This article explains how to configure sales tax rates in Pulse Commerce, including standard state tax rates, custom tax tables, international tax setup, and tax-exempt configurations at the customer and product levels.
Pulse Commerce offers several tax calculation methods to accommodate different business models and compliance requirements. Navigate to Settings > Tax Rates to access your tax configuration options.
Available Tax Calculation Methods:
Nothing is Taxed
- Use this option if your location does not have sales tax
- Appropriate for international merchants in tax-free jurisdictions
- Sets tax to zero on all orders regardless of customer location
Calculate State/Province Tax in Realtime
- Configure fixed tax rates for US states or Canadian provinces
- Choose between standard state list (all 50 US states) or custom state list
- Add tax tables for one additional country's provinces (commonly used for Canada)
- Best for merchants with straightforward tax obligations
Calculate State/City/Province/Zip Code Tax Using Avalara AvaTax
- Real-time tax calculation using Avalara's tax engine
- Automatic updates for changing tax rates and jurisdictions
- Requires purchased add-on module and Professional Services setup
- See the Avalara AvaTax Integration article for complete details
Calculate State/Province/Zip Tax Using Merchant Rules
- Custom zip code-based tax calculation
- Requires additional configuration and setup by Professional Services
- Contact your Account Manager to enable this option
This section covers basic tax rate configuration using the standard US state list. This is the most common setup for US-based merchants.
Setting Up Standard State Tax Rates:
1Navigate to Settings > Tax Rates.
2Select the Calculate State/Province Tax in Realtime radio button.
3Click Edit Values to access the tax rate configuration screen.
4Choose the Use Standard State List radio button. This displays all 50 US states and U.S. Armed Forces designations in the State dropdown where customers enter their address.
Configuring Individual State Tax Rates:
For each state where you have tax obligations, enter the following:
Tax Rate
- Enter the tax rate as a percentage (e.g., 5.12 for 5.12%)
- Tax rates can contain up to two decimal places
- This rate applies to the total sale price of goods
Tax Shipping Checkbox
- Check this box if tax should be calculated including shipping charges
- Default: Unchecked (tax is applied to order subtotal before shipping)
- Consult your tax accountant before enabling this option, as shipping taxability varies by state
5After entering all desired tax rates, click the Update button to save your changes.
Pulse Commerce allows you to set tax-exempt status or custom tax rates at the individual customer level. Customer-level tax settings override system-level tax configurations.
Setting a Customer as Tax Exempt:
1Navigate to Customers > Search Customers.
2Search for and select the customer you want to modify.
3Click Edit Customer to open the customer record.
4Locate the Advanced Settings section.
5For the Tax Exempt field, select Yes from the dropdown.
6Click Save Changes to apply the tax-exempt status.
Setting a Custom Tax Rate for a Customer:
If a customer should be taxed at a different rate than the system settings (but not exempt), follow these steps:
1Follow steps 1-4 above to access the customer's Advanced Settings.
2For the Tax Exempt field, ensure No is selected.
3In the Tax Rate field, enter a numerical value as a percentage (e.g., 8.5 for 8.5%).
4Click Save Changes to update the custom tax rate.
Customer Groups and Tax Treatment:
If your store uses customer groups for wholesale or special pricing:
- Customers assigned to a customer group can still have individual tax-exempt or custom tax rate settings
- Customer-level tax settings take precedence over customer group settings
- If using Avalara AvaTax, the customer group name is sent as the Customer Code to Avalara for tax determination
You can configure specific products to be tax-exempt or to have custom tax rates that override system-level settings. This is useful for products that have special tax treatment in certain jurisdictions.
Setting a Product as Tax Exempt:
1Navigate to Products > Product Catalog Manager.
2Locate the product you want to configure and click the Edit link. The Product Editor opens in a new window.
3Under the Simple tab, locate the Tax % field (highlighted in yellow in the interface).
4Enter 0 (zero) in the Tax % field to make the product tax-exempt.
5Click Update to save your changes.
Setting a Custom Tax Rate for a Product:
To apply a specific tax rate to a product (different from system settings):
1Follow steps 1-3 above to open the product in the Product Editor.
2In the Tax % field, enter the desired tax percentage (e.g., 5.5 for 5.5%).
3Click Update to save the custom product tax rate.
Product Tax Codes (For Avalara Users):
If you use the Avalara AvaTax integration, you can assign product tax codes for accurate automated tax calculation:
1In the Product Editor under the Simple tab, locate the Tax Code field (highlighted in yellow).
2Enter the appropriate Avalara tax code for the product (e.g., P0000000 for general tangible goods, or specific codes like PC040100 for clothing).
3Click Update to save the tax code.
When an order is placed, Pulse Commerce sends this Product Tax Code to Avalara for accurate tax determination based on product taxability rules.
For merchants who need specialized tax configurations—such as limited state selections, custom province lists, or international tax tables—Pulse Commerce offers advanced tax setup options.
Setting Up a Custom State List:
Use this option if you want to display only specific states in the State dropdown, or if you need to create custom state options for special tax zones.
1Navigate to Settings Tax Rates.
