The Best Way to Set Up WooCommerce Taxes Without Plugins

Setting up taxes in WooCommerce may seem overwhelming, but you don’t need extra plugins to do it effectively. WooCommerce includes built-in tax settings that allow you to configure everything manually. This step-by-step tutorial will guide you through the process of setting up taxes correctly in WooCommerce without relying on third-party plugins.

Step 1: Enable Taxes in WooCommerce

WooCommerce does not enable tax settings by default, so you need to turn them on manually.

1. Log in to your WordPress admin dashboard.
2. Navigate to WooCommerce > Settings.
3. Under the General tab, scroll down to the Enable taxes and tax calculations option.
4. Check the box to enable taxes.
5. Click Save changes.

After saving, a new Tax tab will appear in your WooCommerce settings.

Step 2: Configure General Tax Settings

Now that taxes are enabled, you need to configure how they are applied in your store.

1. Go to WooCommerce > Settings > Tax.
2. Set Prices entered with tax:
   • Select Yes if your product prices already include tax.
   • Select No if you want tax added separately at checkout.
3. Choose how tax is calculated under Calculate tax based on:
   • Customer shipping address – Best if you sell internationally.
   • Customer billing address – Suitable for digital goods.
   • Shop base address – Ideal if you only sell locally.
4. Choose a Shipping tax class:
   • Select Standard if shipping tax is the same as product tax.
   • Choose a specific tax class if your region has different shipping tax rules.
5. Click Save changes.

Step 3: Set Up Tax Rates

You need to manually enter tax rates for each region where you collect taxes.

1. Go to WooCommerce > Settings > Tax.
2. Click on Standard rates (or any additional tax classes you need).
3. Click Insert row and fill in the details:
   • Country code: Use a two-letter country code (e.g., US for the United States).
   • State code: If applicable, enter the state code (e.g., CA for California).
   • Postcode/ZIP: Enter specific postal codes if required.
   • City: Enter the city name if necessary.
   • Rate (%): Input the tax percentage (e.g., 7.5 for 7.5%).
   • Tax name: Assign a recognizable name like VAT or Sales Tax.
   • Priority: Set the priority for this tax rate.
   • Compound: Check this if this tax applies on top of another tax.
   • Shipping: Check this if tax applies to shipping costs.
4. Click Save changes.

Repeat these steps to add tax rates for other regions if needed.

Step 4: Add Additional Tax Classes (If Needed)

If you sell products with different tax rates (e.g., reduced VAT for essential goods), create additional tax classes.

1. Go to WooCommerce > Settings > Tax.
2. In the Additional tax classes field, add new tax classes (e.g., “Reduced Rate”, “Zero Rate”), each on a new line.
3. Click Save changes.
4. You will now see separate tabs for each new tax class. Click on them and follow the same steps as in Step 3 to enter tax rates.

Step 5: Assign Taxes to Products

Now, you need to assign the correct tax class to your products.

1. Navigate to Products > All Products.
2. Click Edit on a product.
3. Scroll down to the Product data section.
4. Click the General tab.
5. Find the Tax class dropdown and select the appropriate tax class (e.g., Standard, Reduced, Zero).
6. Click Update.

Repeat this process for all applicable products.

Step 6: Test Your Tax Setup

Before going live, test your tax settings to ensure they work correctly.

1. Add a test product to your cart.
2. Enter a shipping address from a taxable region.
3. Proceed to checkout and verify that the correct tax amount is applied.
4. Adjust tax settings if necessary.

Bonus Tips for Managing WooCommerce Taxes

• Stay Updated on Tax Regulations – Laws change frequently, so stay informed about tax rules in your selling regions.
• Enable Tax Rounding – Set tax rounding at the subtotal level to prevent calculation errors.
• Test Different Customer Locations – Simulate purchases from different regions to confirm accuracy.
• Review Tax Rates Periodically – Update your tax settings regularly to remain compliant.
• Consult a Tax Professional – If you have complex tax requirements, seek expert advice.

Conclusion

Setting up WooCommerce taxes manually is easier than you think. By following this step-by-step tutorial, you can configure tax settings accurately without relying on third-party plugins. This approach saves costs, gives you full control, and ensures compliance with tax regulations in different regions.

If you found this guide helpful, share your thoughts in the comments below!