If you're struggling with tax automation for out-of-state or non-Nexus billing addresses, we've got a solution for you! This tutorial will guide you through setting up product overrides in Shopify to handle taxes correctly for both in-state and out-of-state customers.
Step 1: Create Collections
Create a collection for all your bookable products (experiences) that must be taxed regardless of location.
Create another collection for products that shouldn't be taxed for out-of-state customers.
Step 2: Configure Tax Settings
Go to your Shopify admin panel.
Navigate to Settings > Taxes and Duties.
Click on the United States (or your store location).
Step 3: Set Up Tax Collection for Relevant States
For each state where you want to collect taxes:
Click on the state.
Select "Collect sales tax" (you don't need to enter a sales tax ID).
Save the changes.
Step 4: Create Product Overrides
In the state's tax settings, click "Add an override."
Select your bookable products collection.
Enter your local tax rate (e.g., 8% for New York).
Save the override.
Step 5: Create Exclusions for Non-Taxable Products
Add another override for the collection of products that shouldn't be taxed out-of-state.
Set the tax rate to 0% for this collection.
Repeat steps 4 and 5 for each state where you want to collect taxes.
How It Works:
Customers with in-state billing addresses will be charged the appropriate tax rate for bookable experiences.
Customers with out-of-state billing addresses will be charged tax on bookable experiences but not on other products.
Keep in Mind:
This method may require setting up overrides for multiple states, which can be time-consuming.
You may only need to do this for states near you, where customers are likely to travel from.