How tax works · Help Center

The three tax modes, the difference between included and added tax, and where customers and staff see it.

Your shop charges tax in one of three ways. Two switches on Shop › Settings › Tax Settings decide which.

The three modes

Mode	Switches	What happens
No tax	Enable Tax off	Bills and invoices show no tax
One rate for everything	Enable Tax on, Enable Tax Category off	Every product uses Tax Percentage and is Tax Included
Rates by tax category	Both on	Each product uses the rate of its tax category

Tax categories apply only while Enable Tax is on. With tax off, the categories are kept but not used.

Included or added on top

Each rate is either part of your prices or added to them.

Setting	Price shown 100, rate 5%	Customer pays
Included	4.76 of the 100 is tax	100
Not included	5 is added at checkout	105

With one rate, is Tax Included decides this for the whole shop. With tax categories, each category has its own choice under Your prices.

Which rate a product uses

With tax categories on:

A product with its own Tax category uses it.
A product set to Category Tax uses the Tax choice of its main product category.
A category set to Default uses the Default Tax Category from the tax settings.

A rate of 0 means no tax on that line.

Two cases do not follow the product's own choice:

A variant always follows the product category, even when its parent product names a tax category.
A product whose Category is a sub-category uses the Default Tax Category.

Charges

The delivery charge and the shop charge are taxed only when their own switches are on. See Tax on delivery and shop charges.

Where tax shows

Place	What is shown
Checkout on your store	One note under the total. See Tax and invoices on your store
Invoices	Depends on the template and the tax mode. See What an invoice shows
Credit notes	The same rates the invoice printed. See Credit notes

Orders keep the tax they were placed with

An order stores the rate, the name and the included choice of each line when it is placed. Changing your tax settings later does not change that order. If you modify an order placed with one rate, the whole order stays at that rate. With tax categories, lines it already had keep their rate and a new line takes its current tax category.

Decimals and rounding

Prices on your store use Store Price Decimal Point in General Settings, 2 or 3. See Currency and decimals.
With one rate, tax is worked out once on the items total after discounts, and once on each taxed charge.
With tax categories, tax is worked out on each line and each taxed charge, and rounded there.
The items tax, each charge's tax and the order total are each rounded once to your platform's currency decimals. That is two decimals unless your platform is set otherwise.