State Taxes
Local taxes are associated with the State (province) setup in Admin. You can set a Tax rates based on the State (province). In Admin, local taxes are determined by the order's "Shipping" Address.
For example, if your business is in British Columbia, Canada, you may want to charge 6% GST and 7% PST on orders shipped to your own State/Province. However, all Canadian provinces are charged with 6% GST and all US states are charged with no tax. You can set Tax Options GST = 0% and PST = 0%. Both will be set as default tax. Then you Set the State Tax British Columbia 6% GST and 7% PST. Also set all Canadian Province 6% GST and leave all US States 0% tax.
Taxable Items
You can specify if an item is "taxable" in the item's setup page. By default, all items are considered taxable. If you have a specific item in your store that is tax-exempt, locate the item and select "No" in the Taxable field.
Tax per Item
This is extremely useful when you sell products with different tax rates. Note that food, raw material, wine, finish product, service may be charged with different tax rates.
For example: If you set up
1. the Tax Name at Tax Option eg. HST or VAT (do not enable default); and
2. set up the HST or VAT rates in the State Taxes
You can add the above taxes in the item at the “Add Tax”. You can also remove a tax in individual item by clicking on the tax and remove it.