Get Started with Tax Exemption Rules

You can apply tax exemption rules accurately and automatically with the Square app on an iOS or Android device. Customize your tax settings from your online Square Dashboard to apply them to sales across your devices. Tax exemption rules can be applied to custom amounts, individual items or an entire category of items.

Manage Tax Rules Online

Set Up Tax Exemption Rules

You can create Tax Exemption Rules to exempt taxes based on dining options, item price or total price of items. When the threshold conditions are met, the exempted items will not have the tax rate applied. Creating and editing a tax exemption rule is only available through your Square online Dashboard at this time. To apply Exemption Tax Rules correctly at checkout, update the Square Point of Sale app on your iOS or Android devices. 

1. Visit Account & Settings in your online Square Dashboard > Business > Sales taxes.

2. Select the tax you want to add an exemption rule to.

3. Click Add exemption rule to specify when the tax should not be applied.

4. Choose one condition: if item price is below an amount, if total price is below an amount or if dining option is used.
   Note: Dining options must be turned on prior to using the dining option as a tax exemption rule. To customize your dining options, navigate to Items > Settings > DiningOptions to edit, add or remove.

5. Choose locations and items for this exemption to apply to.

6. Click Save.
   

Edit Tax Rules

1. Visit Account & Settings in your online Square Dashboard > Business > Sales taxes.

2. Click the tax rule you’d like to modify to edit the conditions.

3. Click Save.

Tips for Using Tax Rules

• Conditional tax rules allow you to preset conditions where taxes won’t be applied. During setup, make sure to select items that won’t have tax applied when a specific dining option is used. For example, let’s say coffee “for here” should be taxed, but coffee “to go” shouldn’t be. You’ll want to create a tax rule that removes sales tax when the “to go” dining option is applied, and then add the coffee item to the rule.

• Similar to dining options, conditional taxes can be applied to all items in the cart, or to individual items. Dining options and tax rules work together, so a tax rule will apply to sale based on how the linked dining option is applied to the sale (either to the entire cart or to a specific item). Learn more about applying dining options from the Square app.

• A tax rule can’t be applied to a cart total – only to the items in the cart.

• Tax rules aren’t compatible with item modifiers.