To begin with, tax rules are a combination of Product and Customer Class, Tax Zone, and Rate. Every customer will be assigned to a specific customer class; similarly, every product will be arranged to a product class.
In Magento, the customer’s shopping cart will be analyzed and calculated with a certain amount of tax according to the customer and product classes they belong to, and the region (based on their shipping address, billing address, or shipping origin).
In this Magento tutorial, we will show you how to configure/ set up the tax rules for your store step-by-step. Let’s get started!
How To Set Up Tax Rules In Magento 2?
- The 1st step: Go to the admin panel, navigate to STORES and choose Tax Rules (under Taxes)
(Admin Panel => STORES => Tax Rules)
- The 2nd step: Click on Add New Tax Rule
- The 3rd step: Add tax rule information
First, you must set the rule name.
Second, choose among available tax rates applied to this new rule. To add the new tax rates, click on Add New Tax Rate and fulfill the required information.
- The 4th step: Complete Additional Settings
You must expand the Additional Settings field to see it completely.
First, you must select the Customer Tax Class and Product Tax Class belonging to this new rule. You can also create a new tax class.
Second, set priority for the rule by adding a specific number (lower numbers have higher priority). When there are 2 taxes with the same priority, they will be added. For example, Tax 1 (10%) and Tax 2 (5%) have the same priority, so the Total cost = product price + total tax (15%) x product price. Besides, if these taxes have different priorities (Tax 1 has higher priority), they will be compounded, so the Total cost = (product price + Tax 1 x product price) + (product price + Tax 1 x product price) x Tax 2.
Third, mark on the Calculate Off Subtotal Only if you want to calculate taxes based on the order subtotal.
Fourth, set the Sort Order to determine the order of this rule when listed with others on the checkout page.
Fifth, to import the tax rates you must upload your CSV file then click on the Import Tax Rates button. One more thing is that your CSV file should include: Code, Country, State, Zip/Post Code, Rate, Range from, Range to, and a column for each store view.
Finally, save the config to complete.
We have shown you 4 simple steps to create the new tax rule in Magento 2. If you have any problems when following this tutorial, be free to ask us by leaving a comment below. See you in the next tutorials!