Set up WooCommerce tax settings
Step 3 of the Configure WooCommerce Settings series.
Set up common tax options and rates with WooCommerce. The tax settings has four pages to help you configure your taxes: Tax options, Standard rates, Reduced rate rates, Zero rate rates.
To automate tax calculation, use WooCommerce Tax. This free extension will automatically calculate sales tax at checkout based on your store's address. We recommend automating your taxes if your business is located in one of the supported countries, and you're only selling from one location.
To configure sales taxes manually, follow the guide below. Note: Taxes are complex, unique to your business, and tax laws can often change. This guide and WooCommerce doesn't file and remit your taxes, or tell you what to charge for your sales tax. Tax rates depends on what areas you're selling and shipping to, so each business's tax set up will be different. We're not tax professionals and our guidance is only focused on how to set up taxes in WooCommerce.
You should consult with a tax accountant to make sure that you're using the best sales tax options for your business.
- Navigate to WooCommerce > Settings > Tax tab to set up taxes for your shop.
- If you don't see the Tax tab, make sure taxes are enabled for your shop:
- Go to WooCommerce > Settings > General.
- Select the Enable tax rates and calculations checkbox.
- Save changes.
Tax options
Before setting up tax rates, you'll need to configure how you would like taxes to be calculated and displayed. Not every option will applicable to your business. The settings you need to configure are based on the tax jurisdiction where your shop is located.
Follow WooCommerce's in-depth guide to configure tax options.
Tax rates
Once the tax options are completed, you can set up tax rates for your store.
Navigate to WooCommerce > Settings > Tax tab > Standard rates page (or any of the other tax classes) to define tax rates for the tax class that you're using. WooCommerce includes three tax classes that you can add rates to: Standard rates, Reduced rate rates, Zero rate rates.
To add tax rates, click Insert Row on the table or Import CSV. You can update the attributes for each tax rate that you add:
- Country code - Specify a 2-digit country code. WooCommerce uses the ISO 3166-1 alpha-2 format. For example: US or GB. Leave blank (*) to apply to all countries.
- State code - Specify a 2-digit state code. Check for supported states in each country by referencing the file at
wp-content/plugins/woocommerce/i18n/states.phpin your file manager. Leave blank (*) to apply to all states in that particular country. - Postal Code - Specify one or more postal codes. For multiple postal codes, separate each with a semicolon (;). You can also add filters:
- Wildcards (*) will match several postal codes. For example,
BN*will match all postal codes starting with BN. - Numeric ranges will match all postal codes within the specified range. For example,
1000…3000. - Leave blank (*) to apply to all postal or zip codes in the specified state.
- Wildcards (*) will match several postal codes. For example,
- City - Specify the city where the tax rate is applicable. Separate multiple cities with a semicolon. Leave blank (*) to apply to all cities under the specified state or country.
- Rate % - Specify the tax rate in a format of 4 decimal places. For example, enter
10.0000for a rate of 10%. - Tax name - Enter a tax name. For example, VAT, GST, Sales Tax, etc. The tax name depends on your tax jurisdiction.
- Priority - If you entered multiple tax rates for a specific area, you can prioritize them here. To define multiple tax rates for a single area you need to specify a different priority per rate. For example, if I have two tax rates for California, I can prioritize them with 1 and 2. Tax rate with priority 1 would be applied first, then priority 2 will be applied. Both taxes would be applied individually to the product's cost.
- Compound - Check this box to include compound tax. This means that the tax rate will be applied to all other prior taxes. For example:
- I have two tax rates, a state tax of 10% and an additional tax of 2%. My subtotal is $100.
- First, the state tax is applied to $100. Now my subtotal is $110.
- Then, the additional tax is applied to $110. Now my total is $112.20.
- Shipping - Check this box to apply the tax rate to shipping charges. When disabled, the tax is only applied to the product price.
Additional tax options
There are several other options for setting up taxes, viewing tax reports, and configuring specific tax situations. For more guides, check out Setting up taxes in WooCommerce.
Click Save changes and move on to the Shipping tab.
