Setting up manual tax rates in your online store ensures you collect the right amount of tax from customers based on their location. Here's how to do it:

Manual Tax Collection Overview

Tax calculations are based on specific addresses:

• Physical products: Shipping address
• Digital products: Billing address
• Membership sites: Member's billing ZIP code
• No tax charges apply to donations or gift cards

Adding Country-Level Tax Rates

1. Go to Taxes panel
2. Click "Add Rate" or "+" if rates exist
3. Select country from dropdown
4. Enter tax name and rate
5. Enable optional settings:
   • Tax on digital products/services
   • Tax on shipping
6. Save changes

Adding Provincial Tax Rates (Canada)

1. Click "Add Provincial Rate"
2. Select province
3. Enter provincial tax rate
4. Configure optional settings
5. Enable "Show as Combined Rate" if needed
6. Save changes

Adding U.S. Municipal Tax Rates

For single ZIP code:

1. Click "Add Rate by ZIP Code"
2. Select "ZIP Code"
3. Enter ZIP code and tax rate
4. Save changes

For ZIP code range:

1. Click "Add Rate by ZIP Code"
2. Select "ZIP Code Range"
3. Enter start/end ZIP codes
4. Add tax rate
5. Save changes

Tax-Inclusive Pricing (Optional)

To include tax in displayed prices:

1. Open Taxes panel
2. Select "Include in Price"
3. Save changes

Important Limitations

• Cannot set different rates based on product type (except U.S. automatic rates)
• Cannot set city/region-specific rates outside U.S. and Canada
• Cannot exempt specific customers from tax
• State and municipal taxes are cumulative

Tax Nexus Considerations

Following the South Dakota v. Wayfair, Inc. case:

• Out-of-state sellers may need to collect sales tax
• Economic sales nexus varies by state
• Consult tax advisors for specific obligations
• Check IRS state-specific guidelines

These settings ensure proper tax collection while maintaining compliance with local tax regulations.

Related Articles

Previous Articles