Navigate to Manage Inventory > Taxes to add/edit/delete state tax rates
As an online merchant, you want to understand every nuance of your business. Some aspects – like sales tax – can get overwhelming quickly.
Generally merchants must collect sales tax in states where they have “sales tax nexus.” For example, you live and run your e-commerce business in Texas. Because you have a physical presence in Texas, you have “sales tax nexus” there, and therefore are required to collect sales tax from buyers in the state of Texas.
While all states have a slightly different definition of this term, sales tax nexus is generally defined as “presence” in a state. This presence must be significant enough so that a business has to comply with the state’s sales tax law.
Based on the above, the platform lets you set sales tax rates for any states where you have a "nexus." If a customer purchases with a shipping address inside the states you've set up, sales tax for that state will be charged. If a purchaser outside of those states makes a purchase, sales tax will not be added to the transaction.
Tax laws change constantly, so we always caution that you check and double-check the sales tax rates that you are charging your customers, erring on the high side if necessary to cover your bases. This is particularly important in the wake of landmark court decisions such as South Dakota v. Wayfair, Inc., which indicates that states can choose to charge sales tax on items purchased out of state.
Adding/Editing a State Tax Rate
Tap the "Add Tax" button, or select edit in the action menu, to pop the Tax Detail Modal. Select a state from the dropdown, then enter the applicable tax rate in the rate field. You may multiple taxes or tax types per state.
Optional Category Overrides
Once you set the overall state tax rate, you can optionally add additional tax overrides per category. Example: Your combined State and local Tax rate for your store is 8%, but your state doesn't require you to charge tax on nutrition or food. You can add an additional tax override set at 0% for your nutrition category. In this example, an 8% tax will be charged on all in-state sales, with the exclusion of all nutrition products added to the cart.
Cost Override - Item Is
In many municipalities, taxes can be waived (or charged) based on cost thresholds. For example, in some areas, if you purchase nutrition and spend less than $100, taxes are waived. However, if the total is over $100, your customer should be charged a particular tax rate. You can set this type of threshold using the Cost Override field in the edit tax window. In the example below, the tax rate indicated will be applied if the condition in the cost override field is met.