Unlike some platforms, CartGenie’s tax system isn’t a black box. We give you customized control over your taxable jurisdictions and the rates for special product tax classes.
But you may still wonder how the rates you set get applied to products and in various scenarios. So we’ve created this guide to help answer your questions.
We’ll start with a simple scenario of two products and the tax rate for Texas of 8.25%.
Product A (8.25%): $10.00
Product B (8.25%): $20.00
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Subtotal: $30.00
Shipping: $5.00
Taxes: $2.48
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Total: $37.48The taxes were calculated by multiplying $30.00 × 8.25% = $2.48
Discounts
All discounts are applied to the subtotal prior to tax calculation.
If we had a 50% coupon, the taxable amount would be $15.00 ($30.00 × 50%), resulting in a total tax of $1.24.
If we had a $10 off coupon, the taxable amount would be $20.00 ($30.00 - $10.00), resulting in a total tax of $1.65.
Taxes on Shipping
If the “Charge taxes on shipping” option is enabled for a jurisdiction, then taxes on shipping are calculated by multiplying the shipping cost × the default tax rate for the jurisdiction. This amount is then added to the order total.
In this case, the tax portion from shipping would be $5.00 × 8.25%, resulting in a shipping tax of $0.41.
In CartGenie, you can create special tax classes and apply different rates for classes in a jurisdiction.
Here is a scenario of two products with differing tax rates (default jurisdiction rate of 8.25%).
Product A (8.25%): $10.00
Product B (15%): $20.00
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Subtotal: $30.00
Shipping: $5.00
Taxes: $3.83
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Total: $38.83The taxes were calculated by: ($10.00 × 8.25%) + ($20.00 × 15%) = $3.83
“Percent Off” discounts are taken off of each amount equally prior to tax calculation
If we had a 50% coupon, the taxable portion of each product would be: Product A (8.25%): $5.00 and Product B (15%): $10.00, resulting in a total tax of $1.91.
“Fixed Amount” discounts are taken off of each item in proportion to their share of the subtotal. This is because taking $10 off an item taxed at 15% is a much bigger discount than taking $10 off an item taxed at 8.25%. We decided that taking it off in proportion to its share of the cart subtotal price was the most fair method for the consumer and tax purposes.
If we had a $10 off coupon, the taxable portion for each item would be calculated like so:
Product A: $10 / $30 subtotal = 33.33% × $10 discount = $3.33 off… resulting in a taxable amount of $6.67
Product B: $20 / $30 subtotal = 66.66% × $10 discount = $6.66 off. resulting in a taxable amount of $13.33
($6.67 × 8.25%) + ($13.33 × 15%) = $2.55 total taxes
Taxes on Shipping
If the “Charge taxes on shipping” option is enabled for a jurisdiction, then taxes on shipping are calculated by multiplying the shipping cost × the default tax rate for the jurisdiction. This amount is then added to the order total.
In this case, the tax portion from shipping would be $5.00 × 0.825%, resulting in a shipping tax of $0.41.
We’ll start with a simple scenario of two products and a UK tax rate of 20%.
Product A (20%): £10.00
Product B (20%): £20.00
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Subtotal: £30.00
Shipping: £5.00
Taxes: £5.00
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Total: £35.00The taxes were calculated by: (20% x £30) / (1 + 20%) = £5.00
Discounts
All discounts are applied to the subtotal prior to tax calculation.
If we had a 50% coupon, the taxable amount would be £15.00 (£30.00 × 50%), resulting in a total tax of £2.50
If we had a £10 off coupon, the taxable amount would be £20.00 (£30.00 - £10.00), resulting in a total tax of £3.33.
Taxes on Shipping
If the “Charge taxes on shipping” option is enabled for a jurisdiction, then taxes on shipping are calculated by multiplying the shipping cost × the default tax rate for the jurisdiction. This amount is then added to the order total as it is not included in product prices.
In this case, the tax portion from shipping would be £5.00 × 20%, resulting in a shipping tax of £1.00.
In CartGenie, you can create special tax classes and apply different rates for classes in a jurisdiction.
Here is a scenario of two products with differing tax rates (default jurisdiction rate of 20%).
Product A (10%): £10.00
Product B (20%): £20.00
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Subtotal: £30.00
Shipping: £5.00
Taxes: £3.83
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Total: £38.83The taxes were calculated by: [(10% x £10) / (1 + 10%)] + [(20% x £20) / (1 + 20%)] = £4.24
“Percent Off” discounts are taken off of each amount equally prior to tax calculation
If we had a 50% coupon, the taxable portion of each product would be: Product A (10%): £5.00 and Product B (20%): £10.00, resulting in a total tax of £2.12.
“Fixed Amount” discounts are taken off of each item in proportion to their share of the subtotal. This is because taking £10 off an item taxed at 20% is a much bigger discount than taking £10 off an item taxed at 10%. We decided that taking it off in proportion to its share of the cart subtotal price was the most fair method for the consumer and tax purposes.
If we had a £10 off coupon, the taxable portion for each item would be calculated like so:
Product A: £10 / £30 subtotal = 33.33% × £10 discount = £3.33 off… resulting in a taxable amount of £6.67
Product B: £20 / £30 subtotal = 66.66% × £10 discount = £6.66 off. resulting in a taxable amount of £13.33
[(10% x £6.67) / (1 + 10%)] + [(20% x £13.33) / (1 + 20%)] = £2.83
Taxes on Shipping
If the “Charge taxes on shipping” option is enabled for a jurisdiction, then taxes on shipping are calculated by multiplying the shipping cost × the default tax rate for the jurisdiction. This amount is then added to the order total as it is not included in product prices.
In this case, the tax portion from shipping would be £5.00 × 20%, resulting in a shipping tax of £1.00.
Calculations are performed using 4 decimal points to ensure accuracy until the final tax amount is calculated (Ex: 8.25% x $45 = $3.7125)