How do I add a tax override on only a specific amount?

SWSW
New Member
3 0 1

My business is based out of Massachusetts, where tax is exempt on items $175 or less such as clothing and footwear, which my store sells. 

If the item is over $175, a sales tax of 6.25% is charged only on the amount exceeding $175. For example, if a clothing item costs $200, I would only charge 6.25% tax on the amount that exceeds $175, which is $25, equaling an amount of $1.56 collected tax. 

Is there a way I can override my tax settings to reflect this special case?

Jenn_Seeley1
Shopify Staff (Retired)
Shopify Staff (Retired)
114 0 19

Hey Jason :) 

Jenn here from the Guru team! 

Because of how tax exemptions work - and that they can be applied to collections - the work around here, is to create a collection for any products that this tax exemption would apply to. You don't need to showcase your collection, it's purely for the purposes of creating this rule :) 

Once you have your items in the newly created collection, follow these instructions to apply the override! 

Happy selling!

Jenn

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SWSW
New Member
3 0 1

Hi Jenn,

Thanks for the fast reply. Unfortunately, after creating the override I am still a little confused.

I have an item worth $200, but appears that the shopping cart applies a 6.25% tax on the entire item amount of $200 (coming out to $12.50 of tax) and not just the amount that exceeds $175 (which should only come out to $1.56 of tax.)

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Julia_Okun
Tourist
9 0 3

Hi,

I am also in Massachusetts and am having the same issue as Jason above and I saw his second question never got answered.  How can we set up our websites so if an item is $200 only the $25 gets taxed (the amount of over the $175)?  I am starting to do more in person POS sales and our customers are finding this frustrating.   So far my only option is to charge them for the full amount and then go back and refund them the difference after the fact, which is inconvenient to them and too much to keep track of for every single transaction.

 

Thank you!

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SW_Jason
New Member
2 0 0

Hi Julia, Jason here.

If this helps any, I had to submit a support ticket with Shopify and (very quickly) they came up with a solution. Here's part of the correspondence.

So I have spoked with our higher tech support team and there needs to be 2 things done in order to have that tax exemption work properly.

First, and I have already done it :), was renaming the collection to tax:clothing. This will automatically trigger the system to notify it of the tax exemption rule so no override is actually needed.

The second thing that needs to be changed, is switching on, on your tax page for the US, "I want to specify taxes automatically". See here for a screenshot

Just a note regarding this as well, the special tax calculation only kicks in when the price of the product itself is over $175, and it'll tax the amount over $175 - if you order 18 $10 products though for example, still no tax!

I'm not sure whether they need to do anything on the backend to make this possible for you but if you quote this for them, it should point them in the right direction. Hope it helps!

Jason

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SW_Jason
New Member
2 0 0

Hi Julia, Jason here.

If this helps any, I had to submit a support ticket with Shopify and (very quickly) they came up with a solution. Here's part of the correspondence.

So I have spoked with our higher tech support team and there needs to be 2 things done in order to have that tax exemption work properly.

First, and I have already done it :), was renaming the collection to tax:clothing. This will automatically trigger the system to notify it of the tax exemption rule so no override is actually needed.

The second thing that needs to be changed, is switching on, on your tax page for the US, "I want to specify taxes automatically". See here for a screenshot

Just a note regarding this as well, the special tax calculation only kicks in when the price of the product itself is over $175, and it'll tax the amount over $175 - if you order 18 $10 products though for example, still no tax!

While I'm not sure if there is anything they need to do on the backend to make this happen for you, if you forward this correspondence to them, it should point them in the right direction. Hope it helps.

Jason

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harpreetkaur
New Member
2 0 0

We recommend you don’t do this. U.S. shoppers are accustomed to paying sales tax, but they’re also accustomed to seeing that amount tacked on at the point of sale, not while shopping. Say, for example, you see a candy bar listed at $1.00 (without sales tax listed in the price) in one store, but at $1.07 (with sales tax listed in the price) in another store. While you may end up paying the same amount for the candy bar at the register, the $1.00 candy bar “feels” cheaper.It’s easy for your customers to shop around online, so don’t give them any excuses to favor a competitor’s store over yours.

 

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