Tax classes and products

Which tax rate each product gets, how to give reduced-rate or zero-rate products their own tax class, what happens to products with no class, and how exempt products work.

A tax class is a label you put on products so they can be charged a different rate, for example Reduced for books and food or Zero for exports. This page explains how a product ends up with a rate, how to set classes in bulk, and what Brainerce does and does not decide for you. To create the classes themselves and their rates, see Set up taxes.

Brainerce suggests, you decide. It does not know which tax category your products legally belong to. It cannot tell that bread is zero-rated in your country or that a book is reduced-rate. It shows you the products that have no class chosen and you pick the class. Nothing is changed until you press Apply, and the AI assistant asks for your approval before it assigns a class.

Which tax rate does a product get?

Each product is taxed by looking for a tax class in this order, and the first one found wins:

The variant's own tax class. Only that variant uses it; the product's other variants carry on to the next steps.
The product's own tax class.
A category's tax class. If the product is in several categories that have a class, the category created first is used.
The store default class, if you chose one.
No class, which means the Standard (all products) rates.

Then the rate is the rate you gave that class for the customer's country (and state, if the rate has one). A product that is exempt is not taxed at all, whatever its class (see Exempt products below).

You can see where each product's class comes from in the product, under Tax class: when the product has none of its own, a line under the field says whether it is inherited from a category or is the store default.

Products with no tax class

A product with no class of its own and no class on its categories is charged the store default class, or the Standard (all products) rates when you have no default class. For most stores that is exactly right, and you do not have to classify anything.

Open Settings → Tax and find Products and tax classes when some products are taxed differently. It shows:

a card for each tax class with its number of products and rates,
how many products have no tax class chosen and what they are charged as,
a Products to review table of the 25 newest products with no class chosen, so you can set the ones that need a different rate.

Products that are exempt are left out of the review table, because you already decided about them.

Create and manage tax classes

Classes live on the Products and tax classes tab of Settings → Tax, in the Tax Classes section below the review table. Click Add Tax Class:

Field	What it does	Required, limit or default
Name	The label you pick in the product form and in Tax Class on a rate (for example Reduced).	Required, up to 100 characters.
Slug	The short key used to reference the class. It fills itself from the name until you edit it.	Required. Lowercase letters, numbers and hyphens only.
Description	A note for yourself.	Optional.
Default class	Applied automatically to products with no class of their own.	Off. Only one class is the default.

The list shows Name (with a Default badge), Slug, Description and Actions: Set as default, edit, and delete. A class that is still in use cannot be deleted: a product, a variant, a category or a tax rate that still points at it blocks the delete, and the confirmation says to reassign or merge first. A class with no rate of its own is charged the Standard rate, see the next section.

Reduced-rate and zero-rate products

Create the class, for example Reduced or Zero, as described above.
Add a tax rate for that class: open Add Tax Rate and pick the class in Tax Class. For a zero-rate class, enter 0 as the rate.
Give the class to the products, from Products to review, from the product, or from a category.

A class with no rate of its own is charged the Standard rate. Creating a Zero class and giving it to products is not enough: until the class has its own rate of 0, those products are charged the full Standard rate. The same goes for Reduced: without its own reduced rate, products in it pay the Standard rate.

There is one situation where a class with no rate means no tax at all: your Standard rate sits on your default class (the old setup wizard did this) instead of on Standard (all products). Then a class with no rate of its own has nothing to fall back to, and the customer pays no tax on its products in that country. The Tax Center warns you with "(class): products would pay no tax" under What to check. Press Add rate for this class to open the rate form with the class already picked.

Exempt products

A product is exempt when its Tax field is set to Tax exempt, or when it is in a category set to Tax exempt. Exempt products are not taxed, even if they also have a tax class.

Exempt and reduced-rate are different things. An exempt product pays no tax and is not part of any class review. A zero-rate product still has a tax class and a 0% rate, so the zero shows on the order and invoice as a tax line. Which one applies to your product is a legal question for you or your accountant.

The Products and tax classes section shows how many products are exempt. To see which ones, open the products list: the Tax column shows Tax exempt on each exempt product (add the column with the Columns button). There is no one-click filter for exempt products.

Set a tax class on products and categories

One product. Open the product and use Tax class next to Tax. It appears only when tax collection is on and you have at least one class. Leave it on Default to inherit.
A whole category. Open the category and set Tax class. Every product in it that has no class of its own uses it.
Many products at once. In Products to review on the Tax page, choose a class for each row, or tick several rows, pick one class under Set selected to, and press Apply to selected. Up to 25 products are shown at a time; the next ones appear after you apply these.
In the products list. The Tax class column (add it with the Columns button if you do not see it) can be edited in place.

A product created from the form takes its class right after it is created. A variant can have its own class, which wins over the product's class.

To remove a class from a product, set Tax class back to Default.

What Brainerce does not do

It does not decide a product's tax category. There is no automatic classification. The review table only lists products that have no class chosen.
It does not assign classes on its own. Nothing is applied until you press Apply or approve the assistant's proposal.
It does not tell you which rate is correct. It charges the rate you entered for the class.
It does not give a legal opinion. A suggestion from the assistant is a starting point, never a statement about what the law requires.
It does not retax orders you already took. A class you set today applies to new checkouts only.

Ask the AI assistant

You can ask the assistant "Which of my products have no tax class?" or "Are my products classified?". It reads the same numbers as the Tax Center and lists products with their categories. It may propose a class for a product and tell you why (the name and category), and it assigns one only after you agree. For a product you say is exempt, it marks it tax exempt instead. When it is not sure, it asks you.

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