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Tax overrides and exemptions

Taxes are calculated automatically within Shopify, but you can override these tax rates for greater control over the taxes that you charge. Use overrides if you need to do any of the following:

  • Control how much tax you charge for a particular product
  • Handle tax exceptions and exemptions
  • Specify unique tax rates for shipping destinations
  • Specify unique tax rates for tax-exempt customers

For example, you can specify overrides for state tax exemptions in the United States, provincial tax exemptions in Canada, or VAT exemptions in the European Union or the United Kingdom.

To set up a tax override, create a manual collection for the products that are tax exempt, and then apply the override to that collection.

If you don't need to charge sales tax, then you can create overrides and set the tax rates to 0%. Always check with a local tax authority to make sure that you are charging your customers the correct tax rates.

On this page

Considerations for setting up tax overrides and exemptions

Before setting up tax overrides, review the following considerations:

  • Customer tax exemptions always take precedence over tax overrides. If a customer has a tax exemption, then they won't be charged tax on applicable products, even if there are tax overrides in place. This applies to all types of tax overrides, such as product or shipping.
  • You can set up tax overrides on only manual collections. You can't use tax overrides with automatic collections.
  • Tax overrides apply to online sales and to Shopify POS sales.

Set a product to be exempt from sales tax

If you have just a few products that are exempt from tax, then you can prevent any taxes from applying to these products individually.

Steps:

  1. From your Shopify admin, go to Products.

  2. Click the product that you want to update.

  3. In the Price section, click Horizontal menu.

  4. Deselect Charge tax on this product.

  5. Click Save.

Create a manual collection of products that need a tax override

If you have a group of products that all need the same tax override, then you can create a collection that contains the products, and then apply the override to the collection.

You can make tax override collections hidden so that the collection isn't visible to your customers. After you apply a tax override to the collection, any products that you add to the collection will become tax exempt everywhere in your store, whether the collection is hidden or not.

Steps:

  1. From your Shopify admin, go to Products > Collections.

  2. Click Add collection, and then enter a name for it.

  3. Under Collection type, select Manual.

  4. Optional: To hide the collection from any of your active sales channels, then click Manage in the Publishing section, and then deselect the sales channels to hide the collection. Learn more about sales channel availability.

  5. Click Save.

  6. In the Products section, click Browse.

  7. Select the products that you want to add to the collection, and then click Done.

After you add all the products that need a tax override to the collection, you can apply a tax override to the collection.

Product categories

Product categories are labels that are assigned to products or to collections of products. For merchants that use Shopify Tax, they indicate the tax obligations and exemptions that customers have when they purchase those particular products.

Using product categories increases the accuracy of tax calculations, and reduces the need for tax overrides. Product categories are selected from Shopify's Standard Product Taxonomy, which is a predefined and standardized list. To learn more, refer to Product categories.

If you set a product category for a product that has an override in place, then the override takes precedence over product category tax calculations. Consider removing any product tax overrides that conflict with your product categories. However, if you're aware of tax rules that aren't calculated by product categories, then keep your product tax overrides.

Override the taxes on a collection or on shipping charges

You can specify unique tax rates for a collection of products or on shipping charges.

When you create a tax override, you might need to select the region to apply the tax override to. For example, when you create a US tax override, you must specify the state that it applies to.

Steps:

Desktop

  1. From your Shopify admin, go to Settings > Taxes and duties.

  2. Click the country to apply a tax override for.

  3. In the Tax rates and exemptions section, add a tax override for products or shipping charges.

  • To add an override to shipping charges, complete the following steps:
    1. In the Shipping overrides section, click Add override.
    2. Select the region where you want the override to apply.
    3. In the Tax rate field, enter the tax rate that you want to apply to the shipping charge.
  • To add an override for products, complete the following steps:
    1. In the Product overrides section, click Add override.
    2. Select or search for a collection that you want to add an override for.
    3. Select the region where you want the override to apply.
    4. In the Tax rate field, enter the amount of tax that you want to charge for the products in the collection.
  1. Click Add override.
Mobile

  1. From the Shopify app, tap Menu, and then tap Settings Settings.

  2. In the Store settings section, tap Taxes and duties.

  3. Tap the country that you want to add the tax override for.

  4. In the Tax rates and exemptions section, add a tax override for products or shipping charges.

  • To add an override to shipping charges, complete the following steps:
    1. In the Shipping overrides section, tap Add override.
    2. Select the region where you want the override to apply.
    3. In the Tax rate field, enter the tax rate that you want to apply to the shipping charge.
  • To add an override for products, complete the following steps:
    1. In the Product overrides section, tap Add override.
    2. Select or search for a collection that you want to add an override for.
    3. Select the region where you want the override to apply.
    4. In the Tax rate field, enter the amount of tax that you want to charge for the products in the collection.
  1. Tap Add override.

