How to add state tax to a price

The Texas Tax Policy News has been updated to provide guidance on the proper calculation of sales and use tax.

Table of Contents Show

Get Free Tax Rate Tables
Create Sales Taxes
Create Sales Tax Online
Create Sales Tax In-App
Disable or Delete Sales Taxes
View Taxes from Item Level
Edit Taxes at the Time of Sale
Create Tax Exemptions
Set Up Taxes in Square Online
Manage Taxes with the Catalog Import Tool
Related Articles
Can't find what you need?
How do you add tax and price?
How do you add tax to a price in Texas?
What is the formula to add sales tax?

Here are the highlights:

“If the sales price involves a fraction of a dollar…a fraction of one cent that is less than one-half of one cent is not collected and a fraction of one cent that is equal to one-half of one cent or more is collected as one cent of tax.”
“…[T]he amount should be carried to the third decimal place.”
“If the numeral numeral in the third decimal place is equal to or greater than five, the amount should be rounded up to the next cent.”
State and local sales tax should be calculated by multiplying the state rate by the total sales price, then multiplying the local rate by the total sales price and adding the totals together to get the final sales tax due on the purchase. [Example 1]
“When several taxable items are sold in the same transaction, sales tax is computed on the total sale of taxable items, not on the sale of each individual item.” The final total is after coupons, discounts, “free” offers and “…all other price reductions have been subtracted.” [Example 2]
Sellers may not round off the sales tax rate.

Example 1:

“…an item is sold for $20 and the total tax rate is 8.25 percent (6.25 percent state tax, 2 percent city tax). The seller should multiply $20 by the state tax rate (6.25 percent) and then multiply $20 by the city tax rate (2 percent). The seller would add state tax ($1.25) and the local tax ($.40) to compute the total tax due ($1.65).”

Example 2:

“…a retailer may offer a customer a 10 percent discount on all purchases. If the customer buys an item marked at $50, the discounted price becomes $45. Tax is computed on the final discounted sales price of $45.”

Get Free Tax Rate Tables

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.

Avalara Author

Susan McLain

Avalara Author Susan McLain

Susan McLain began her career as a technical writer in technology industries such as satellite networking and medical devices. Her skills encompass technical and marketing writing, usability engineering, verification and validation testing and protocol writing, requirements development, business analysis, technical illustration/graphic design and marketing. She has owned her own business providing service to small to medium sized business and in other positions, she has been in project management, documentation and marketing. She is currently the content specialist for Avalara helping to “make sales tax less taxing.”

Please note that this guidance is general in nature and does not constitute legal, tax or any other type of professional advice. If you are unsure about your tax or where to find the relevant information, we suggest that you consult with a professional.

With Square Point of Sale, you can apply taxes to your sales and create custom taxes. Enable your team members to edit taxes at the time of a sale through your team permissions and track your taxable and non-taxable sales in your online Square Dashboard.

Square’s fees are taken out of the total amount of each transaction, including tax and tip.

Create Sales Taxes

Create Sales Tax Online

Go to Account & Settings from your online Square Dashboard.
Click Business information > Sales taxes.
Click Create tax.
Enter the tax name, rate and select the location.
Choose tax application and select if it will apply to custom amounts.
Choose to add an exemption rule which will specify when this tax shouldn't be applied.
Choose to Include tax in item price, which shows one amount – the combined sales tax and item price. If toggled off, the tax will appear as a separate line item to the price.
Click Save.

Create Sales Tax In-App

From the Square Point of Sale app:

From the navigation bar at the bottom of your screen, tap ≡ More.
Tap Settings > Checkout > Sales taxes.
Tap the tax you would like to modify or create a new tax. On a mobile device tap the + icon. On a tablet, tap Add a New Tax.
Fill out the tax information.
Tap Save.

Disable or Delete Sales Taxes

View Taxes from Item Level

Go to Items & orders > Items from your online Square Dashboard.
Click on an item to bring up the item details page. If taxes have been applied to an item, they will be listed under the Taxes field.
If there is no sales tax applied, click Account & Settings > Sales Tax to get started.

Note: Sales tax and custom taxes will automatically apply to sales where a custom amount is entered. To disable taxes for custom amounts visit your tax settings in the app.

Edit Taxes at the Time of Sale

From the Square app, tap Checkout > Review Sale.
Tap an item.
Under Taxes, toggle applicable tax rates on or off.

Note: From the Current Sale screen, you can also tap Tax to view all tax rates applied to the current sale. Tap the red X icon to remove a tax rate from applicable items within the sale, then tap Save to return to checkout.

Create Tax Exemptions

You can create tax exemption rules on your online Square Dashboard to apply them to sales across your devices. These rules can exempt specific items or item categories from taxes. You can also create a tax exemption rule for sale totals that are above or below a custom price point. Learn how to create and manage tax exemption rules with our Tax Exemption Guide.

Set Up Taxes in Square Online

Learn more about setting up taxes for your Square Online site >

Manage Taxes with the Catalog Import Tool

Once you've created sales taxes, you can apply the tax to your catalog via the catalog import.

Once the tax rate is created, click Items > Actions > Export Library in your online Square Dashboard.
Once exported, tax columns will appear at the end of the spreadsheet. From here, enter Y or N in each item row to apply, or not apply the tax rate to the selected item in the catalog.
For large catalogs, items can be sorted by category, or a formula can be written to facilitate the bulk application of tax rates.
Once tax rate(s) has been assigned to items within the spreadsheet, go back to Items > Actions > Import Catalog > Modify Item Library to upload any changes.

Note: When editing any existing catalog items from the spreadsheet, do not edit or remove the value in the Token column. Upon reimporting, the token is used to identify the existing item in the catalog.

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Can't find what you need?

How do you add tax and price?

Sales Tax Calculation Formulas.

Sales tax rate = sales tax percent / 100..

Sales tax = list price * sales tax rate..

Total price including tax = list price + sales tax, or..

Total price including tax = list price + (list price * sales tax rate), or..

Total price including tax = list price * ( 1 + sales tax rate).

How do you add tax to a price in Texas?

State and local sales tax should be calculated by multiplying the state rate by the total sales price, then multiplying the local rate by the total sales price and adding the totals together to get the final sales tax due on the purchase.