When it comes to tapping a 1/8 NPT, the general rule of thumb is to tap it as deep as possible. This will ensure that you have a good seal and won't have any issues with leaks. However, there are a few things to keep in mind when tapping this size hole.
First, make sure that you have the right size drill bit. A 1/8 NPT tap will require a #7 drill bit. If you don't have the right size drill bit, you run the risk of damaging the tap or creating an uneven hole. Second, use plenty of cutting oil when tapping the hole. This will help to lubricate the tap and prevent it from getting stuck. Finally, go slowly and carefully when tapping the hole. It's easy to damage taps by going too fast, so take your time and be careful.
If you follow these tips, you should be able to successfully tap a 1/8 NPT hole without any issues.