Set a tax override for a product in Shopify
Sometimes the default tax rate does not apply to certain products. Groceries are zero-rated in Canada, and certain types of children's clothing are exempt or carry a lower rate in several places. When the default rate is wrong for a group of products, you create a collection for those products and override the rate for that collection.
Written · Shopify admin, desktop steps · 5 minutes read
The worked example
| Collection | Zero-rated groceries (manual collection) |
| Item | $42.00 of groceries |
| Default tax, 13% HST | $5.46 |
| Override tax | 0% = $0.00 |
| Customer saves | $5.46 |
Download the record: product-tax-override-register.csv (195 bytes).
A register of the product overrides in this tutorial, with the default tax and the overridden tax for each collection. The default tax column sums to $12.34 and the override column sums to $0.00.
1Create a manual collection
From your Shopify admin, go to Products > Collections. Click Add collection, enter a title such as Zero-rated groceries, and add the products by hand. You can set up tax overrides only with products that you manually add to collections; automatic collections and app-added products do not work.
2Open Taxes and duties
From your Shopify admin, go to Settings > Taxes and duties.
3Click the country
Click the country to apply a tax override for. When you create a US tax override, you must specify the state that it applies to.
4Add a product override
In the Tax rates and exemptions section, go to the Product overrides section and click Add override.
5Select the collection, region, and rate
Select or search for the collection you want to add an override for. Select the region where you want the override to apply. In the Tax rate field, enter the amount of tax that you want to charge for the products in the collection. For zero-rated products, enter 0%.
6Click Add override and check an order
Click Add override. Then open an order containing a product from the collection and confirm the tax line reads $0.00. A $42.00 grocery order in Ontario that would have carried $5.46 of HST now totals $42.00.
The arithmetic
The 8% rate on the New York row is an example rate; the New York rule on the help page is that clothing under $110 per item is exempt:
| Collection | Item | Default tax | Override tax | Customer pays |
|---|---|---|---|---|
| Zero-rated groceries, Ontario | $42.00 | $5.46 | $0.00 | $42.00 |
| Children's clothing, New York | $86.00 | $6.88 | $0.00 | $86.00 |
| Both collections together | $128.00 | $12.34 | $0.00 | $128.00 |
The two rows together are $128.00 of products, $12.34 of default tax, and $0.00 of tax with the overrides. The New York example on the help page is a clothing rule: two items with a combined price of $200 are each exempt when each is under $110, but one item priced at $110 is subject to sales tax.
Held at the counter
Only manual collections work. You can set up tax overrides on only manual collections. You cannot use tax overrides with automatic collections, or for products added by a collection or an app source. If the collection fills itself by a rule, the override will not apply.
A single product can be untaxed without a collection. If you have just a few products that are exempt from tax, you can prevent any taxes from applying to these products individually: open the product, and in the Price section, deselect Charge tax on this product, then click Save.
Customer exemptions still win. 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 two-step collection and override process, the manual collection rule, the per-product tax-removal option, and the New York clothing exemption rule.
- Manage your taxes — Shopify's help pages: the product tax override steps and the note that the default rate does not apply to certain products.