Set up tax-exempt customers

You can set up to not collect tax or to collect tax except for applicable exemptions from your customers. Tax exempt customers aren't charged any tax when they complete a checkout. These customers need to check out using the same email address as the one listed on their customer account.

Considerations when setting up tax-exempt customers

Consider the following implications before setting up tax-exempt customers:

  • If you set a customer to be tax exempt but you use tax-included pricing, then the customer will still be charged the full listed product price.
  • If you have 'include or exclude taxes based on your customer's country' turned on, then pricing becomes dynamic. This means that tax might be removed from the price displayed to the customer, unless fixed pricing is added to the product in a catalog or market setting. Learn more about dynamic tax-inclusive pricing.

Steps:

  1. From your Shopify admin, go to Customers.

  2. Click a customer that you want to exempt from taxes.

  3. In the Customer section, click Horizontal menu, and then click Manage tax settings.

  4. In the Tax settings section, select whether to collect tax:

    • To collect tax, select Collect tax.
    • To not collect tax, select Don't collect tax.
    • To collect tax except for applicable exemptions, select Collect tax unless exemptions apply, and then in the Select exemptions drop-down menu select the tax exemptions.

  5. Click Save.

Set up tax-exempt company locations

If your store is on a plan that supports Shopify B2B, then you can also apply tax exemptions to company locations.

Steps

  1. From your Shopify admin, go to Customers > Companies.

  2. Click the company with the location that you want to update.

  3. In the Locations section, click the location that you want to update.

  4. In the company location details section, click Horizontal menu.

  5. Click Edit tax details, and then enter the associated tax ID in the Tax ID field. If you use Shopify tax and have company locations with shipping addresses in the United Kingdom or the European Union, then this field is labeled VAT number instead.

  6. In the Tax settings section, select whether to collect tax:

    • To collect tax, select Collect tax.
    • To not collect tax, select Don't collect tax.
    • To collect tax except for applicable exemptions, select Collect tax unless exemptions apply, and then in the Select exemptions drop-down menu select the tax exemptions.

Built-in tax exemptions

Shopify has built-in tax overrides for two specific cases:

  • US merchants selling clothing in New York, New Jersey, Massachusetts, and Rhode Island
  • Canadian merchants selling vapor products in British Columbia and Saskatchewan

Clothing tax rules in US states

The following states have tax exemptions for certain clothing products:

StateExemption rule
MassachusettsClothing products with a price under $175 USD are exempt from state sales tax, and clothing products with a price over $175 USD collect tax only on the amount that their price is over $175 USD.
MinnesotaAll clothing is exempt.
New JerseyMost clothing and footwear products are exempt from state sales tax. There are no price limits for this exemption.
New YorkClothing products, footwear products, and items used to repair clothing products with an individual price under $110 USD are exempt from state sales tax in some jurisdictions. For example, two items with a combined price of $200 USD are each exempt from sales tax, but one item with an individual price of $110 USD is subject to sales tax.
PennsylvaniaMost clothing is exempt, with exceptions such as formal wear and sports equipment.
Rhode IslandClothing and footwear products with an individual price of $250 USD or less are exempt from state sales tax, and only the incremental amount above $250 USD is subject to sales tax.
VermontMost clothing is exempt, with exceptions such as clothing accessories or equipment.

New York jurisdiction details

In New York, the clothing exemption applies to the local tax rates of the following jurisdictions:

  • Bronx
  • Brooklyn
  • Chautauqua
  • Chenango (except the city of Norwich)
  • Columbia
  • Delaware
  • Dutchess County
  • Greene
  • Hamilton
  • Manhattan
  • Queens
  • Staten Island
  • Tioga

For Shopify to calculate the correct tax rates, your store must be set up to collect sales tax in the state, and you need to create a collection for the applicable clothing products with a title of tax:clothing.

Steps:

  1. From your Shopify admin, go to Products > Collections.

  2. Click Create collection.

  3. In Title, enter tax:clothing in lowercase letters.

  4. Under Collection type, select Manual

  5. Add products to the collection manually.

  6. Optional: To hide the collection from any of your active sales channels, change the collection's availability.

  7. Save your collection.

After you save the tax:clothing collection, the applicable clothing rule will be applied automatically, and the correct amount of tax will be collected for the products in that collection.

Use the tax:clothing collection for states with clothing exemptions listed on this page. If another clothing exemption applies in your jurisdiction, then use other tax override methods or mark your products as nontaxable in the Price section of the product page.

