I have followed the guidelines for setting up taxes in my store with the following settings:
I have already tried removing these settings and adding them back in with no luck. The only payment gateway I have setup and am using is PayPal. The issue I am seeing is when I add something to my cart, it does not automatically add on the taxes. Furthermore when I am redirected to the PayPal payment gateway the taxes are not added on to the total there either. Are there any additional settings I need to fix in order to get this to work?
Are you using Paypal Express? If so, the Paypal button or checkout button will take you from the checkout page to Paypal's page where your customers will then input their data. The next screen is where your customers will input their discount codes, see their shipping options and the applicable taxes. They will then confirm the total and their account will get charged. Try a transaction yourself on your store and refund yourself afterwards :)
You'll definitely see the the order total with applicable taxes.
I hope that helps!