Magento 2 Tax Configuration

💰 Magento 2 Tax Configuration – Set Up Taxes the Right Way

Taxes are critical for any eCommerce store operating across regions. Magento 2 offers a flexible tax system that can be configured by location, customer group, product type, and more. Let’s dive into how to configure it correctly!

🔧 How Magento 2 Handles Taxes

  • Tax Rates – Defines percentage per region/postcode
  • Tax Rules – Combines rates + customer groups + product classes
  • Tax Zones – Matches location-specific rules
  • Product Tax Classes – Assign to products
  • Customer Tax Classes – Assign to customers/groups

⚙️ Step-by-Step: Creating a Tax Rate

Go to Stores > Tax Zones and Rates and click Add New Tax Rate.

// Programmatically create a tax rate
$taxRate = $this->taxRateFactory->create();
$taxRate->setCode('US-CA-Standard')
        ->setTaxCountryId('US')
        ->setTaxRegionId(12) // e.g., California
        ->setZipIsRange(0)
        ->setTaxPostcode('*')
        ->setRate(8.25)
        ->save();

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🧩 Creating a Tax Rule

Tax rules are combinations of product tax classes, customer tax classes, and tax rates.

Navigate to Stores > Tax Rules > Add New Tax Rule.

// Create Tax Rule
$rule = $this->taxRuleFactory->create();
$rule->setCode('US-Standard')
     ->setTaxRateIds([$taxRate->getId()])
     ->setCustomerTaxClassIds([3]) // e.g., Retail
     ->setProductTaxClassIds([2])  // e.g., Taxable Goods
     ->setPriority(0)
     ->setPosition(0)
     ->setCalculateSubtotal(0)
     ->save();

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🏷 Assign Product & Customer Tax Classes

Product tax class is set under Catalog > Products > [Product] > Tax Class.

Customer tax class is assigned via Customer Groups in Customers > Customer Groups.

📦 Tax Display & Calculation Settings

To control how tax is calculated and displayed:

  1. Go to Stores > Configuration > Sales > Tax
  2. Configure options like:
    • Display Prices Including/Excluding Tax
    • Apply Tax After Discount
    • Shipping Tax Class

✅ Summary

  • Create Tax Rates for locations
  • Create Tax Rules by linking rates, customer & product classes
  • Assign correct tax classes to products and customers
  • Configure display settings in the Tax configuration

Magento 2 gives you powerful tools to comply with global tax requirements. Whether you’re selling in California or Canada, it scales with your business!