This article goes over how to set up custom tax rates for countries, state/provinces, and zip/postal codes. These tax rates will be applied on checkout based on where the item is shipped.
Enable Custom Taxes
- Access the Taxes section.
- Click Setup
- Enable Tax - toggle on.
- Tax Method - From the drop down menu, choose Custom.
- Match only first 5 of zip/postal code - When toggled on, only the first 5 digits of the zip code will be checked against the database. The zip code database only has 5 digit codes available and any additional numbers or letters are not recognized.
- Save - Click to save changes.
Create Tax Rates
- Access Custom Rates.
- Click Add Custom Rate.
- Location Type - Choose either Country, State or Zip.
- Based on what you choose, choose from next drop down to specify details.
- Tax Rate - Enter the tax rate.
- Create - Click to save changes.
How Custom Rates are Applied
- First, it checks to see if there is a zip / postal code match, if so, it applies that tax rate to the order.
- If no zip code match is found, it checks to see if there is a state / province match, if so, it applies that rate to the order (exact match required).
- Finally, if there is no matches for state or zip, the system will check the country and if there is a match, that rate will be applied.
REMEMBER: If you configure a custom rate by zip, the zip code you configure in the admin area MUST match what the shopper would enter (i.e. if you set up one for a Canadian zip code, if you configure this as "H4X1Y6" in the admin area, the shopper must enter "H4X1Y6" exactly at checkout to have sales tax charged accordingly).