How to Configure and Setup Tax Rates in Magento
Step 1.
Set up a tax rate for your state. In this example I am setting a tax rate for a store based in Florida.
Admin>Sales>Tax>Manage Tax Zones & Rates
Select, Add New Tax Rate button
For Tax Identifier enter, US-FL-*-Rate 1
For Country enter, United States
For State enter, Florida
For Rate enter, 7.00
You can leave the Tax Titles blank
Select, Save Rate button
If you have a physical store presence in another state make sure you add that rate also. Please keep in mind every stats has different laws regarding collecting tax. This blog is for tutorial purposes only; seek an accountant in your area for proper advice.
You can now safely delete the other rates.
Step 2.
Set up a default tax rate.
If you don’t want your customer’s to see the tax by default then you’ll need to create another default rate. For example, visitor comes to your store, and you don’t want them see the tax included on all the products, until they pass the cart and will see it in check out, dependant on the state there in. In this example, no one will see tax included on products, not in the cart or until visitor "enters" the state their from. And if they are from Florida then, they will only see the tax increment at checkout, when they input their state.
So you’ll need to edit Magneto Tax Configuration
Admin>System>Configuration>Tax>
Under Default Tax Destination section
For Country Select United States
For State Select Alaska
For Default Post Code Enter, *
Under Display section
Display Cart/Order Prices Select, Excluding Tax
Display full tax summary Select, No
Display Shipping Prices Select, Excluding Tax
Display Product Prices Select, Excluding Tax
Display Zero Tax Subtotal Select, No
Optionally, you can configure the other sections here.
You can test it, but make sure to refresh cache before.
Your all done. Congrats
