Destination State Sales Tax

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Hi- A few questions regarding the set up of Sales Tax in Shopify. 

We are in a destination state, so we need to tax various rates based off of where we are shipping to. I have set up my state in the tax set up. Does Shopify have the various rates within each state already loaded into the system to calculate? Or is this something I need to do? We will also be shipping to other states, so same questions. Are those tax rates automatically calculated in the system? Or what do I need to do to set that up?

 

If I need to create Overrides, please share how to do that. I am only able to see where to create shipping overrides for states. 

 

Please advise on how Shopify works with destination states, what is automatically set up with Shopify's system, and if there is anything I need to manually set up. 

Thanks!

 

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Shopify Staff
Shopify Staff
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This is an accepted solution.

Hi @2SAAB,

Thank you for getting in touch. If you have a tax nexus in a state that uses destination-based tax system, Shopify will automatically calculate and charge the customer the appropriate tax amount based on the shipping address provided. Shopify has an internal tax database that is used for the calculation of state, county and city taxes. You would not need to manually add rates unless you had a specific reason to do so, and the key thing is that you provide Shopify with any and all locations and addresses that may serve as tax nexuses in US states. The automatic tax system can then work as intended.

You can read more about setting up US taxes in Shopify here. You can also place some test orders on your store if you'd like to see the automated tax system being used in practice. 

Please let me know if you have further questions!

Kind regards,

Victor | Shopify Social Care

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