If you have a WooCommerce store and need to set up both taxed and non-taxed products, here is how to do it:

1. Enable tax rates and calculations

If you haven’t done so, enable the tax rate and calculations by going to WooCommerce then Settings then General, in your WordPress dashboard.

To enable all you need to do is check the box that says “Enable tax rates and calculations”. Then save to apply the changes.

2. Adjust the Tax Settings

Next under Tax tab and adjust the settings. The way I like to set them up is:

  • Prices entered with tax = No, I will enter prices exclusive of tax
  • Calculate tax based on = Customer billing address
  • Shipping tax class = Standard
  • Rounding = Round tax at subtotal level instead of compounding per line
  • Display prices in the shop = Excluding tax
  • Display prices during cart and checkout = Excluding tax
  • Display tax total = As a single total

3. Setup The Tax Rates

Once the settings are in place, you will need to set up the Tax Rates. Go under the Standard rates tab and click on “Insert row” button.

If you live in US under most circumstances the only columns, you will need to fill out are:

  • Country code = enter your 2 letter country code, for example US
  • State code = enter your 2 letter state code, for example TX
  • Rate % = enter your tax rate, for example 8.2500
  • Tax name = give the tax a name, for example Texas Tax
  • Priority = optional, if you have more than one, you can set the priority
  • Shipping = if you want to tax the shipping, set this to yes

Then click the blue “Save changes” button to apply

4. Edit the Products

Now you will need to go through your products and set whether they are taxed by scrolling down to the General tab and looking for the Tax status drop-down.

For taxed items, set the Tax status to Taxable and for non-taxed items, set it to None

Save to apply the changes.

5. Test and Verify That Everything Works Correctly

The easiest way to do this is by adding a few products to the cart.

  • Check that taxed items are applying the correct tax amount.
  • Check that non-taxed items don’t add a tax.
  • Check that if both are added together, only taxed items apply the tax.

6. Troubleshooting

If you have problems making the changes, check and make sure you are using the most recent version of WooCommerce and that you are not using the WooCommerce Services plugin, which overrides the settings.