Collecting taxes for your online transactions

Collecting taxes for your online transactions

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Last updated October 08, 2026 18:11

Important information about setting up taxes for your online store.

You can calculate and collect taxes like Sales Tax, Value-Added Tax (VAT), and Goods and Services Tax (GST), from customers at checkout when required, and export your sales data into a report. Use this guide to learn more about setting up tax rates for your store.

Throughout this guide, “sales tax” refers broadly to any consumption-based tax, including US sales tax, VAT, and GST.

Note: This guide offers useful information, but it isn't legal or accounting advice. Squarespace doesn't provide advice about laws applicable to your site or business, as stated in our Terms of Service. If you have questions about collecting taxes, consider speaking with a tax advisor.

Before you begin

VAT and GST applies to goods and services in the EU, UK, and other countries. VAT rules and rates for your store depend on where you're located.
You can export your sales tax data from the Accounting panel. Learn more in Managing your accounting data.
You can collect sales tax in every state or country where you have a physical location like a store, office, or warehouse. Depending on local laws, you may also need to collect tax in jurisdictions where you make sales, even without a physical location.
Visit Sales tax 101 for small business owners for guidance on sales tax. We strongly recommend that you consult with a tax advisor regarding your business’s tax obligations.

Set up automated taxes

You can automate your sales tax calculations at checkout for a fee. This calculation is based on your business address, your customer’s shipping or billing address, and the locations where you’re registered to collect tax. You can set up automated tax rates from the Taxes panel.

Recommended if you:

Don’t want to manually set up tax rates
Want to avoid errors when collecting taxes
Want to use multiple Product Tax Codes
Want tax rates to update automatically whenever they change

To use automated taxes, you must add tax registrations for the correct addresses or postal codes.

Note: Every business is different, and tax laws vary by location. You're responsible for registering with the appropriate tax authorities. Squarespace can’t help with this process or offer tax advice. You’re also responsible for ensuring your business collects, files, and pays the correct taxes. We recommend working with a professional tax advisor for specific guidance about your business and to understand your tax obligations.

Visit Setting up automated tax rates in Squarespace for detailed setup instructions.

Set up manual taxes

You can set tax rates manually from the Taxes panel. When manual taxes are enabled, the rates you’ve manually set are applied at checkout.

Recommended if you:

Have a single tax rate that applies to all products on your store
Want to manually set up tax rates

Tip: You can switch between automated and manual tax rates in the Taxes panel.

Set up taxes for service products

Taxes for physical products depend on shipping or pickup locations, while digital products use the shopper's billing address. For service products, like in-person classes, workshops, or events, you can calculate taxes using the physical location where the service takes place.

When editing a service product, set its Tax address source to one of these options:

Default service tax address: Calculates tax using your store's global tax origin address set in your tax settings.
Customer’s billing address at checkout: Calculates tax using the billing address the customer enters at checkout.
A different address: Calculates tax using a custom physical address you enter for that specific service.

Add a tax address for service products

To add a tax address for service products:

Open the Taxes panel.
Under Tax address for service products, click Add next to Service product tax address.
Enter your address, and click Save.
You can assign a service address to individual service products within the Product Editor.

How sales tax is calculated at checkout

Sales tax is applied at checkout after your customers enter the following information:

Shipping address: Used to calculate tax for physical products.
Billing address: Used for download products and service products. Also applies to local pickup, regardless of the product type, unless you add a taxation address.
Billing postal code: Used for Digital products pricing plans. Tax is based on the billing postal code tied to the member's payment method.
Taxation address: Applies to local pickup orders when a taxation address has been added.
Carts with different product types: If a customer buys different product types in a single order, checkout calculates taxes per line item. Physical products use shipping addresses and service products use their assigned service location.
Fallback addresses: If a service product uses a custom location or default tax address that’s missing or invalid, checkout defaults to the customer’s billing address to calculate tax.
Subscriptions: Recurring service subscriptions use the location tax rule in place during the original purchase. Updating a product's service location later won't change existing recurring orders.

The order total updates to include the correct tax based on your tax setup and the information collected at checkout. If a customer uses a discount, tax is calculated on the discounted price. When more than one tax applies, like state and local taxes, they’re both added, but won’t compound.

Tax-inclusive pricing

With tax-inclusive pricing, tax is built into the listed price. Customers pay the price you show, instead of paying the listed price plus tax. The tax portion is calculated at checkout and varies by customer location. You can switch between displaying tax in the price or adding it at checkout from the Taxes panel:

Open the Taxes panel.
Under How tax is added, choose Include in price, then click Save.

Tip: You can customize receipts to change how tax and pricing displays.

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Collecting taxes for your online transactions