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How to apply tax to your Shipping Zones in Shopify

Learn about tax and how to apply it to your sales.

If you have a Shopify store you might need to charge tax on your sales. You can set up Shopify to automatically handle most common sales tax calculations, and you can also set up tax overrides to address unique tax laws and situations.

I’ll show you how this works if you are using our Postcode Shipping app. (There was a video on the PS site but it is not available anymore)

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How to apply tax to your Shipping Zones in Shopify
Display sales tax in your display price

How to apply tax to your Shipping Zones in Shopify

To add a tax to a country or region, first set up the Shipping Zones you need to apply tax to, in Shopify.

It’s important to remember that Shopify’s tax settings pull Shipping Zones from your Shopify settings, not the Shipping Zones you have setup within the Postcode Shipping app. If you’ve already created your Shipping Zones in the Postcode Shipping app, you’ll still need to create these Shipping Zones in Shopify.

To do that, follow our guide Setup your Shopify Shipping Zones and enable Postcode Shipping rates, then follow on with the instructions below.

Once you've set up your Shopify Shipping Zones, you can apply taxes to them:

From your Shopify dashboard navigate to Settings, then Taxes and Duties.

Here you’ll see a list of your current Shipping Zones you just created in Shopify, as well as other locations you have applied tax to previously.

Click the region you’d like to add tax to. Regions not yet set up will show dashes.

By default no tax is applied, click Reset to default tax rates.

Shopify will now use default tax rates, unless you choose to ‘Add a tax override’.

Shopify automatically saves this simple change, so the Save button is greyed out. But you will need to hit Save if you manually change the tax rate or add an override.
Do this for any other Shipping Zones you need to add tax to.

Display sales tax in your display price

In some countries it’s your legal obligation to include sales tax in the displayed prices for most types of merchandise, so it’s best practice to always display it. To enable this feature:

Scroll down to ‘Tax calculations’ and select 'All prices include tax’.
Click Save.

Remember it is your duty to file or remit your tax, and to make sure you are charging your customers the correct sales tax rates. Be sure to check the rules and regulations with your local tax authority or a tax accountant. Find out more about tax from Shopify Support.

Updated on: 23/11/2022

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