Price products tax-inclusive in Shopify
Customers in some countries, such as the United Kingdom, expect product prices that include their local value added tax. Customers in other countries, such as the United States, expect taxes to be excluded on the storefront and added at checkout. Tax-inclusive pricing lets Shopify include or exclude taxes in your product prices automatically, based on your customer's region.
Written · Shopify admin, desktop steps · 4 minutes read
The worked example
| Product price | $100.00 |
| Home tax rate | 10% |
| Tax inside the $100.00 | $9.09 |
| Product portion | $90.91 |
| UK price, VAT 20% | £120.00 includes £20.00 VAT |
| Setting | Markets > market > Taxes and duties > Tax display |
Download the record: tax-inclusive-price-check.csv (126 bytes).
A price check sheet for the examples in this tutorial, splitting each tax-inclusive price into its product portion and its tax portion. The tax portions on the two $100.00 rows are $9.09 and $16.67.
1Open Markets
From your Shopify admin, go to Markets. Tax-inclusive pricing is set per market, not per product, so pick the market whose customers expect tax in the price.
2Click the market
Click the market that you want to activate tax-inclusive pricing for. Your store address in the Shopify admin is used to determine your home tax rate, which is the rate used to deduct from your tax-inclusive prices when you sell to another country.
3Open the market tax settings
In the Taxes and duties selector, click the market's tax settings to display the tax options. The current tax and duties settings are displayed, as well as a preview of how these settings are communicated to your customers.
4Select Dynamic tax display
In the Tax display menu, choose the tax-inclusive option. Shopify then automatically includes the local tax rate in your storefront prices for the countries and regions where customers expect it, and shows prices without tax included everywhere else.
5Check the price split
Check a product page in that market. On a $100.00 product with a 10% home tax rate, the tax portion inside the price is $9.09 and the product portion is $90.91. On a £120.00 price with 20% VAT, the VAT inside the price is £20.00 and the product portion is £100.00.
The arithmetic
Shopify's own formula: Tax = (Tax Rate × Price) / (1 + Tax Rate). The $100.00 at 10% example is the one on the help page:
| Price including tax | Rate | Tax inside | Product portion |
|---|---|---|---|
| $100.00 | 10% | $9.09 | $90.91 |
| $100.00 | 20% | $16.67 | $83.33 |
| £120.00 | 20% | £20.00 | £100.00 |
The formula works because the listed price already contains the tax. For $100.00 at 10%: (0.10 × 100) / 1.10 = 9.0909, which rounds to $9.09, leaving a product portion of $90.91. For £120.00 at 20%: (0.20 × 120) / 1.20 = 20.00 exactly.
Held at the counter
Tax overrides are ignored. Your home tax rate is determined by your store's address. Any tax overrides will not be recognized when using tax-inclusive pricing. Only the standard tax rates for both the origin country and destination country are used.
Shipping rates do not change. Tax-inclusive pricing adjusts product prices only. It does not change your shipping rates, so a customer whose product prices no longer include your home tax rate still pays the shipping rate exactly as you set it.
Post-purchase add-on apps break the display. Including or excluding tax based on your customer's country or region is not supported on stores using third-party apps that offer post-purchase add-ons. If you use one, the price display will not switch the way this tutorial describes.
Sources
- Dynamic tax-inclusive pricing — Shopify's help pages: the activation steps, the Tax = (Tax Rate × Price) / (1 + Tax Rate) formula, the $100.00 example, and the three limitations.