How to Setup Non-taxable Products
Some stores sell products that should not have any sales tax applied to it. An example product would be a gift certificate.
Here is how you would do it.
Add a new Product Tax Class and call it "Non-Taxable". The name really doesn't matter, but that one is fairly descriptive.
Assign the products that you don't want to be taxable to use that Product Tax Class. This can be done when adding or editing the product. Under the Prices tab there should be a select menu to select a Product Tax Class.
How this works
- When taxes are calculated for an order the first thing that is done is that the products in the cart are organized by what Product Tax Class they are assigned to. A total sale amount for each Product Tax Class is calculated.
- Then, all the applicable tax rates for the shipping address are retrieved.
- The tax rates are then looped through and the total for the Product Tax Class that the tax rate is applied to is retrieved (from A). That total is then used to calculate the appropriate tax.
If a product is assigned to a Product Tax Class but no tax rates are setup for that Product Tax Class then those products will be ignored when taxes are calculated.