How Tax is Calculated During Checkout and Shown in Orders?
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Calculating the correct tax for each order is essential for compliance and customer transparency. This guide will walk you through how tax is calculated in your online store using various parameters.
Tax Calculation Parameters
To accurately calculate tax, the following parameters are used:
- Business Address: Ensure your business address is correctly set up in Settings as it is crucial for tax calculation.
- Product Tax Classification
- If you are using the Basic Tax Setup, the Тax class assigned to each product will be used.
- If you are using the Advanced Tax Setup with Stripe Tax, the Stripe Product Tax code assigned to each product will be used.
- Customer Shipping or Billing Address:
- If the products in the cart require shipping, the customer’s shipping address will be used.
- If no shipping is required, the customer’s billing address will be used.
Calculating Tax During Checkout
The following steps are used to determine what kind of tax rate is applied during the customer checkout process:
- Customer Enters Address: When the customer proceeds through the checkout process, they need to enter their shipping or billing address on the Checkout page.
- Apply Tax Rate: Once the address is entered, the respective tax rate will be automatically applied based on the parameters mentioned above.
- Tax Amount: This is displayed in the Order Summary section on the Checkout page, providing transparency for the customer.
Accessing Order Tax Information
Once the customer places an order, the tax amount will be visible to you on the order details page.
To review the tax information for a specific order, you need to:
- Navigate to Orders: Go to the Orders section in your store dashboard.
- View Single Order: Select the specific order to view its details. The Order Summary, including the tax amount, will be visible on this page.
