Tax categories ensure that your products use the right tax treatment and tax rate globally. For example, some products have reduced tax rates in different cities or countries. Assign your products a tax category to automatically apply these reduced rates and other taxability rules where applicable. Otherwise you can use one of the generally taxable categories, pick the one that best reflects your business:
- General - Tangible Goods:
- General - Electronically Supplied Services:
- General - Services:
This ensures that the standard rate of the jurisdiction is charged. See our list of available tax categories.
Default tax categories
When activating Stripe Tax you can set two types of default tax categories: one for products and one for shipping. These are set in the Tax settings in the Dashboard.
Product tax category
The default product tax category represents your product or service in Stripe Tax. We use this if you don’t explicitly specify a
tax_code on your Products or in
product_data on your transactions. As you process payments, we also use the default tax category to display the tax thresholds you might be approaching or have exceeded, under the Monitor tax thresholds section in your tax settings. In the event you sell multiple different product types (for example, SaaS and eBooks), you could use test mode to change your default tax category and review the impact of different product types on your Monitor tax thresholds section.
Shipping tax code
The default shipping tax code represents the tax treatment for shipping fees when charged. We use this if you don’t explicitly specify a
tax_code on a shipping rate in a Checkout session. Stripe Tax allows you to change the default shipping treatment to Nontaxable if you don’t want to charge any tax on shipping fees. We recommend you leave the default as “Shipping” to ensure the correct tax is always charged.
To charge tax on shipping for recurring payments, you can create a Product or pass
product_data for a line item called “shipping” and select the shipping
The taxability of shipping can vary by US state and country.
You must specify a
tax_behavior on a price, which determines how tax is presented to the buyer, allowing you to localize your checkout depending on the market. 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 tax behavior on a price
You can set the tax behavior for a Price when creating it with the Dashboard or the API. When creating a Price on the Dashboard, you can inspect the impact of your pricing model on your revenue.
To create a Price with
tax_behavior through the API, it might look like this:
In some cases, you might want to use a custom price that hasn’t been pre-configured. You can pass in
price_data instead of a price ID. For example, accepting a one time payment for a custom price might look like this:
Setting a tax category on a product (optional)
When creating Products in the Dashboard you can set your
tax_code in the dropdown by searching for any available tax category. If you don’t, Stripe tax uses the default tax category defined on the Dashboard.
To create a Product with
tax_code using the API, it might look like this:
In some cases, you might want to use a custom product that hasn’t been pre-configured. You can pass in
product_data instead of a product ID. For example, accepting a one time payment for a custom product might look like this:
Creating a shipping rate with tax code (optional)
Checkout payment mode allows you to set shipping rates and charge tax on shipping. You can automatically calculate tax on shipping charges by setting the tax code on the shipping rate in the Dashboard or API.
Checkout payment mode allows you to set shipping rates to support charging for tax on shipping. You can add a tax code to automatically calculate tax on shipping charges by setting the tax code on the shipping rate in the Dashboard.