To calculate tax for recurring payments, Stripe offers Stripe Tax and Tax Rates.
Stripe Tax—a paid product that automatically calculates the tax on your transactions without the need to define the rates and rules. Fees only apply after you’ve added at least one location where you’re registered to calculate and remit tax. For more information, see Stripe Tax.
Tax Rates—a free feature that allows you to define any number of tax rates for invoices, subscriptions, and one-time payments that use Checkout. Stripe won’t create or maintain any tax rates on your behalf. For more information, see Tax Rates and how to use them.
Stripe Tax allows you to calculate the tax to collect on your recurring payments when using Stripe Billing. You can create new subscriptions or add Stripe Tax to existing subscriptions, and examine any potential impact to the amount on your customer’s upcoming invoice. Stripe Tax is natively integrated with Stripe Billing and automatically handles tax calculation with your pricing model (e.g., sub-cent, package), prorations, discounts, trials, and more. This guide assumes you’re setting up Stripe Tax and Billing for the first time.