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.
Setting the tax behavior explicitly on a price is optional, if you set up the default tax behavior in the Stripe Tax settings. You can override the default tax behavior setting by setting a tax behavior on a price.
(Optional) Tax code: A tax code is a classification of your product or service for Stripe Tax that makes sure 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 the tax code, Stripe Tax uses the preset tax settings.
You can’t change
tax_behavior after you set it to one of “exclusive” or “inclusive.” You can create a new price and archive the current one instead.
Learn more about Products, prices, tax codes, and tax behavior.