Tax calculation

How automatic tax calculation works and the calculators, categories, and rules that power it

Commerce Layer automatically calculates taxes at checkout using a configurable calculator per market — you can use a supported third-party service, an external integration, or define your own rules manually.

Tax calculators

Taxes are automatically calculated at checkout. If the price list associated with a market does not include taxes, the tax is added to the order total and customers are charged. If the price list includes taxes, the tax is only reflected in the order summary. Tax calculators use the merchant's address and the shipping address to determine the order's tax rate.

An organization can have one or more tax calculators. You can connect a tax calculator to a market, and all taxes for orders in that market will be calculated automatically. Commerce Layer currently supports Avalara, Stripe Tax, TaxJar, and Vertex, plus the option to use a manual tax calculator or implement custom logic via external tax calculators. If you use a manual calculator, you must define its tax rules manually — third-party calculators already provide their own rules by default.

Tax categories

Tax categories are defined for all SKUs that have special taxation. They are used by the tax calculators that support them — currently Avalara, Stripe Tax, and TaxJar — to determine any reduced tax rate for SKUs.

Tax rules

Tax rules are associated with manual calculators. They allow you to define matching rules based on the shipping address, unlike third-party calculators which provide tax rules by default. You can use regular expressions to filter shipping addresses by country, state code, and zip code — the applicable tax rule is then determined by matching the order's shipping address against the defined expressions.