontaxable spa services in California so you can focus on pampering your clients while staying in the IRS’s good graces.

Let’s demystify this together.

In the state of California, sales tax applies primarily to the sale of tangible personal property. As the name suggests, this includes physical items, such as furniture, clothing, electronics, toys, etc.

Are services taxable?

While it largely depends on the types of services, California, in general, doesn’t tax services .

However, they are taxable if the services involve creating or manufacturing new tangible personal property . This can include, for example:

A jewelry maker who assembles a custom necklace for a client

A manufacturer producing furniture from raw materials

In contrast, services that involve fixing or maintaining an item are nontaxable , such as:

Repairing a broken chair or fixing a smartphone

Installing a machine or home appliance like a dishwasher

In our case, it’s safe to say that spa and wellness-related services are nontaxable .

However, when products and services are combined such as in a package, this is where taxability gets complicated.

If a service is inseparable from the sale of a taxable product, the entire charge may be subject to state sales tax. For instance, if a spa offers a package that includes both a taxable product (like skincare items) and a nontaxable service (such as a massage), the total price might be taxable if the product and service are not separately stated.

While many spa services are nontaxable, as we’ve seen, certain services involving tangible products or specific types of services are subject to tax liability.

Knowing the difference can help you avoid unexpected tax liabilities and adjust your sales price to reflect these requirements.

The sale of retail products offered by spas is generally subject to sales tax in California.

This includes:

Selling skin care products like serums, moisturizers, and essential oils — if you sell these items as part of a service (such as selling a lotion after a facial), the sale of the products is taxable, while the service itself is not.

Selling spa equipment — If the spa sells equipment, like LED light therapy masks or facial steamers, and includes setup or assembly as part of the sale, that could be taxable because it’s part of selling a product.

Spa treatments that include retail products for clients to take home, such as facial kits, creams, or other products, are taxable.

Some examples where spa services with tangible goods are taxable:

Packages including products — If a spa offers a facial treatment that comes with a skincare kit for home use.

Massage with oils or creams for home use — When a massage package includes a bottle of the same essential oil or lotion used during the session for the client to take home.

Body treatments with complementary products — If a body wrap service includes a jar of body scrub for at-home maintenance.

Now that we got the taxable services out of the way, the good news is that most traditional spa services qualify for tax exemptions or exclusions.

Let’s explore the spa services in California that are generally nontaxable

When it comes to spa offerings, most personal care services are free from sales tax in California. This is because they focus on providing relaxation, beauty enhancement, or wellness and not transferring physical goods.

These include popular treatments like massages, facials, manicures, pedicures, and waxing.

Med spas can also take a breather. Med spa services are typically nontaxable in California as well!

These treatments include wellness and aesthetic treatments, including Botox, laser therapies, and other medical-grade procedures.

They’re classified as medical services when performed by licensed service providers, which means they qualify for a tax exemption.

Facials are a cornerstone of spa services, and in California, they’re typically exempt from sales tax.

These skin-care treatments are classified as personal care services, making them a tax-free indulgence for your clients. Facials rely on hands-on techniques, tools, or nontaxable consumable products , which are used to deliver the treatment and aren’t sold to the client.

Mind you, the key is that the client isn’t purchasing physical products to take home as part of the treatment.

Massage therapy, one of the most popular spa services, is also exempt from state sales tax in California.

They count as personal care services, focusing on relaxation, pain relief, and overall wellness, making them exempt under the state’s tax laws.

Sauna and steam room facilities are popular additions to spa experiences. They’re generally regarded as a service and are not subject to sales tax.

Fees for memberships or day passes giving clients access to these facilities are also exempt from sales tax.

💡 Tip : How to maintain tax exemption and compliance

To make your services remain nontaxable, whether facials, massages, manicures, or other, avoid including take-home products like serums, moisturizers, oils, and other products under the same price.

If you do include retail products, clearly separate their cost on the receipt to separate the nontaxable treatment service from the retail sale.

If your spa sells taxable products or services in California, you are required to register with the California Department of Tax and Fee Administration (CDTFA) and collect and remit sales tax from your customers. This is a legal obligation for any retailer engaged in business within the state.

Also, keep in mind that if you’re offering taxable items like skincare products, equipment, or retail merchandise, you’ll need to register for a seller’s permit .

Steps to register for sales tax:

Go to the CDTFA online portal to start your registration process.

Provide business information about your spa, such as its name, address, ownership type, and federal tax identification number (EIN).

Once your application is approved, you’ll receive a seller’s permit, which allows you to collect sales tax from your customers.

Note : If you are not sure which of your services are taxable and if you should charge sales tax on your pricing, ask your certified public accountant (CPA).

As a taxpayer, you can contact the California Department of Tax and Fee Administration to get additional information on tax regulations, procedures for filing returns, registering for permits, different tax rates, forms and guides for various tax purposes, and more.

What you need to know about use tax

Use tax applies when your spa purchases items from an out-of-state vendor or online supplier without being charged sales tax on the purchase price. For example, if you buy skincare products or equipment from outside California, you must report and pay the equivalent use tax directly to the state. The rate typically matches the sales tax rate, so it’s important to review your invoices for compliance.

To avoid paying sales tax twice, ensure you obtain a resale certificate to provide to your vendors when purchasing products for resale. This keeps you from being taxed both when buying and selling.

Taxes are part of running any business. But, the good news is that taxes are generally in your favor as a spa owner in California, as most traditional spa services qualify for exemptions.

Above, we’ve helped you understand which spa services are tax-exempt and in which cases taxes apply. And now, let’s simplify taxes even further.

Pabau is an all-in-one management software that streamlines your spa operations, including the tedious tax side of things with:

Setting up different spa offerings, retail products, and packages

Grouping services for easier management

Applying different taxes to products and services (or not applying tax at all!)

Combine multiple tax rates into single, easy-to-apply tax groups

Accurate tax breakdown in invoices, transactions and reports

Sleep soundly, knowing your taxes are organized efficiently and seamlessly integrated into your spa’s workflows. Take the first step – book a demo with our wonderful team .

Disclaimer

This article is intended for informational purposes only and does not constitute financial, legal, or other professional advice. The content provided here should not be used as a substitute for consulting with a qualified professional regarding your specific circumstances. Always seek the advice of a qualified accountant, tax professional, or attorney for any concerns related to taxes or business operations.

Schedule a Demo to see how Pabau can help your team.

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