How to Create Sales Tax Calculation Rules
This tutorial will explain how to manually set up Sales Tax Calculation Rules (Tax Classes). These rules can be as simple as your local city tax rate or as complex as an entire state of tax rates by city. Have hundreds or thousands of tax rules? We can help.
To Create Sales Tax Calculation Rules click Sell (1) then choose the Taxes (2) area.
Premium Plus account holders will need to choose the store they want to manage and click the Pencil (Edit) Icon.
For the Taxing Method (3) choose Sales Tax.
For Tax Service (4) choose None.
Decide if you want to Apply Coupons (5) before or after taxes then click Add Tax Class (6).
When the page refreshes you'll see these fields.
Tax Class Name (7) - The tax class name is used for internal identification purposes only so that you can easily identify your different tax classes when you apply them to each of your products. Below are some examples of tax class names.
- Digital Goods
- Tangible Goods
- Services & Subscriptions
Default Class (8) - Select "Yes" if this is the class that should be applied to all of your store's products by default. Don't forget that you can specify which tax class is used for each product you sell, so you can apply different tax rates to each of your products. There can only be one default tax class.
Shipping Class (9) - Select "Yes" if this is the class that should be used to tax shipping costs. Select "No" if you don't want to tax shipping costs. There can only be one shipping tax class.
Class Rules (10) - This is where you will manually type in the following information.
- Country Code - Please use the Alpha-2 Code as outlined in the ISO Country Code Assignments
- State - Please use the ANSI 2 Character Code as outlined in the ANSI State Abreviation Assignments
- City - Please type out the full name of the city
- Postal (zip code) - Please use the full postal/zip code
- Rate (%) - Rates can be up to 2 decimal points (ie... 10.25%)
If you want to apply a tax rate across an entire field use an asterisk (*). Below is an example of how it would work.
- Country = US
- State = TN
- City = * (all cities within TN)
- Postal = * (all zip codes within TN)
- Rate = 9%
This would mean that a product purchased in any City or Zip Code within the state of Tennessee the sales tax rate would be 9%.
If after the first rule you need more click Add Another Rule (11) and a new row for another rule will appear.
After completing all rules click Save Tax Class (12).
Upon saving you'll see all of the Tax Classes (13).
If you want to edit your Sales Tax Classes click the Pencil (Edit) Icon. To delete click the X (Delete) Icon.
Remember that taxation is granular if needed. This means that tax settings can be adjusted within the Inventory Item (Step 2 - Pricing & Tracking). You'll be able to choose the default tax class or any other tax class or no tax at all.