Mark a customer tax exempt in Shopify
Some customers should not be charged tax at all: a registered nonprofit, a reseller buying stock to sell on, a business with a valid exemption certificate. You set that on the customer's own profile, not on the order, so every future checkout for that customer gets the same treatment.
Written · Shopify admin, desktop steps · 4 minutes read
The worked example
| Customer | Northside Community Theatre, nonprofit |
| Order | $240.00 of products |
| HST if taxed | 13% = $31.20 |
| Taxed total | $271.20 |
| Exempt total | $240.00 |
| Tax saved | $31.20 |
Download the record: tax-exempt-customers.csv (185 bytes).
A record of the exempt customers in this tutorial, with the tax each order would have carried and the total paid. The tax saved column sums to $54.60.
1Open the customer
From your Shopify admin, go to Customers. Click the customer you want to exempt from taxes. In this tutorial that is Northside Community Theatre, a registered nonprofit.
2Open Manage tax settings
In the Customer section, click the menu button, and then click Manage tax settings. The tax settings for that one customer open.
3Choose how to collect tax
In the Tax settings section, select whether to collect tax. To collect no tax at all, select Don't collect tax. To collect tax except where an exemption applies, select Collect tax unless exemptions apply, and then pick the tax exemptions in the Select exemptions drop-down menu.
4Click Save
Click Save. The exemption now applies to that customer's checkouts. Tax exempt customers are not charged any tax when they complete a checkout.
5Check the next order
Open the customer's next order and confirm the tax line reads $0.00. A $240.00 order that would have carried $31.20 of HST now totals $240.00. If tax still appears, check that the customer checked out with the same email address as the one listed on their customer account.
The arithmetic
Both example customers are in Ontario, where the combined rate is 13% HST:
| Customer | Order | Tax if collected | Customer pays |
|---|---|---|---|
| Northside Community Theatre | $240.00 | $31.20 | $240.00 |
| Riverside Books Wholesale | $180.00 | $23.40 | $180.00 |
The tax saved across the two example orders is $31.20 plus $23.40, which is $54.60. Keep the exemption certificate or reseller number on file for each exempt customer: the setting is yours to make, and the certificate is what backs it up if a tax authority asks.
Held at the counter
Tax-included prices stay at full price. If you set a customer to be tax exempt but you use tax-included pricing, the customer will still be charged the full listed product price. The exemption removes the tax from the order, not from the shelf price.
The email must match. Tax exempt customers need to check out using the same email address as the one listed on their customer account. A checkout under a different email is charged tax like any other order.
Exemptions beat overrides. Customer tax exemptions always take precedence over tax overrides. If a customer has a tax exemption, they will not be charged tax on applicable products, even if there are tax overrides in place.
Sources
- Tax overrides and exemptions — Shopify's help pages: the tax-exempt customer steps, the email matching rule, the tax-included pricing note, and the rule that exemptions take precedence over overrides.