Knowledgebase

How to configure taxes in Magento

Setting up taxes in Magento is a process that includes several steps. It involves product tax classes, customer tax classes, tax zones and rates and everything is combined into tax rules.

First, you need to set your product and customer tax classes. To add and edit product tax classes in your admin panel go to Sales>Tax>Product Tax Classes. On the page that opens there's a table with the existing product tax classes. Depending on whether you've installed Magento with or without sample data there will be two or three preconfigured classes. These might be enough for your purposes. To edit a class click on its name in the table and to add a new one click on the Add New button above the table. The only setting on the add/edit page is for the name of the product tax class. You can associate a product with a product tax class when you add or edit the product.

The situation is similar with customer tax classes. Go to Sales>Tax>Customer Tax Classes. There should be a preconfigured customer tax class called Retail Customer. You can edit existing customer tax classes by clicking on the particular tax class in the table, or you can add new ones by clicking on the Add New button above the table. As with product tax classes the setting that you can configure is the name of the tax class. Customer tax classes are assigned to customer groups (from Customers menu>Customer Groups).

To add geographical zones (whether a whole country or just a state/province within a country) and to associate that zone with a tax rate go to Sales>Tax>Manage Tax Zones & Rates. You'll see a table with a couple of example rates that come preconfigured with Magento. You can edit an existing rate by clicking on its row in the table; to add a new one click on the Add New Tax Rate button. On the page with the settings type an identifier for the rate in the field for Tax Identifier (don't use spaces). Select the country and optionally the state from the respective drop-down menus. If you set the state drop-down menu to * this means that the rate will apply to the whole country; if you select a particular state, the rate will apply only to that state. You can set a zip/post code range by using the respective settings. If you do, the tax rate will be applied only when the customer's zip/post code is within the range. In the field for Rate Percent type the actual tax rate. In the Tax Titles section you can specify a name for the tax rate for each store view.

Once you have the necessary product and customer tax classes and tax rates you need to combine them using tax rules. Go to Sales>Tax>Manage Tax Rules. On the add/edit page there are lists with the product and customer tax classes and with the tax rates that you have created. You can select one or more items from each list. The tax rule will be applied if the product(s) in the cart has a matching product tax class assigned to them, the customer belongs to a group whose tax class is marked in the list of the tax rule, and the customer's address matches one of the selected rates. There's also a setting for priority. If more than one tax rule matches all the conditions, those with a lower number for priority will be applied first.

For screenshots and some more details you can also check out the tutorial on managing taxes in Magento.

Was this answer helpful?

 Print this Article

Also Read