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WooCommerce: How To Manage Taxes?

Table of contents

To access the tax settings screens, they first need to be enabled.

To start configuring taxes:

Go to: WooCommerce > Settings > Tax. This tab is only visible if taxes are enabled.
The Tax tab displays several options that can be set to suit your needs — settings you choose are based on the tax jurisdiction under which your store is located.

Prices Entered With Tax: This option is perhaps the most important when managing taxes in your store, as it determines how you input product prices later on.
Calculate Tax Based On: Select whether taxes should be calculated based on the customer’s shipping address or billing address.
Shipping Tax Class: Choose the tax class to apply to shipping costs, if applicable.
Rounding: If you enable Rounding tax at subtotal level, instead of per line, the rounding is done at the Subtotal level. Check your tax jurisdiction to know if this is done.
Additional Tax Classes: Tax Classes are assigned to your products. In most cases, you want to use the default Standard class. If you sell goods that require a different tax class (i.e., Tax, except zero-rated products) you can add the classes here. To get started, we include Standard, Reduced Rate and Zero Rate tax classes. Each class is listed at the top of the tax settings page – click a class to view tax rates assigned to the class.
Display Prices During Cart and Checkout: This option determines how prices are displayed in your cart and checkout pages – it works independently of your catalog prices. Choose from inclusive/exclusive tax display.
Display Tax Totals: This determines if multiple taxes get displayed as one total during checkout, or as an itemized list of taxes.

In the “Standard Rates” section, you can define tax rates for different tax classes:

If you have different tax rates for specific locations, you can set up tax rates based on tax zones:

Click on the “Add Tax Rate” button in the “Tax Zones” section.
Enter a name for the tax zone, such as “State Tax” or “Local Tax”.
Specify the country, state, or postal code for which the tax rate should apply.
Add the tax rates applicable to the tax zone by clicking the “Add Rate” button.
Enter the tax rate and choose the tax class.
Save the tax zone by clicking the “Save Changes” button.

WooCommerce also provides additional settings for tax display and rounding options, which you can configure according to your preferences.
Once you have set up the tax rates and options, click the “Save Changes” button to apply the settings.

To manage tax exemptions in WooCommerce, you can follow these steps:

Log in to your WordPress dashboard.
Navigate to “WooCommerce” in the left-hand side menu and click on “Settings”.
In the Settings page, click on the “Tax” tab.
Enable tax calculations by checking the box next to “Enable taxes” if you haven’t already done so.
Under the “Tax Options” section, ensure that the tax calculation method is set to the appropriate option for your store.
Scroll down to the “Additional Tax Classes” section.
In the field, enter a name for the tax class, such as “Tax Exempt” or “Non-Taxable” to create a new tax class for tax exemptions.
Save the tax class by clicking the “Save Changes” button.
Now, you can assign the tax-exempt status to specific customers or user roles:

For individual customers: Go to “Users” in the WordPress menu and locate the customer you want to exempt from taxes. Edit the customer’s profile, scroll down to the “Tax Exempt” field, and check the box to mark them as tax exempt.
For user roles: If you want to exempt a specific user role, you can use a plugin like “User Role Editor” to edit the capabilities of that role. Grant the “tax_exempt” capability to the desired user role.

Save the changes to the user profile or user role.
WooCommerce will automatically apply tax exemptions to customers or user roles marked as tax exempt during the checkout process. Taxes will not be calculated for their orders.