How the automatic tax calculation for delivery sales works:

If you have an outlet in the United States, you can enable the Automatic tax calculation for delivery sales setting to automatically calculate taxes when items are marked for delivery. Sales taxes will be automatically calculated for items marked for delivery with a valid shipping address in one of the nexus states.

The customer's address must be complete and valid for the automatic calculations to apply.

• All sales going to another state without nexus automatically have No Tax applied.
• If other items in the same sale have the Take Now status, these items will have the in-store rates applied.
• If a customer has a specific tax rate or no tax, this will be applied instead.

• If you're adding shipping costs to the sale, you need to add them with the item that has the Freight brand applied so the costs will be taxed for the specific state.

  If you need to set up the freight brand, navigate to Catalog > Brands > click Add brand. Enter Freight in the text field and click Add brand.

Enabling automatic tax calculation for delivery sales

The Automatic tax calculation for delivery sales setting is disabled by default and must be enabled manually.

All outlets in the US are listed as nexus locations by default. These are states where you must charge taxes. Additional nexus states can be added at your own discretion.

To enable the Automatic tax calculation for delivery sales setting:

1. Navigate to Setup > Sales taxes.

2. In the Taxes for Delivery Sales section, check the Automatic tax calculation for delivery sales box (next to Deactivated) to change it to Activated. The Add nexus button, list of outlet names, and default nexus states display.

   

   If you need to deactivate the automatic tax calculation for delivery sales setting, uncheck the Activated box and it will display as Deactivated.

3. Next, click Add nexus.

   

4. In the pop-up window, click the Add Location dropdown and select a state.

   

5. (Optional) After selecting a location, click Add address details (optional) and enter the Street address, City, and ZIP code information in the text fields.
6. Click Add nexus.

A pop-up banner displays confirming the nexus has successfully been created. In the Taxes for Delivery Sales section, the nexus you added displays in the table.

When using the Xero integration, it's important to map every new tax rate in the integration settings. This ensures that all sales are correctly transferred to the accounting system. Quickbooks Online can't process sales with multiple tax rates applied and is not recommended to use with automatic taxes.

Viewing the automatically calculated tax rate

The automatically calculated tax rates display in:

• Receipts
• Sales History
• Reports > Tax reports

The rates won't display in Settings > Sales Taxes.

Setting up tax categories for items with tax regulations

The default tax rate will be applied automatically when items are marked for delivery to a nexus state. For items that have specific tax regulations, it's important to set up tax categories so the correct tax is calculated.

Assigning a tax category for an individual product

To set up tax categories for individual products:

1. Navigate to Catalog > Products.
2. Use the Search for products field or scroll the product list to find the item.
3. Click the pencil icon (Edit) to display the Edit product page.

4. In the Tax section, under Tax for delivery sales, use the Tax category dropdown to find and select a tax category you want to apply to the product.

   

5. Click Save.

The tax category will now apply to the product when automatically calculating the taxes for the sale.

Assigning a tax category in bulk

To set up tax categories in bulk:

1. Navigate to Catalog > Products.
2. Use the Search for products field or scroll the product list to find the items.
3. Check the checkbox beside the items you want to update in bulk.

4. Click the Choose an action dropdown > Update products > Edit tax category.

   

5. In the pop-up window, use the Tax category for delivery sales dropdown and select a tax category.

   

6. Click Assign tax category.

The tax category will now be applied to the products when automatically calculating the taxes for the sale.

What's next?