# Setting Up Tax Rates and Automated Taxes in WooCommerce

> **Source video:** https://www.youtube.com/watch?v=s-fgmY6nwJA

This guide explains how to enable the tax feature in WooCommerce, add tax rates manually, configure tax classes and calculation options, and automate tax calculation with the WooCommerce Shipping and Tax plugin.

## Enable Taxes in WooCommerce

1. In the WordPress dashboard, go to **WooCommerce → Settings**.
2. Under **General**, scroll down.
3. Next to **Enable taxes**, enable the option **Enable tax rates and calculations**.
4. Scroll down and click **Save changes**.

A new **Tax** tab now appears at the top of the settings page.

## Add a Tax Rate Manually

1. Open the **Tax** tab.
2. Click on **Standard rates** at the top.
3. Click **Insert row**.
4. Enter the details for your tax rate. Example from the video (Switzerland):
   - **Country code:** `CH` (you can type the country name and the code is filled in).
   - **State code:** leave empty (it's a statewide tax).
   - **Postcode / ZIP code:** leave empty.
   - **City:** leave empty.
   - **Tax rate:** `8.1` (%).
   - **Name:** `Value added tax`.
5. The **Shipping** option is ticked by default, which means tax is also charged on the shipping price. If that's not the case in your area, untick this option.
6. Click **Save changes**.

To verify it works, open the store, go to the cart and check out. If the customer's country is the United States, no tax appears; change the country to Switzerland and the value added tax is added (e.g. $8.98 on a $110 order, which is 8.1%).

## Add Additional Tax Classes

1. Add as many tax rates as you want for as many areas as you want.
2. Under **Tax**, there are different types of rates, such as **Reduced rates** — many countries charge less tax on items like medical products or books.
3. To change the names of additional tax classes, go to **Tax options**.
4. Under **Additional tax classes**, edit the name or add a new one by entering a new line and typing the name.

### Apply a Tax Class to a Product

1. Go to **Products** in the WordPress dashboard.
2. Click **Edit** on a product where the special tax class applies.
3. Scroll down to **Product data**.
4. Under **Tax class**, change it from **Standard** to **Reduced rate** or **Zero rate**.

## Configure Tax Calculation Options

Review these settings and make sure they're correct for your business:

- **Prices entered with tax:** Set to **I will enter prices exclusive of tax** by default, meaning if you enter a product at $40, tax is added on top at checkout. Choose **Yes, I will enter prices inclusive of tax** if the tax should already be included in the price.
- **Calculate tax based on:** This is important. For example, some US states charge tax based on your shop location rather than the shipping destination. If you're in California, set this to **Shop base address** so taxes are based on your business location, not the customer's destination.

Save your changes after configuring these options.

## Automate Tax Calculation with the WooCommerce Shipping and Tax Plugin

First, check the plugin's list of supported countries to see if the country where you do business is included.

- If your country is on the list, this method is recommended.
- If it is not on the list, enter your tax rates manually as shown above.

### Install the Plugin

1. Go to **Plugins → Add New**.
2. Search for **WooCommerce Tax**.
3. Install and activate the plugin.

### Connect Your Site to WordPress.com

Before enabling automated taxes, the site must be connected to WordPress.com:

1. Go to **WooCommerce → Settings**.
2. Click **Connect** and then **Continue**.
3. Open your email inbox and look for an email from WordPress.com titled **Connect to WooCommerce Shipping and Tax**.
4. Open the email and click **Connect**.

Your site is now connected.

### Enable Automated Taxes

1. Back in the tax settings, find **Automated taxes**.
2. Switch it to **Enable automated taxes**.
3. Scroll down and click **Save changes**.

### Enter Your Store Address

For automated taxes to work correctly, make sure your shop or business location is correct:

1. In **WooCommerce → Settings**, under **General**.
2. Under **Store address**, enter your store address.