Setting up taxes in WooCommerce

Setting up taxes and tax rates is one of the first tasks you want to perform when setting up a store. Taxes can be a complex matter, but WooCommerce aims to make setup as straightforward as possible.

We recommend consulting with a tax professional or an accountant on what may be your best options, plus any applicable laws to your state, country or business. Each business is unique, and there’s no way we can cover millions of possibilities.

Enabling Taxes ↑ Back to top

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

  1. Go toWooCommerce > Settings.
  2. Select the Enable Taxes checkbox.
  3. Save changes.

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Configuring Tax Options ↑ Back to top

To start configuring your taxes, go to: WooCommerce > Settings > Tax. This tab will only be there 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.

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Prices Entered With Tax ↑ Back to top

This option is perhaps the most important when managing taxes in your store, as it determines how you input product prices later on.

  • “Yes, I will enter prices inclusive of tax” means that all catalog prices are input using your store’s base tax rate.

For example, in the UK you would input prices inclusive of the 20% tax rate e.g. You enter a product price of £9.99 that includes £1.67 tax. A customer in the UK would pay £9.99 as defined, and a customer in the US would only pay £8.32.

  • “No, I will enter prices exclusive of tax” would mean that your catalog prices need to be tax exclusive.

Using the example from above, a UK shop would enter 8.32 at the product price. A tax of 20% would be applied on top of this during checkout making the amount payable £9.99.

The tax calculation for tax-inclusive prices is:

tax_amount = price - ( price / ( ( tax_rate_% / 100 ) + 1 ) )

The tax calculation for tax-exclusive prices is:

tax_amount = price * ( tax_rate_% / 100 )

You can read a more details on our tax calculations in this document.

Calculate Tax Based On ↑ Back to top

This setting determines which address is used for tax calculations.

  • Customer billing address
  • Customer shipping address (default)
  • Store base address

If you use store base address, taxes will always be based on your store location and not your customer’s location.

Shipping Tax Class ↑ Back to top

In most setups, shipping tax class is inherited from the item being shipped, e.g., Shipping a reduced rate item such as baby clothes would also use a reduced rate. If this is not the case in your jurisdiction, choose a different tax class.

Rounding ↑ Back to top

If you enable Rounding tax at subtotal level, instead of per line, the rounding will be done at the subtotal level. Check your tax jurisdiction to know if this is done.

Additional Tax Classes ↑ Back to top

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 in the Shop ↑ Back to top

This option determines how prices are displayed in your shop/catalog. Choose from inclusive/exclusive tax display.

Display Prices During Cart and Checkout ↑ Back to top

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.

Note: The address field needs to be filled in to get tax calculations if you have a tax table that distinguishes between locations.

Price Display Suffix ↑ Back to top

Allows you to change display to: “Prices include __% tax/VAT” or anything appropriate for your store. You can use these two placeholders if you want to have text before and after the price:

  • {price_including_tax}
  • {price_excluding_tax}

For example: “Price incl. VAT: {price_including_tax}” will display as: “Price incl. VAT: $15” (if that is the price, of course). So, if you’ve set the taxes to display excluding tax, you could add in small print what the tax inclusive of tax will look like:

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Display Tax Totals ↑ Back to top

This determines if multiple taxes get displayed as one total during checkout, or as an itemized list of taxes.

Setting up tax rates ↑ Back to top

Tax classes are displayed at the top of the tax screen. Click one to view tax rates for the class.

In the tax rates table, you can define tax rates (one per row). Click Insert Row to get started.

Each tax rate has these attributes:

  • Country Code – 2 digit country code for the rate. Use ISO 3166-1 alpha-2 codes. Leave blank (*) to apply to all countries.
  • State Code – 2 digit state code for the rate. See i18n/states/COUNTRYCODE.php for supported states. For the US, use a 2 digit abbreviation e.g. AL. Leave blank (*) to apply to all states.
  • ZIP/Postcode – Enter postcodes for the rate. You may separate multiple values with a semi-colon (;), use wildcards to match several postcodes (e.g. PE* would match all postcodes starting with PE), and use numeric ranges (e.g. 2000-3000). Leave blank (*) to apply to all postcodes.
  • City – Semi-colon separated list of cities for the rate. Leave blank (*) to apply to all cities.
  • Rate % – Enter the tax rate, for example, 20.000 for a tax rate of 20%.
  • Tax Name – Name your tax, e.g. VAT
  • Priority – Choose a priority for this tax rate. Only 1 matching rate per priority will be used. To define multiple tax rates for a single area you need to specify a different priority per rate.
  • Compound – If this rate is compound (applied on top of all prior taxes) check this box.
  • Shipping – If this rate also applies to shipping, check this box.

