A tax zone is a named area with its own tax rates. It can cover U.S. states, countries, postal-code ranges, or any place your other zones do not cover. Each rate charges a percentage for every active tax class, so one rate can charge 6% for physical goods and 0% for digital goods.
This article explains how to set up tax zones and their rates. To manage the goods categories those rates use, see Tax Classes. To manage where tax charges post, see Tax Products.
Prerequisites
- You need administrator access to Orders & Inventory's tax setup.
- Set up your tax classes first. A rate shows percentage fields only for the classes that are active when you open the zone. A tax class is an account-level category, not a zone-specific setting, so you can reuse the same class in every zone that needs it.
- On the product side, the product being sold must have Taxes enabled and a tax class selected in its financial configuration. Zones and rates do not add tax by themselves. Without the product-level setting, Rhythm adds no tax to an order even when the billing address matches a configured zone.
Where to Find It
Go to Orders & Inventory › Setup › Taxes › Zones to see every tax zone in your account. Select Create Tax Zone, or select a row's edit or clone icon, to open the zone form.
The Settings
| Setting | Options | Default | Effect |
|---|---|---|---|
| Name | Any text | Empty | The zone name staff see |
| ID | Suggested from the name | Generated from the name | The zone's permanent identifier. You can edit it only when you create or clone a zone |
| Type | States / Countries / Postal Code / Rest of the World | States | The kind of area the zone covers |
| Status | Active / Inactive | Active | Whether the zone charges tax |
| Override Tax Product | On/off, with a product selector | Off | Records this zone's tax against a tax product other than your account's default (see Tax Products) |
| Tax Rates | One or more named rates, each with a percentage per active class | None | The taxes this zone charges |
Defining the Area
The area fields change based on the Type you choose:
- States — choose one or more U.S. states from a searchable list.
- Countries — choose one or more countries.
- Postal Code — enter one or more ranges, each with a Start: and an End:. Select Add Range to add another range, and use the trash button to remove any range after the first. Postal codes are not always enough to identify a local tax rate because some postal codes cross local jurisdictions with different rates. Rhythm does not automatically determine local sales tax for a jurisdiction. You configure every rate yourself by state, country, or postal-code range, so verify your rates instead of assuming Rhythm applies a standard rate for you.
- Rest of the World — there is no area to define. This zone applies everywhere your other zones do not cover. Because it is a catch-all, a broad Rest of the World zone can overlap with more specific tax planning if you are not careful. For example, a Rest of the World zone with its own VAT rate can end up applying to a country you meant to handle in its own zone. If you run more than one VAT rule at once, such as one rate for an existing zone and a different rate for a new one, review your existing Rest of the World zones so a broad rule does not unintentionally reach a country that needs its own treatment.
Adding a Tax Rate
- On the zone form, under Tax Rates, select Add a Tax Rate. To change an existing rate, select that rate's edit icon.
- Enter a Name: for the rate.
- Enter a percentage for each tax class listed. Every active tax class in your account has its own field.
- To post this rate's tax to a specific product instead of the zone's or your account's default, tick Override tax product and choose one.
- Select Save Changes in the dialog, then save the zone itself.
Warning
The rate dialog's title bar reads Ship By Tax Method. That title is mislabeled; you are still adding or editing a tax rate.
Warning
Saving the rate dialog does not mark the zone form as having unsaved changes. If you add or edit a rate and then leave the zone form without changing anything else, Rhythm can discard your rate change without warning. Always save the zone itself after you work with rates.
Result
The rate appears in the zone's Tax Rates table with its name, each class percentage, and its product, or Use default tax product. Rhythm does not save anything until you save the zone.
Dependencies and Precedence
- Every zone and rate lives inside one tax setup for your account. When you save any zone, including a deletion, Rhythm saves the whole tax setup at once. If a colleague edits another zone at the same time, one of your changes can overwrite the other if you both save close together.
- Only active tax classes get a percentage field on a rate. If you deactivate a class after setting up a rate, Rhythm drops that class's percentage the next time someone opens and saves the zone. If you reactivate the class later, the rate gets a new 0% field instead of the old percentage. See Tax Classes.
- Rates in different zones can disagree about the same tax class. A class change does not update every zone at once, because each zone rebuilds its rate fields only when someone opens and saves that zone.
- Unticking "Override tax product" on a rate keeps the product on the rate; it only hides the choice. To remove the override entirely, delete and re-add the rate, or set the product back explicitly if you reopen it.
- A percentage must be 0 or more, and the zone's save additionally refuses anything above 100 or with more than two decimals. The dialog checks only the lower limit, so Rhythm catches a percentage above 100 only when you save the whole zone.
- You cannot save a tax setup that names a tax product or tax class which no longer exists. If a save fails without a clear reason, check that every product and class used by your zones and rates still exists.
Change Impact and How to Revert
Switching a zone to Inactive stops it from charging tax, and you can turn it back on later. Its places and rates stay in place. Deleting a zone removes the zone, its places, and its rates entirely, and you cannot undo that deletion from this screen.
Zone and shipping-method identifiers are checked separately, but Rhythm also checks your shipping zones for a possible duplicate when you type a new tax zone identifier. That duplicate check is advisory only and does not block the save.
Warning
There is no setting to hide tax line items from the Portal shopping cart. Once a zone and rate apply to a buyer's order, the tax shows in their cart. There is no way to display an order without showing tax that applies to it.
Permissions
Creating, editing, cloning, deleting, and setting up rates for tax zones all require administrator access to Orders & Inventory's tax setup. The account-wide default tax product is a separate setting that people with only tax-product access can also change; see Tax Products. Staff without tax access cannot open these pages. See Orders & Inventory Staff Access Policies.
Validation and Errors
| Message contains | Cause | Fix |
|---|---|---|
| Form Errors: a value for Name, ID, Type, or an area | A required field is empty | Fill in the field |
| Please enter one or more states / Please enter a valid starting or ending postal code range | The area for the selected type is incomplete | Fill it in |
| You haven't entered a valid value for Name / Classes | The rate dialog was saved without a name, or a class percentage was blank or negative | Fix the rate and save it again |
| Please enter a valid rate | A percentage field was touched and is empty or negative | Enter 0 or more |
| Unable to save Tax Zone | Rhythm could not save the zone. Common causes are a percentage above 100, too many decimals, or a missing tax product or class | Correct the rate or reference and save again |