Tax Classes, Zones and Rates

Tax Classes

Tax classes allow you to set different tax rates for items such as Shipping, Gift Wrapping and custom product classes. They can be used if you have certain products that are taxed at a different rate, or not at all.

1. Go to Store SetupTax, then click the Tax Classes tab.

Tax Classes tab

2. Click the + (plus) icon to create a new class, and click the - (minus) icon to delete existing classes.

3. You can change the Tax Label for each class by clicking its name and typing your desired label name.

4. Save your changes.

The Default Tax Class cannot be renamed or deleted.

Tax Zones

Tax zones are the geographical areas which tax rates are applied to. They can be defined by country, state/province or zip/postal codes. There is no limit to the number of tax zones you can set up, but a geographical area can only be defined once.

1. Click the Tax Rates & Zones tab.

Add a Tax Zone button

2. Click the Add a Tax Zone button.

3. Enter a Tax Zone Name that describes this tax zone (such as California or Australia). This name is for your reference only and will not be shown to customers.

4. Select a Zone Type. If selecting a type based on one or more states/provinces or zip/postal codes, you'll first need to specify the country that the zone is in. You'll then be presented with a list of states/provinces, or a text box to define the applicable zip/postal codes.

5. For Tax Zone Applies to, select any specific Customer Groups for the zone to apply to.

6. Check the box marked Yes, enable this tax zone to make the zone active.

7. Save your changes.

Tax Rates

Tax rates are the percentages at which products or services are taxed. Each zone can have as many tax rates as necessary. This is necessary for products and services that need to be taxed different rates for different jurisdictions (federal, state and/or municipal), then have them compounded at checkout.

1. Click the Add a Tax Rate button.

Add a Tax Rate button

2. Enter a Tax Rate Name. This will be shown on the order-summary breakdown.

3. Enter a percentage for each of the Tax Class Rates. If you are not charging tax on a certain class, enter 0.

4. For zones with more than one rate, enter a number which represents the Priority in which this tax rate should be calculated against other tax rates in this zone. Tax calculations will be compounded in order of highest priority (lowest number), to the lowest priority (highest number).

5. Leave the box marked Yes, enable this tax rate checked.

6. Save your changes.

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