2Select the Calculate State/Province Tax in Realtime radio button and click Edit Values.
3Choose the Use Custom State List radio button.
4In the Add New Custom Tax section:
- Enter the State Name or abbreviation (e.g., NY, CA)
- Enter the Tax percentage (up to 2 decimal places, e.g., 5.13)
- Optionally check Tax Shipping if shipping charges should be taxed for this state
5Click Add New to add the custom state tax rate.
6Repeat steps 4-5 for each state you want to include in your custom list.
7Click Update to save all custom state tax configurations.
Setting Up International Tax Tables (e.g., Canadian Provinces):
Pulse Commerce allows you to configure tax tables for one additional country beyond the United States. This is commonly used for Canadian GST/PST/HST rates.
1Navigate to Settings Tax Rates and click Edit Values.
2Locate the Choose One Other Country dropdown menu.
3Select the country you want to configure (e.g., Canada).
4In the Add New Custom Tax section below the country selector:
- Enter the Province Name or abbreviation (e.g., ON for Ontario, BC for British Columbia)
- Enter the Tax percentage for that province (e.g., 13.0 for Ontario HST)
- Configure Tax Shipping if applicable
5Click Add New to add the province tax rate.
6Repeat steps 4-5 for each province/territory you need to configure.
7Click Update to save your international tax configuration.
How International Tax Tables Work:
When you configure a country's province list:
- A Province dropdown will appear for customers selecting that country during checkout
- For all other countries, customers will see a Province text box instead of a dropdown
- Tax is calculated based on the selected province when the configured country is chosen
Some businesses require more granular tax calculations based on zip codes, city boundaries, or complex tax jurisdiction rules. Pulse Commerce offers solutions for these specialized requirements.
Zip Code-Based Tax Calculation:
Sales tax calculation by zip code is possible but requires additional configuration and setup beyond the standard tax rate manager.
Available Options:
1. Merchant Rules (Manual Zip Code Configuration)
- Custom zip code-based tax rules configured by Pulse Commerce Professional Services
- You maintain specific zip code tax rates through the admin panel
- Best for businesses with a limited number of zip code-specific tax rates
- Requires manual updates when tax rates change
2. Avalara AvaTax (Automated Zip Code Calculation)
- Fully automated zip code-level tax calculation
- Includes city, county, and special district taxes
- Automatically updated when tax rates or boundaries change
- Requires purchased add-on module
- See the Avalara AvaTax Integration article for details
When to Consider Advanced Tax Solutions:
You should consider Avalara AvaTax or custom merchant rules if your business:
- Operates in states with origin-based sourcing (where your business location determines tax rates)
- Has nexus in multiple states with frequently changing tax rates
- Sells in jurisdictions with complex tax rules (multiple overlapping tax districts)
- Needs to calculate tax on a zip code or street address level
- Wants to eliminate manual tax rate updates and reduce audit risk
- Requires audit protection and compliance reporting
Tax Calculation Hierarchy:
Pulse Commerce applies tax rates in the following order of precedence:
- Customer-level tax settings (custom tax rate or tax exempt status)
- Product-level tax settings (custom tax percentage or tax code)
- Avalara AvaTax calculation (if enabled and configured)
- Merchant rules / zip code rules (if configured)
- State/Province tax rates (from Tax Rate Manager)
We do not have sales tax in my country; will United States tax rates apply?
No. If your location does not have sales tax, navigate to Settings Tax Rates and select the Nothing is Taxed radio button. This sets tax to zero on all orders regardless of customer location or product settings.
Can I have different tax rates for wholesale vs. retail customers?
Yes. Use the customer-level tax settings to assign custom tax rates or tax-exempt status to specific customers. Alternatively, if you use customer groups for wholesale pricing, you can set tax-exempt status for all customers in a wholesale customer group. See the "Tax Exempt Customers" section for detailed instructions.
How do I update tax rates when they change?
For manual tax rate configurations, navigate to Settings Tax Rates Edit Values and update the tax percentages for the affected states. If you use Avalara AvaTax, tax rates are updated automatically—no manual intervention required.
Can I charge different tax rates for different product categories?
Yes, but this requires product-level tax configuration. You'll need to set custom tax percentages on individual products or use Avalara AvaTax with product tax codes that automatically apply category-specific tax rules (e.g., clothing tax exemptions, grocery tax rates).
What if I need to collect tax in a state where I don't have physical presence?
Economic nexus laws may require you to collect tax in states where you exceed certain sales thresholds, even without physical presence. Simply add the state to your tax configuration in Settings Tax Rates and enter the appropriate tax rate. Consult your tax advisor to determine where you have economic nexus obligations.
How do shipping charges affect tax calculation?
By default, tax is calculated on the order subtotal before shipping charges are added. If your state requires tax on shipping, check the Tax Shipping checkbox for that state in the Tax Rate Manager. This is configured per state, so you can tax shipping in some states but not others.
Can I see what tax rate was applied to a specific order?
Yes. When viewing an order in Orders Order Manager, the order details page shows the tax amount charged and the tax rate applied. This information is also included in order confirmation emails sent to customers.