Tax rate examples ↑ Back to top

Here is an example of a tax setup for a UK store — 20% for UK customers only.

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In this example, we have a 6% tax rate for all U.S. states except California, which has a 7% tax rate and a local tax rate of 2% for ZIP code 90210. Notice the priorities — this demonstrates how you can ‘layer’ rates on top of another.

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Importing and exporting rates ↑ Back to top

There are Import CSV and Export CSV buttons below the table with the rates. You can use them to import and export tax rates to and from a CSV file.

The CSV file for importing requires 10 columns;

country code, state code, postcodes, cities, rate, tax name, priority, compound, shipping, tax class

Leave tax class blank for standard rates.

Below, we’ve provided a sample tax rate CSV to import for the United States based on state tax only. This should not be used for production purposes, as tax rates frequently change. Double-check any rate for accuracy before using.

Download Sample Tax Rate CSV Here

Deleting tax rates ↑ Back to top

If you incorrectly added tax rates or the CSV import has incorrectly added tax lines, this information needs to be deleted.

To delete:

  1. Go to: WooCommerce > Settings > Tax > Your Tax Rates (Standard, Reduced Rate, Zero Rate)
  2. Select the incorrect lines by clicking on them. They will be highlighted in yellow.
  3. Select Remove Selected Rows. This will remove the highlighted rows.
  4. Save changes.

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If you want to delete all tax rates at once, use the ‘Delete all WooCommerce tax rates’ option in WooCommerce > System Status > Tools.

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Viewing tax reports ↑ Back to top

Tax reporting can be found in WooCommerce > Reports > Taxes > Taxes by Date > Year. This report lets you view taxes for the year.

Yearly Taxes

Going to Reports > Taxes > Taxes by code displays a different report, showing taxes separately.

Taxes by Code

Configuring special tax setups ↑ Back to top

Tax based on subtotal amount ↑ Back to top

Note: We are unable to provide support for customizations under our Support Policy. If you are unfamiliar with code/templates and resolving potential conflicts, contact a WooExpert.

Apply different tax rates based on the customer role ↑ Back to top

Note: We are unable to provide support for customizations under our Support Policy. If you are unfamiliar with code/templates and resolving potential conflicts, select a WooExpert or Developer  for assistance.

FAQ ↑ Back to top

Why do prices change when “Prices Include Tax”? ↑ Back to top

If you are entering prices including tax, you should be aware that this price might change based on the country in which your customer is located.

For example, your store is in the UK, so you create one tax rate for GB of 20%.

  • You create a product with a tax inclusive price of £120.
  • Customers in the UK will pay £120 (£100 + £20 VAT).
  • Customers outside the UK will pay £100 because you do not have any tax rates set up for any other country.

OR

Your store is in the UK, so you create one tax rate for GB of 20%, a tax rate for France of 19% and Norway at 25%.

  • You create a product with a tax inclusive price of £120.
  • Customers in the UK will pay £120 (£100 + £20 VAT).
  • Customers in France will pay £119 (£100 + £19 Tax).
  • Customers in Norway will pay £125 (£100 + £25 Tax).
  • Customers outside the UK, France or Norway will only pay £100 because you do not have any tax rates set up for any other countries.

This is explained in more detail inside this guide.

Can I charge one amount regardless of customer location when defining prices including tax? ↑ Back to top

This can be done but is an experimental (not officially supported) feature. See here.

When some users visit my store, taxes are not shown. ↑ Back to top

Since taxes are based on customer location in most setups, things like geolocation can make taxes hidden (until the user checks out and inputs their real address).

To prevent this, disable geolocation and set the default address to the store address:

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