Tax Classes

Overview

Tax classes control how much tax users will be charged based on their region. It also controls tax rates for physical vs digital products.

Important Reminder

Tax classes work on top of your shop settings. This means that if you shop settings are set to not charge tax, this will override any tax classes that you create. Therefore, be sure to set up your shop options according to your tax needs.

Creating a Tax Class

  • Go to "Shop > Setup > Tax Classes"
  • Click on "Create New Tax Class" in the secondary navigation.

In the above example, we create a 8% tax on any physical (shipped) product in any order coming from Illinois, United State.

FieldDescription
TitleReference name for this tax class.
Digital ProductsTax applied to non-shipped products.
Physical ProductsTax applied to shipped products.
CountryCountry in which this tax class applies.
StateState in which this tax class applies.

Calculations

Tax is calculated on a product-by-product basis. So the tax total for your cart may not be an exact percentage of the cart's total. Consider a scenario in which you charge 15% tax on physical products only:

ProductTypeUnit TotalTaxCart Total
Widget APhysical$100.00$15.00$115.00
Widget BDigital$50.00$0.00$165.00
Widget CPhysical$50.00$7.50$222.50
--$200.00$22.50$222.50

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Published on 2013/07/12.
Last updated on 2013/07/13.

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