Create and edit tax rules

About tax rules

You can create tax exemption and tax reduction rules based on fulfilment method, item price, total price or item quantity, and apply them accurately and automatically on the Square Point of Sale app. You can apply tax rules to custom amounts, individual items or an entire category of items. When the threshold conditions are met, the relevant items do not have the default tax rate applied.

Conditional tax rules are preset conditions where taxes aren’t applied, and you can apply a conditional tax rule to all items in a cart or to individual items. Dining options and tax rules work together, so a tax rule applies to a sale based on how the linked dining option is applied to the sale – either to the entire cart or to a specific item.

Before you begin

Make sure you’ve created at least one sales tax before creating a tax rule. Learn how to create and manage sales tax settings.

You can create and edit tax exemption and reduction rules through your Square Dashboard.

To apply tax rules correctly at checkout, make sure the Square Point of Sale app on your devices is up to date.

Tax rules only apply to the items in a cart. You cannot set tax rules for item modifiers. To apply tax rules to dining options, set up your dining options first. Learn how to create and manage dining options.

Tax rules you add to item categories will automatically apply to any future items added to those categories. Similarly, removing an item from a category will also remove the tax rule from it.

Add tax rules

You can add tax rules through your Square Dashboard.

1. Sign in to your Square Dashboard and select Settings > Account & Settings > Payments > Sales taxes.

2. Under Sales taxes, select the tax you want to add a rule to.

3. Click Create rule under Tax rules to specify when the default tax should not be applied.

4. Enter the name of the tax rule.

5. Select either:

   1. Tax exemption: This option ensures that the default tax will not apply, making the selected item(s) completely tax-free.

   2. Tax reduction: This option allows you to lower the tax rate. Enter a value in the Reduce tax to field. Ensure that this rate is lower than the default tax rate. Note: If you want a 0% tax rate, choose Tax Exemption instead of Tax Reduction.

6. Click Add condition and select one of the following options:

   1. Fulfilment method then tick the appropriate fulfilment methods.

   2. Item price then enter a value in the ‘When item price is less than’ field.

   3. Total price then enter a value in the ‘When total price is less than’ field.

   4. Item quantity then select either equal to, less than or greater than, and enter an amount.

7. Click Add condition if you’d like to add an additional condition that has not been already selected.

8. Select the Locations where the tax rule should apply.

9. Select the Items & categories to which the tax rule should apply.

10. Click Save.

Once created, your tax rules will be visible in the Sales Tax modal to which they apply.

Edit tax rules

You can edit, disable or delete your tax rules from your Square Dashboard. By disabling a tax, the tax will no longer be applied to purchases. You can enable a tax again by following the same process. Deleting a tax removes the tax from your Square account and cannot be undone.

1. Sign in to your Square Dashboard and select Settings > Account & Settings > Payments > Sales taxes.

2. Under Sales taxes, select the tax rule you want to edit.

3. Click the pencil icon next to your tax rule name to edit the rule, update the fields you want to change and select Save.

4. To disable or delete the tax rule, select Remove and click Save.

Related articles

• Create and manage your sales tax settings

• Set up your card surcharges