Tax Rates

Tax rates define the specific percentages applied to transactions based on jurisdiction, product type, and customer category. This guide covers rate configuration and management.

Overview

Tax rates enable you to:

• Define jurisdiction rates
• Set effective dates
• Handle rate changes
• Configure combined rates
• Manage special rates
• Track rate history

Accessing Tax Rates

Navigate to Tax Management → Tax Rates to manage rates.

Understanding Tax Rates

Rate Types

Type	Description
Standard	Default tax rate
Reduced	Lower rate items
Zero	0% rate
Combined	Multiple jurisdictions
Special	Specific situations

Rate Components

Component	Description
State	State-level tax
County	County tax
City	Municipal tax
District	Special district
Total	Combined rate

Rate Status

Status	Description
Current	Active rate
Scheduled	Future rate
Historical	Past rate
Expired	No longer valid

How-To Guides

How to Set Up Tax Rates

Creating Tax Rate

1. Go to Tax Management → Tax Rates
2. Click New Rate
3. Configure:
   • Jurisdiction
   • Rate percentage
   • Tax group
   • Effective date
4. Set components
5. Save rate

Rate Configuration

Tax Rate: Los Angeles, California

Jurisdiction:
├─ Country: United States
├─ State: California
├─ County: Los Angeles
├─ City: Los Angeles
└─ ZIP: 90001-90089

Rate Components:
├─ State Tax: 7.25%
├─ County Tax: 0.25%
├─ City Tax: 0.00%
├─ District (Metro): 0.50%
├─ District (Transit): 0.50%
└─ Total Rate: 8.50%

Effective Date: January 1, 2026
Status: Current
Tax Group: Standard Goods

How to Configure Combined Rates

Combined Rate Setup

Combined Rate: San Francisco

Address-Based Calculation:

ZIP Code: 94102
Components:
├─ CA State Tax:           6.00%
├─ CA State (Prop 30):     0.25%
├─ Local (County):         0.25%
├─ Local (City):           1.25%
├─ District (BART):        0.50%
├─ District (SF Transit):  0.25%
└─ Total Combined Rate:    8.50%

Display Options:
├─ Show Breakdown: Yes
├─ Invoice Display: Combined
└─ Report Detail: By component

How to Handle Rate Changes

Rate Change Process

1. Receive rate change notification
2. Create new rate entry:
   • New rate percentage
   • Effective date
3. Test calculations
4. Verify date handling
5. Document change

Rate Change Configuration

Rate Change: California State Tax

Current Rate:
├─ Rate: 7.25%
├─ Effective: Jan 1, 2017
└─ Status: Current

New Rate:
├─ Rate: 7.50%
├─ Effective: Apr 1, 2026
└─ Status: Scheduled

System Behavior:
├─ Before Apr 1: Use 7.25%
├─ Apr 1 onwards: Use 7.50%
├─ Invoice Date: Determines rate
└─ Quotes: Show rate at conversion

How to Set Up Jurisdiction Rates

State-Level Rates

State Tax Rates Summary

State          | Rate    | Notes
─────────────────────────────────────────
California     | 7.25%   | + local
Texas          | 6.25%   | + local up to 2%
New York       | 4.00%   | + local
Florida        | 6.00%   | + discretionary
Washington     | 6.50%   | + local
Oregon         | 0.00%   | No sales tax
Montana        | 0.00%   | No sales tax
Alaska         | 0.00%   | Local only
Delaware       | 0.00%   | No sales tax
New Hampshire  | 0.00%   | No sales tax

Local Rate Lookup

Rate Lookup by ZIP Code

ZIP: 90210 (Beverly Hills, CA)

Components:
├─ State: California         7.25%
├─ County: Los Angeles       0.25%
├─ City: Beverly Hills       0.00%
├─ District: LA Metro        0.50%
└─ Total:                    8.00%

Nearby Variations:
├─ 90211: 9.50% (different district)
├─ 90212: 9.50% (different district)
└─ 90213: 8.00% (same)

How to Configure Product-Specific Rates

Rate by Tax Group

Rates by Tax Group: California

Tax Group              | Rate    | Authority
─────────────────────────────────────────────────
Standard Goods         | 7.25%+  | State + Local
Food (Unprepared)      | 0.00%   | Exempt
Prepared Food          | 7.25%+  | State + Local
Clothing               | 7.25%+  | State + Local
Prescription Medicine  | 0.00%   | Exempt
OTC Medicine          | 7.25%+  | State + Local
Digital Products       | 0.00%   | Exempt (intangible)
SaaS                  | 0.00%   | Exempt (service)

How to Import Rate Tables

Bulk Import

1. Download rate template
2. Populate with rates
3. Go to Tax Rates → Import
4. Upload file
5. Review and confirm
6. Process import

Import Template

Rate Import Template (CSV)

country,state,county,city,zip,rate,group,effective
US,CA,Los Angeles,Los Angeles,90001,8.50,STD,2026-01-01
US,CA,Los Angeles,Beverly Hills,90210,8.00,STD,2026-01-01
US,CA,San Francisco,San Francisco,94102,8.50,STD,2026-01-01
US,TX,Harris,Houston,77001,8.25,STD,2026-01-01
US,NY,New York,New York,10001,8.875,STD,2026-01-01

How to Track Rate History

Rate History View

Rate History: California State

Date          | Rate   | Change  | Source
─────────────────────────────────────────────────
Apr 1, 2026   | 7.50%  | +0.25%  | Scheduled
Jan 1, 2017   | 7.25%  | +0.25%  | Legislative
Jan 1, 2013   | 7.00%  | -0.25%  | Sunset
Apr 1, 2009   | 7.25%  | +1.00%  | Temporary
Jan 1, 2001   | 6.25%  | +0.25%  | Legislative

Advanced Features

Automatic Rate Updates

External services:

• Rate database sync
• Change notifications
• Automatic updates
• Verification checks

Address Validation

Accurate jurisdictions:

• Address standardization
• ZIP+4 lookup
• Rooftop geocoding
• Jurisdiction mapping

Tax Calculation Engine

Real-time calculation:

• Multi-jurisdiction
• Combined rates
• Exemption handling
• Rounding rules

Audit Trail

Complete history:

• All rate changes
• Who changed
• When changed
• Why changed

Best Practices

Rate Management

• Regular updates
• Verify accuracy
• Test calculations
• Document sources

Effective Dates

• Plan ahead
• Test transitions
• Communicate changes
• Archive old rates

Jurisdiction Accuracy

• Use precise addresses
• Verify ZIP codes
• Handle edge cases
• Regular validation

Compliance

• Monitor changes
• Update promptly
• Keep records
• Audit regularly

Configuration

Rate Settings

Navigate to Settings → Tax → Rates:

• Default Rate - Fallback rate
• Rounding - Rounding rules
• Display - Rate display
• Updates - Auto-update settings

Integration Settings

• Rate Service - External provider
• Sync Frequency - Update timing
• Validation - Address validation
• Backup - Fallback options

Troubleshooting

Common Issues

Wrong rate applied

• Verify address
• Check jurisdiction
• Review effective date
• Test with preview

Rate not found

• Check jurisdiction setup
• Verify ZIP code
• Add missing rate
• Use default rate

Combined rate incorrect

• Review components
• Check districts
• Verify calculation
• Manual verification

Import failed

• Check file format
• Verify columns
• Review data types
• Check for duplicates

Related Documentation

Learn about Tax Exemptions to manage tax-exempt customers and certificates.