British Columbia vapor product tax rules

British Columbia applies a higher PST rate to vapor products. In addition, GST is compounded on the PST. For Shopify to calculate the correct tax rates, you need to create a collection for the applicable vapor products with the title tax:eliquid_vaporizers.

For more information about the PST rate for vapor products, refer to the Government of British Columbia website.

Before you begin

For the override to apply correctly, you need to set up your tax accounts for Canada and British Columbia first.

Steps:

  1. From your Shopify admin, go to Products > Collections.

  2. Click Create collection.

  3. In Title, enter tax:eliquid_vaporizers in lowercase letters.

  4. Under Collection type, select Manual

  5. Add products to the collection manually.

  6. Optional: To hide the collection from any of your active sales channels, change the collection's availability.

  7. Save your collection.

After you save the tax:eliquid_vaporizers collection, the applicable sales taxes are applied automatically, and the correct amount of tax will be collected for the products in that collection.

Saskatchewan vapor product tax rules

Saskatchewan applies a Vapour Products Tax, or VPT, to vapor products. As of June 1st, 2025, PST is charged in addition to VPT, and GST is compounded on top of the product price with VPT. For Shopify to calculate the correct tax rates, you need to create a collection for the applicable vapor products with the title tax:eliquid_vaporizers.

For more information about the VPT for vapor products, refer to the Government of Saskatchewan website.

Requirements for Saskatchewan vapor product tax

For the override to apply correctly, you need to set up your tax accounts for Canada and Saskatchewan first.

Steps:

  1. From your Shopify admin, go to Products > Collections.

  2. Click Create collection.

  3. In Title, enter tax:eliquid_vaporizers in lowercase letters.

  4. Under Collection type, select Manual

  5. Add products to the collection manually.

  6. Optional: To hide the collection from any of your active sales channels, change the collection's availability.

  7. Save your collection.

After you save the tax:eliquid_vaporizers collection, VPT is collected on products in the collection in addition to GST and PST. VPT and PST are applied on the product base price, with GST compounded on the updated price.

Set a 0% tax rate for most of your products

If most or all of your products are exempt from sales tax and you're in a country that has both federal tax and regional taxes, then you can override the defaults to 0% in the Base taxes section.

However, for your products that are taxable, you will need to add those products to a collection, and then create a tax override for that collection.

Steps

Desktop

  1. From your Shopify admin, go to Settings > Taxes and duties.

  2. Click the name of the country for which you want to add the tax override.

  3. In the Base taxes section, specify that the regional tax rate is added to 0% federal tax.

  4. In the Tax overrides section, click Add a tax override.

  5. In the Add Tax Override for country dialog, select the collection to apply the tax override to.

  6. Under Location, specify the country or region the override will apply to.

  7. Click Add override.

Mobile

  1. From the Shopify app, tap Menu, and then tap Settings Settings.

  2. In the Store settings section, tap Taxes and duties.

  3. Tap the name of the country for which you want to add the tax override.

  4. In the Base taxes section, specify that the regional tax rate is added to 0% federal tax.

  5. In the Tax overrides section, tap Add a tax override.

  6. In the Add Tax Override for country dialog, select the collection to apply the tax override to.

  7. Under Location, specify the country or region the override will apply to.

  8. Tap Add override.

Troubleshooting tax overrides

Use the following information to diagnose and resolve common issues with tax overrides.

Troubleshoot product overrides and shipping overrides work independently

If you set up a product override for a collection, then the override applies only to the products in that collection. If you also need to override the shipping tax, then you must create a separate shipping override.

Troubleshoot tax overrides apply to both online and POS sales

Tax overrides that you create in Settings > Taxes and duties apply to both your online store and Shopify POS sales. You don't need to create separate overrides for each sales channel.

Troubleshoot tax overrides can't be applied to regions within a country

You can create tax overrides at the country or state level, but you can't create overrides for specific regions, cities, or districts within a country or state. If you need more granular control over tax rates, then consult with a tax professional about alternative approaches.

Troubleshoot tax overrides don't apply to product bundles directly

If you use product bundles, then tax overrides on the bundle product itself are ignored at checkout. This happens because the individual products in the bundle are added to the order separately. To apply tax overrides to bundled products, add the individual product components to your override collection instead of the bundle product.

Troubleshoot tax override option is unavailable

If the option to add a tax override is unavailable for a specific region, then check whether you have the Duties and import taxes feature activated for that region. When duties are activated, the system doesn't use tax overrides for that region because duties and import taxes are calculated using a different method. To use tax overrides, you need to deactivate duties for that region.