Setting manual tax rules lets you choose where you'll collect sales tax. When customers buy products from your store, they pay the tax rates you set. You can collect taxes from your customers who live in specific:
- Provinces in Canada
- States and zip codes in the United States
If you ship products to countries or provinces outside the US, use this guide to manually add tax rules to your store. For help with VAT, GST, and tax-inclusive pricing, visit Collecting VAT or GST.
Note: This guide is available as a resource, but should not be construed or relied upon in any way as legal or accounting advice. Per our Terms of Service, Squarespace doesn't provide advice or recommendations regarding laws applicable to your site or business. If you have questions about collecting taxes, you can consult with a tax advisor.
Before you begin
- It's not possible to manually set different tax rules based on the product. If you're in the US, you can set up automatic tax rates to charge different rates based on the product.
- The customer's shipping address determines tax for physical product purchases.
- The customer's billing address determines tax for digital and service product purchases, unless a physical product is purchased at the same time.
- The member's billing postal code associated with their payment method determines tax for member area memberships.
- Tax rules don't apply to donations or gift card purchases.
Step 1 - Add country tax rules
You can add tax rules for the countries where you ship products. To do this:
- In the Home Menu, click Commerce, then click Taxes.
- If you haven't set up tax rules, under Manual Setup, click Get Started. If you already added tax rules, you can click +.
- Select a country from the Country drop-down menu, or begin typing to search for one.
- If you selected the United States, click Select State, and add a state. It's not possible to create a national tax rule for the United States.
- Click Next.
- For non-US tax rules, enter the tax name. This appears at checkout, in order summaries, and notifications.
- Enter the tax rate for the location.
- If you're required to charge tax on shipping, you can switch the toggle on for Charge Tax on Shipping.
- If you're required to charge tax on service products and member area memberships, switch the toggle on for Charge Tax on Member Areas and services.
- Click Save to publish your changes.
Step 2 - Add Canadian province tax rules
To create province tax rules for Canada:
- Click Add province rate.
- Click Select a province and choose the province.
- Enter the provincial sales tax rate.
- If you're required to charge tax on service products and member area memberships, switch the toggle on for Charge taxes on Member Areas and services.
- If you're required to charge tax on shipping, you can switch the toggle on for Charge tax on shipping.
- You can also switch the toggle on for Show as combined rate on invoice.
- Click Add, then click Save.
Step 3 - Add local tax rules (United States)
Local tax rules can apply to a single ZIP Code or a range of ZIP Codes in one state, so you can set tax rules compliant with various tax laws within one area. To do this:
- Click Add zip code rate.
- Click ZIP Range or Zip Code and follow the next steps.
State and province tax rules combine with local tax rules. For example, if you charge customers in New York State 10% sales tax and charge customers in New York City 8% sales tax, customers in New York City will pay 18% sales tax. To create tax rules for states with variable local rates, create multiple local tax rules instead of a single, state tax rule.
Single ZIP Code
To add a tax rule for a single ZIP Code:
- Click ZIP Code.
- Add the ZIP Code and tax rate.
- Click Add, then click Save.
Range of ZIP Codes
To add tax rules for a region/range of ZIP Codes:
- Click ZIP Range.
- Add the start and end ZIP Codes and the tax rate for that region.
- Click Apply, then click Save.
Charge sales tax on service products and memberships
To collect sales tax when you sell service products or memberships:
- In the Taxes panel, click Manual rates, then click an existing tax rule or create a new one.
- Switch the toggle on beside Charge taxes on Member Areas and services.
Edit a tax rule
You can edit or remove a tax rule by clicking the rule in the Taxes panel.
- Removing a country tax rule removes all state and local tax rules that apply to it.
- Removing a state tax rule removes all local tax rules for the state.
Tax-inclusive pricing (optional)
With tax-inclusive pricing, customers pay a product's listed price at checkout, instead of paying the listed price plus sales tax. The portion of the total that goes toward sales tax depends on the customer's location and is calculated at checkout.
You can enable tax-inclusive pricing after setting up your manual tax rules:
- In the Home Menu, click Commerce.
- Click Taxes.
- Under Settings, click How tax is added.
- Choose Include in price, then click Save.
Tip: You can customize invoices to change how tax and pricing displays.
How taxes are calculated and shown in an order
After setting up your rules, the taxes applied to orders displays at checkout after a customer enters their address. The tax is based on:
- The shipping address for physical product purchases
- The billing address for digital and service products, unless a physical product is purchased at the same time
- The billing postal code associated with a member's payment method for member area memberships
If a customer uses a discount, tax is calculated based on the discounted price. If multiple taxes apply (for example, a state and local tax) both taxes are charged but won't compound.
Understanding South Dakota v. Wayfair, Inc.
In the US, an out-of-state seller is required to collect tax on remote sales made to customers in-state if the seller’s activity creates sales tax nexus with the state. Historically, nexus meant having a temporary or permanent physical presence in the state based on long-standing definitions.
On June 21, 2018, as part of its decision in South Dakota v. Wayfair, Inc., the US Supreme Court overturned some of its previous decisions and determined that out-of-state sellers may create sales tax nexus without a physical presence in-state. Sales tax nexus without in-state physical presence is referred to as economic sales tax nexus.
Numerous states responded to the Supreme Court’s decision by passing new legislation or reasserting existing economic sales tax nexus laws. How a seller creates sales tax nexus varies depending on each state’s laws.
If you’re selling products or services online, we recommend you speak with a tax advisor to evaluate your sales tax collection obligations in light of these new laws. The Internal Revenue Service provides a list of state websites for more information on each state’s sales tax laws.