Tax Settings
Configure tax services by country and built-in NEXT Tax rates
Sales Tax
Configure tax collection from Settings > Taxes. Tax rules apply across your store, including storefront and campaign orders.
- Tax Services calculate tax: NEXT Tax, TaxJar, or Avalara AvaTax.
- Tax Regions assign a service to a country.
- Tax Rates define the percentages charged by built-in NEXT Tax.
Markets and Taxes
In Settings > Markets, open a market to view its tax service. Choose Configure beside Taxes to open Settings > Taxes.
Activating a market does not set up tax collection. Not collecting means no tax region is configured for that country. Collecting shows the assigned service; check its settings and checkout totals before launch.
Tax Services
Choose Settings beside a service to configure it.
- NEXT Tax uses rates you enter and maintain in NEXT.
- TaxJar calculates tax for regions assigned to TaxJar.
- Avalara AvaTax calculates and reports tax for regions assigned to Avalara.
Tax Regions
Assign one service per country. You can use TaxJar for the US and NEXT Tax for France and Germany in the same store. Add each country as a separate tax region.
Tax Rates
NEXT Tax matches rates to the shipping address, falling back to the billing address when no shipping address is provided. Product category overrides can replace the standard rate.
Regions assigned to TaxJar or Avalara use that service's settings instead of manual NEXT Tax rates.
Configure Taxes
- Go to Settings > Taxes and select Add Tax Region.
- Select the country and tax service, then save.
- For NEXT Tax, add the required rates. For TaxJar or Avalara, complete the linked service setup.
Add Tax Rate
Open the region, choose Add Tax Rate, and enter:
- State/Province:
*applies across the country. Use|to separate multiple states or provinces. - Rate (%): the percentage to charge.
- Display Name: the tax label shown at checkout and on receipts.
- Shipping: apply this rate to shipping charges.
- Compound: allow this rate to combine with other matching rates.
Add separate rates for country and state taxes as needed.
Add Tax Rate Override
Choose Add Tax Rate Override to set a rate for a Product Category. It applies to order items in that category and replaces other matching rates for those items.
Tax is calculated after discounts. A price of 100 discounted by 10% is taxed on 90.
Built-in Tax Settings
Go to Settings > Taxes and choose Settings beside NEXT Tax.
Tax Calculation
Use Currencies with Prices Including Tax to select currencies whose prices already include tax. Prices in other currencies have tax added at checkout.
This setting applies across the store by currency. Markets using the same currency share this treatment, even when their tax rates differ by country.
For a price of 100 and an example rate of 20%:
| Price setting | Before tax | Tax | Total |
|---|---|---|---|
| Inclusive | 83.33 | 16.67 | 100.00 |
| Exclusive | 100.00 | 20.00 | 120.00 |
For example, to use built-in NEXT Tax with exclusive USD prices and inclusive EUR prices:
- Create the US and European markets with their currencies.
- Add a NEXT Tax region and the required rates for each country.
- Select EUR under Currencies with Prices Including Tax and leave USD unselected.
Digital Products
Enable Charge Tax on digital product to tax products that do not require shipping. The setting is off by default.
Address selection stays the same: shipping first, then billing. In a mixed basket, digital items use the shipping address when one is provided.
Recommended Settings
| Requirement | Configuration |
|---|---|
| Country tax only | Add a country rate with State/Province set to *. |
| State tax only | Add rates for the applicable states. |
| Country and state tax together | Enable Compound on both rates. |
| State rate replaces country rate | Leave Compound off on the state rate. |
| Category-specific rate | Add a tax rate override for the category. |
Combined rates are added before calculation. For example, 5% country tax plus 8% state tax charges 13% on the taxable amount.
Check Before Launch
Place a test order for each country and currency. Check the tax label and total, price inclusion, discounts, shipping tax, and any category overrides. Include digital products if you sell them.
Tax Reporting
Use Tax Reports to review tax collected by rate.