Tax Management#

This guide explains how to set up tax jurisdictions, configure tax components, apply default tax rates to checkouts, and mark inventory items as taxable.

1. Setting Up Tax Jurisdictions#

Sales tax calculation is determined by the shopper's tax jurisdiction. You can configure jurisdictions under Merchant → Reserve → Tax Management in the Admin Sidebar.

Option A: Using Preset Jurisdictions#

1. Scroll to the Tax Presets section.
2. Select a preset (e.g., standard state/regional rates).
3. Click Add Jurisdiction. It will now appear in your active list.

Option B: Building a Custom Jurisdiction#

If your business operates in a locality with unique tax combinations (e.g., state + county + city rates), you can build a custom jurisdiction:

1. Click Create Custom Jurisdiction (or open the Jurisdiction Builder modal).
2. Enter a Name (e.g.,
   markup

   Los Angeles retail tax

   ) and a Code (e.g.,
   markup

   US-CA-LA

   ).
3. Add Tax Components:
   • Component Name: (e.g., "State Sales Tax")
   • Component Code: (e.g., "STATE")
   • Rate (Percentage): (e.g.,
     markup

     7.25

     for 7.25%)
4. Add additional components if needed (e.g., "County Tax" at
   markup

   1.00%

   and "District Tax" at
   markup

   1.25%

   ).
5. Click Save Jurisdiction. The system automatically sums the components to calculate the total rate (in this example,
   markup

   9.50%

   ).

2. Setting Your Default Jurisdiction#

To ensure sales taxes are applied to all orders automatically:

1. Under Tax Management, locate the Default Jurisdiction dropdown.
2. Select your primary jurisdiction (e.g., your storefront location).
3. Click Save Default. All newly generated receipts and portal checkout pages will use this default rate unless specified otherwise.

3. Applying Tax to Products#

Taxes are only calculated on items marked as taxable in your catalog:

1. Open Inventory and click Edit on an item.
2. Locate the Taxable toggle.
   • Taxable (Enabled): The item is subject to sales tax.
   • Taxable (Disabled): The item is tax-exempt (e.g., services, certain groceries, or medications).
3. Save the product.

4. Tax Math & Checkout Flow#

When an order is created, taxes and fees are processed sequentially:

1. Subtotal Calculation: Sum of all items.
2. Taxable Subtotal: Sum of only items marked
   markup

   taxable: true

   .
3. Tax Amount: Multiply the taxable subtotal by the active jurisdiction's rate: $$\text{Tax} = \text{Taxable Subtotal} \times \text{Tax Rate}$$
4. Post-Tax Subtotal: Sum of Subtotal + Tax.
5. Processing Fee: Calculated on the post-tax subtotal (Base platform fee + any merchant add-on fees): $$\text{Fee} = (\text{Subtotal} + \text{Tax}) \times \text{Fee Rate}$$
6. Grand Total: Sum of Subtotal + Tax + Processing Fee.

Example Checkout:

• Taxable Book: $20.00 (Taxable = Yes)
• Service Fee: $10.00 (Taxable = No)
• Jurisdiction:
  markup

  US-CA

  (Rate = 8.00%)
• Processing Fee: 2.00%
• Math:
  • Subtotal = $30.00
  • Taxable Subtotal = $20.00
  • Tax = $20.00 * 8.00% = $1.60
  • Post-Tax Subtotal = $31.60
  • Processing Fee = $31.60 * 2.00% = $0.63
  • Grand Total = $32.23