Today we're excited to announce a new feature that's been in the works for some time now. Introducing automatic tax calculations by zip code! This new feature for shops in the United States will automatically apply the correct tax rates based on the purchaser's zip code.
The US has 50 states all with different tax rates. Kind of annoying. Within each of those states, there are counties with different tax rates, and cities with their own tax rates. The tax rates often vary between counties, cities, and sometimes even between neighbouring zip codes. Yikes!
So in order to simplify the whole process, we've gone ahead and outfitted the Shopify system with a tax database from the professionals at Tax Data Systems
, who do this sort of thing for a living. As a Shopify store owner, you now have the ability to enable automatic tax-rate lookups for any state.
Great! I want it!
If you're brand-new to Shopify, it's already enabled in your shop. If you're an existing Shopify merchant, you'll have to enable it manually, but don't worry, it's super easy. Watch this quick video that explains exactly how to set it up:
If you have trouble viewing this video please click here
Q & A
What states do I need to charge tax for?
The federal requirement is that you charge taxes in any state you have a physical presence. Please consult a tax professional for any further information on whether or not you need to charge sales tax in a specific state.
Is shipping taxed?
This depends on what state the purchaser is in, and is part of our tax database. In the future this may also depend on whether or not you include handling or padding in your shipping costs, but at the time of writing this does not currently affect it.
Can I change whether or not shipping is taxed?
No. Whether or not to tax shipping is part of the tax law.
Can I change the tax rate?
No. We are using an accurate database that is frequently updated and contains the correct tax rates. It would be unwise to change that. If you have a concern that there is a mistake in our system, feel free to contact us and we will help you get to the bottom of it.