Stripe Tax uses information stored on the Products and Prices APIs to determine the right rates and rules to apply when calculating tax. Update the products and prices you use to include:
- Tax behavior: the tax behavior on a price can be either “inclusive” or “exclusive”. This determines how the buyer sees the tax. When you set tax behavior to exclusive, it adds tax onto the subtotal amount you specify on your price. This is common in US markets and for B2B sales. When set to inclusive, the amount your buyer pays never changes, even if the tax rate varies. This is common practice for B2C buyers in many markets outside the US.
- (optional) Tax category: a tax category is a classification of your product or service for Stripe Tax. We use this to make sure that we apply the correct tax rate to your transactions. Some examples include “Audio book”, “Gift card”, or “Software as a service”. If you don’t set this, Stripe Tax uses the default tax category set in tax settings.
You can’t change
tax_behavior after you set it to one of “exclusive” or “inclusive."
Learn more about Products, prices, tax codes, and tax behavior.