We can create Tax Rates and Tax Rules in Magento 2 based on consumer and product. Tax Rules determines the amount of the tax customer will pay based on billing address, product class, and customer class.  Every product has product class, and the consumer has customer class.

There are two primary steps:

  1. Fill the Tax Rule Information
  2. Configure the Additional Settings

How to Fill the Tax Rule Information?

  • Login to Admin Panel, go to  STORES =>Tax Rules

Tax rule menu

  • List of already added rules will get displayed.
  • You can add new tax rule by clicking Add New Tax Rule button. The following page will get open, fill the information

Tax rule info

  • Optional: You can also add new tax rate by clicking Add New Tax Rate button

Tax rate

How to Configure the Additional Settings?

  • Expand Additional Setting tab, to set following:
    • Customer Class:    Customer Tax Class is a kind of customer(Customer group) that is making a purchase.  If you serve different kinds of customers such as retail, business, and nonprofit, you will need to create different Customer Tax Classes.For Example, Government users should be exempted from Tax Payment, so class for government user can be created. To see current customer groups go to Stores => Customer Group

New customer group

  • Product Tax Class: They are used in calculations to determine the correct tax rate applicable in the shopping cart.You can assign particular class while creating a new product. For example, there may be no tax for some products. Product Tax Class can be found in Products => Catalog => New Product

Product tax class

  • Priority: If several Tax Rules try to apply several Tax Rates at the same time Magento decides the priority based on the value you provide in this field.For example, assume you sell a product in Philadelphia, Pennsylvania. Further suppose that according to the Tax Rule for Pennsylvania, the sales tax for that item is 6 percent and that the Tax Rule for Philadelphia adds another 1 percent. In this case, you want Magento to add the two sales tax. So, you would give the two Tax Rates the same Priority.
  • Sort Order: Sort Order determines the Tax Rule’s position in the list of Tax Rules.

Additional Setting

  • Fill the information, and Click Save Rule, the Rule will get add to the Rules list

Tax Rules Grid

Hope this tutorial will help you to add Tax Rules in Magento 2. Thanks for reading!