Set a tax override for a shipping destination in Shopify
The default tax rate does not fit every region. Where a shipping destination taxes shipping differently, or does not tax it at all, you set a shipping override for that region instead of changing the rate for the whole store. This tutorial sets a 0% shipping tax override for one region, on an order with $14.00 of shipping.
Written · Shopify admin, desktop steps · 4 minutes read
The worked example
| Order | $86.00 of products, $14.00 shipping |
| Standard shipping tax | 8% example rate = $1.12 |
| Override shipping tax | 0% in the chosen region = $0.00 |
| Total, standard | $101.12 |
| Total, with override | $100.00 |
Download the record: shipping-tax-override-log.csv (156 bytes).
A log of the shipping overrides in this tutorial, with the standard and overridden shipping tax for each region. The standard column sums to $2.08 and the override column sums to $0.00.
1Open Taxes and duties
From your Shopify admin, go to Settings > Taxes and duties. Overrides live on the same page as your registrations.
2Click the country to override
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, so the override stays inside one region.
3Add a shipping override
In the Tax rates and exemptions section, go to the Shipping overrides section and click Add override.
4Select the region
Select the region where you want the override to apply. Pick the state or region that does not tax shipping, or taxes it at a different rate from your store default.
5Enter the tax rate
In the Tax rate field, enter the tax rate you want to apply to the shipping charge in that region. For a region that does not tax shipping, enter 0%.
6Click Add override
Click Add override. Orders shipped to that region now use the override rate on shipping, while orders shipped elsewhere keep the standard rate.
The arithmetic
The 8% rate is an example rate used to show the arithmetic; the point is the difference the override makes:
| Shipping | Rate | Shipping tax | Order total |
|---|---|---|---|
| $14.00, standard rate | 8% | $1.12 | $101.12 |
| $14.00, override rate | 0% | $0.00 | $100.00 |
| $12.00, standard rate | 8% | $0.96 | $98.96 |
| $12.00, override rate | 0% | $0.00 | $98.00 |
The two example orders are $86.00 of products plus shipping. With the override, the customer saves $1.12 on the first order and $0.96 on the second, because the override removes the shipping tax entirely in that region.
Held at the counter
Overrides cannot target a city or district. You can create tax overrides at the country or state level, but not for specific regions, cities, or districts inside a country or state. If a city taxes shipping differently from the rest of its state, an override cannot fix that.
A shipping override does not change the product tax. Product overrides and shipping overrides work independently. Setting a shipping override leaves the tax on the products untouched, and a product override leaves the shipping tax untouched.
Customer exemptions win. If a customer has a tax exemption, they are not charged tax on the products that qualify, even if an override sets a rate for that region. Exemptions always take precedence over overrides.
Sources
- Tax overrides and exemptions — Shopify's help pages: the shipping override steps, the region limit, and the rule that exemptions take precedence over overrides.
- Manage your taxes — Shopify's help pages: managing registrations and the Decide how tax is charged section on the Taxes and duties page.