Exclude WooCommerce Shipping Costs from Tax Calculations

With this guide, we’ll tell you about WooCommerce Shipping Tax and how to exclude WooCommerce shipping costs from tax calculation. We’ll take the example of the WooCommerce FedEx Shipping plugin and show you the necessary steps.

What is WooCommerce Shipping Tax?

WooCommerce shipping tax is the option provided by WooCommerce to include tax in the price calculation. WooCommerce also allows you to set the tax percentage and lets you enable tax based on the location.

Under the Standard rates, you get to enable or disable the tax option for locations and zones. In the image shown above,  you can clearly see that the radio button has been disabled, meaning, the 14% tax is not applicable for the ZIP code 10017, New York.

The Need to Exclude WooCommerce Shipping Costs from Tax Calculation

You have the choice to apply taxes to either each product or the entire cart. You also get to choose if you want to have a tax on the shipping charges you offer.

However, most shipping carriers like FedEx have either taxes already included in the shipping costs or are tax-free. So there’s no need to add an additional tax to the shipping amount. Let’s take a real-life example of a store owner with a simple query.

Customer: Since FedEx shipping is tax-free, I would like to exclude WooCommerce Shipping costs from the tax calculations. How do I configure this using the WooCommerce FedEx Shipping plugin?

Excluding WooCommerce Shipping costs using WooCommerce FedEx Shipping Plugin

The WooCommerce FedEx Shipping plugin fetches the real-time shipping rates directly from FedEx APIs and displays on the Cart/Checkout page. The returned FedEx rates are inclusive of the necessary tax and thus, there’s no need to add another layer of tax.

To exclude tax from shipping cost calculation, you need to go to your WooCommerce settings and slide up to the Tax section. Once there, you can uncheck the Tax option on under the Shipping column from the respective tax rule. Now, let’s take an example and try to see it effects on the cart page.

In the above example, we’ve taken an example with the shipping tax calculation turned on. As you can see, the cart clearly says that the taxes are being calculated and the FedEx shipping rates are also inclusive of taxes. Note that the FedEx Ground is $11.90 which is a tad more than what FedEx usually displays.

Now, once you disable the Shipping tax option under the tax option, you should be able to see shipping rates exclusive of the tax. In the image below, you can see that the FedEx Ground is $10.44, which is clearly lesser than before.

Conclusion

WooCommerce Shipping Tax is one area where users often face difficulty in setting up a WooCommerce store. It may get even worse when you try calculating the WooCommerce shipping costs and managing taxes.

We hope this article would have helped you exclude tax from the shipping cost calculation. If you have any problem setting up the WooCommerce FedEx Shipping plugin, then feel free to Contact PluginHive Customers Support.

Happy selling!