Know Your Magento 2 Tax Configuration

Bill Etienne
Director, E-commerce

Know Your Magento 2 Tax Configuration

Magento calculates and applies tax based on tax rules.  Each tax rule is associated with a particular customer tax class, product tax class, and tax rate.  Each tax rate is associated with a particular tax zone.

Customer tax classes are assigned to customer groups.  From the Admin, go to Stores / Customer Groups.

Product tax classes are assigned to individual products.  From the Admin, go to Products / Catalog.

The defaults for customer tax class and product tax class are defined under Stores / Configuration / Sales / Tax.  Typically:

Default Tax Class for Customer = Retail Customer

Default Tax Class for Product = Taxable Goods

Setting a Tax Rule

  1. From the Admin, go to Stores / Tax Rules
  2. Click on Add New Tax Rule and fill the pertinent fields:

Name the name of the tax rule

Customer Tax Class the customer group to which the tax rule applies

Product Tax Class the product group to which the tax rule applies

Tax Rate the rate used when the given tax rule is applied

Priority used when multiple tax rules are applied

Subtotal Only used when tax is applied to the order subtotal only

Sort Order the position of the tax rule when used with others

  1. A typical tax rule for a Los Angeles store might be:

Name California

Customer Tax Class Retail Customer

Product Tax Class Taxable Goods

Tax Rate US-CA-*-Rate 1

Priority 0

Subtotal Only 0

Sort Order 0

  1. Click on Save Rule.

 

Creating a Tax Class

  1. On the New Tax Rule page (when a new tax rule is being defined), expand Advanced Settings.
  2. Click on Add New Tax Class in either the Customer Tax Class section or the Product Tax Class section.

Setting a Tax Rate

From the Admin, go to Stores / Tax Zones and Rates.  

  1. Click on Add New Tax Rate and fill the pertinent fields:

Tax Identifier

Country

State/Region

ZIP/Post Code

Rate

  1. Click on Save Rate.

 

- Bill EtienneDirector, E-commerce | 

Filed under: <E-commerce>