Setting up manual tax rates in Squarespace Commerce

Apply sales tax to products sold to customers from specific countries or provinces, especially outside the US.

You can set up manual tax rates to 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:

• Countries
• 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 rates to your store. For help with VAT, GST, and tax-inclusive pricing, visit Collecting VAT or GST.

If you sell products in the US, you can add automatic tax rates using our TaxJar extension. To learn how, visit Setting up automatic tax rates in the US.

Tip: Register for our Setting up shipping and taxes for Squarespace Commerce webinar where we’ll show you how to set up tax rates and add shipping and pickup options for physical products.

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

• 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 rates don't apply to donations or gift card purchases.

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Limitations

• It's not possible to set different tax rates 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's tax category.
• It's not possible to set different tax rates for cities and regions outside the US and Canada. 
• It's not possible to exempt certain customers from paying sales tax.

Step 1 - Add country tax rates

You can add tax rates for the countries where you ship products. To do this:

1. Open the Taxes panel.
2. If you haven't set up tax rates, under Manual Setup, click Add Rate. If you already added tax rates, you can click +.
3. Select a country from the Country drop-down menu, or begin typing to search for one.
4. 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.
5. Click Next.
6. For non-US tax rates, enter the tax name. This appears at checkout, in order summaries, and notifications.
7. Enter the tax rate for the location.
8. If you're required to charge tax on shipping, you can switch the toggle on for Charge Tax on Shipping.
9. 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.
10. Click Save to publish your changes.

Step 2 - Add Canadian province tax rates

To add province tax rates for Canada:

1. Click Add province rate.

2. Click Select a province and choose the province.
3. Enter the provincial sales tax rate.
4. 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.
5. If you're required to charge tax on shipping, you can switch the toggle on for Charge tax on shipping.
6. You can also switch the toggle on for Show as combined rate on invoice.
7. Click Add, then click Save.

Step 3 - Add local tax rates (United States)

Local tax rates can apply to a single ZIP code or a range of ZIP codes in one state, so you can set tax rates compliant with various tax laws within one area. To do this:

1. Click Add zip code rate.

2. Click ZIP Range or Zip Code and follow the next steps.

State and province tax rates combine with local tax rates. 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 add tax rates for states with variable local rates, create multiple local tax rates instead of a single, state tax rule.

Single ZIP code

To add a tax rule for a single ZIP code:

1. Click ZIP Code.
2. Add the ZIP code and tax rate.
3. Click Add, then click Save.

Range of ZIP codes

To add tax rates for a region/range of ZIP codes:

1. Click ZIP Range.
2. Add the start and end ZIP codes and the tax rate for that region.
3. Click Apply, then click Save.

Charge sales tax on service products and memberships

To collect sales tax when you sell service products or memberships:

1. In the Taxes panel, click Manual rates, then click an existing tax rule or create a new one.
2. Turn on the Charge taxes on Member Areas and services toggle.

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 rates that apply to it.
• Removing a state tax rate removes all local tax rates 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 rates:

1. Open the Taxes panel.
2. Under How tax is added, choose Include in price, then click Save.

Tip: You can customize receipts to change how tax and pricing displays.

How taxes are calculated and shown in orders

After setting up your rates, 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. If the customer chooses a local pickup option, the tax is based on your pickup taxation address.
• 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.