WooCommerce Settings

How to configure WooCommerce Tax Settings

WooCommerce Settings

Configuring WooCommerce Settings:

  1. How to configure WooCommerce General Settings
  2. How to configure WooCommerce Products Settings
  3. How to configure WooCommerce Tax Settings
  4. How to configure WooCommerce Shipping Settings
  5. How to configure WooCommerce Payments Settings
  6. How to configure WooCommerce Account and Privacy Settings
  7. How to configure WooCommerce Email Settings
  8. How to configure WooCommerce Advanced Settings

 In this guide, we will review the powerful WooCommerce Tax tools which will allow you to configure your tax settings and manage your Online Store in an easy and efficient way.

Get Started

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

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

  1. Go toWooCommerce > Settings > General.
  2. Select the Enable Taxes and Tax Calculations checkbox.
  3. Save changes.

Configuring Tax Options

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.

  • “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 )
More information about:

Calculate Tax Based On

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 are always based on your store location and not your customer’s location.

Shipping Tax Class

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.
In the case of multiple tax rates in the order, the shipping tax will be applied as follows:

  • If you have a product with the Standard rate in the order, it will be used for the shipping regardless if this rate is high or low;
  • If you don’t have a product with the Standard rate in the order, then the first rate found in the Additional tax class section will be used for shipping.

The goal is to make sure that your highest rate is listed the first in the Additional tax class section if you don’t use the Standard class and if you need the highest tax rate to apply to shipping, for example.
Here is a setup to showcase it visually:
The Standard class is there by default but Tax A, Tax B, Tax C should be created for each tax class respectively. Note that it is not possible to delete the Standard tax rate but you can leave it empty and it will be ignored:

Standard rate is empty:

Tax A (24%) – the highest rate listed the first:

Tax B (14%):

Tax C (10%):

As a result, the highest tax rate gets applied to the shipping in the order with multiple tax rates assigned to products:

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 in the Shop

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

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.

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

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:

screen-shot-2016-11-24-at-16-06-02

Display Tax Totals

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

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