Tax overrides

Set up Stripe Tax to fit your business needs with tax overrides. Create rules that apply to a product tax code in any supported location.

For example, you can:

• Change the Software as a service (SaaS) - personal use tax code from taxable to non-taxable in Louisiana to reflect the uncertainty of how SaaS might be taxed.
• Apply a 5% tax rate to the Newspapers tax code in Poland, instead of the applied rate of 8%, to reflect that your product is a regional newspaper and not a national one.
• Treat the Food for non-immediate consumption tax code as taxable at the standard rate in New York, to reflect that you sell a bagels with cream cheese.

After you create a tax override, you’re responsible for keeping the rate and taxability up to date with any changes in tax law. When you remove a tax override, Stripe manages the updates.

Access tax overrides

Calculations and transactions with tax overrides applied incur no additional charge over other tax calculations or transactions. To enable access to tax overrides on your account:

1. In the tax settings Dashboard, scroll to the Advanced options section.
2. Select +Create rules button in the Custom tax rules section.
3. Review the information about tax overrides and click Continue.
4. The Overrides tab now appears in your tax Dashboard.

Create a tax override

Create your first tax override in a sandbox to make sure you get the tax outcome you expect:

1. In the Dashboard, navigate to the Overrides tab in the Tax page.
2. Click + Create override.
3. In the section Product tax code, choose the product tax code your override applies to.
4. (Optional) Specify the date and time for the override rule to become effective under Effective date. For example, you can set the override rule to start from the first day of the month. If you don’t set a date, the rule takes effect immediately.
5. In the section Rule location, choose a jurisdiction where your override applies.
   • You can create a rule that applies to a country or state.
   • For US jurisdictions, you can also create a rule that only applies to a specific city, county, or district.
6. For Tax type, choose the type of tax your override applies to.
7. Click the Tax behavior you want to apply. We indicate whether the product tax code you chose is taxable or non-taxable in that specific location and for the particular tax type (for example, sales tax or VAT).
   • If you choose Taxable, you have two options:
     • Apply the standard rate. This means that your rule always uses the standard rate that Stripe has determined for that product tax code, tax, and location. If the standard rate changes, that change also applies to your products.
     • Apply a custom rate. This means that your rule uses the tax rate that you set. If the standard rate changes for that product, your custom rate still applies.

     Regional considerations

     United States

     You can’t apply a custom rate in the US when creating a rule for a state that applies to all jurisdictions in a state because several cities and counties have different tax rates. To determine a custom rate for these jurisdictions, select a specific city, county, or district in the jurisdiction dropdown.

8. Verify that all of the details in the Summary panel are correct. The Rate preview displays the expected tax rate that applies for a location within the jurisdiction you chose.
   • The calculated tax might vary for other addresses within the same jurisdiction.
   • In some cases, the tax code, tax, and location you select might be taxed at the location of your business, rather than the destination of the customer. In these cases, the preview displays how tax applies in your business location. We don’t use your tax override rule in these cases.
9. Click Create rule to apply your rule immediately, or at the time and date you chose.

View and maintain your tax overrides

View all your override rules in the Overrides tab. Click an override to view the following information:

• When the rule was created or edited.
• Who created or edited the rule.
• The taxability and rate that’s applied.
• The tax code, location, and tax the rule applies to.

If you have an override in place, Stripe won’t automatically update the taxability or custom rate of your product if something changes. It’s your responsibility to maintain your tax overrides to make sure they reflect what’s needed for your business.

Edit a tax override

If your override is scheduled to start in the future, you can edit the start or end time of your override rule. If your rule is already active, you can edit the end date and time. To change the tax code, location, or tax rate, you must archive the rule and create a new one in its place.

To edit your tax rule:

1. In the Dashboard, navigate to the Overrides tab in the Tax page.
2. Find the override rule you want to edit.
3. Click the overflow menu () next to the rule and choose Edit rule.
4. Make your changes to the time and date.
5. Click Save.

Archive a tax override

You can archive an override that you created. After you archive an override rule, it no longer applies to your tax transactions and Stripe’s default behavior applies instead. Rules can’t be unarchived, but you can create a new rule instead.

To archive your tax override:

1. In the Dashboard, navigate to the Overrides tab in the Tax page.
2. Find the tax override you want to archive.
3. Click the overflow menu () next to the rule and choose Archive rule.
4. Confirm your changes, then click Archive.

Verify which transactions have a tax override rule applied

To verify which tax override applies to a transaction, view the customizations_applied_ids column of the itemized export.

We don’t include transactions that contain tax overrides in the US-specific location reports or summarized reports. Learn more about the different tax reports.

How we pick which override applies

When two rules apply to the same product in the same jurisdiction, Stripe only applies the more specific rule.

For example, this might apply if Stripe treats your product as taxable in the state of Colorado, but you want to treat it as non-taxable in all of Colorado except for the city of Boulder, where it should be taxed at the standard rate.

To change this, you can create a rule for the tax code that you apply to your product for the state of Colorado:

1. Navigate to the Overrides tab in the Tax page, then choose Colorado from the Rule location dropdown.
2. Enable Include all jurisdictions.
3. Choose Sales Tax from the Tax type dropdown.
4. Set Non-taxable as the Tax behavior.

Additionally, you can create a second rule for the same tax code to apply tax in Boulder, but not elsewhere in Colorado:

1. Navigate to the Overrides tab in the Tax page, then choose Colorado from the Choose location dropdown under Rule location.
2. Disable Include all jurisdictions.
3. Choose Boulder from the Choose a jurisdiction* dropdown.
4. Choose Sales Tax from the Tax type dropdown.
5. Set Standard rate as the Tax behavior.

You can’t create a tax override that applies to the same specific jurisdiction (for example, Boulder) for the same tax code, during the same time period.

When you can’t use overrides

Some parts of a tax calculation can’t be overridden. The following things will continue to affect the final tax calculation:

• Sourcing rules: These rules determine whether tax is calculated using the destination of the buyer or the origin of the seller. If you create an override that applies to a jurisdiction, but your product is sourced to the origin instead, your override rule won’t apply.
• Tiers, thresholds, and taxable basis apply in some jurisdictions:
  • Taxable basis: In certain locations, only a specific portion of the tax code is taxable. For example, in Texas, only 80% of the cost of Software as a service is subject to tax.
  • Treatment based on price: Products might be treated differently based on their price. For example, in New York, clothing is exempt from tax if it costs under 110 USD, but taxable if it exceeds that amount. Even if you create a rule for New York City with a custom rate, sales of clothing in New York under 110 USD is still considered exempt.

Tax overrides for Connect platforms

Connect use cases that qualify for tax overrides

• Marketplaces (Connect platforms that assume responsibility for collecting and remitting taxes for their connected accounts)
• Connected accounts with access to the Stripe Dashboard and that are liable for collecting taxes

Connect software platforms partially supported by tax overrides

A software platform can create an override for their connected account by doing the following:

• Navigate to the connected account details page from the Connected accounts page.
• Log in as the connected account.
• Create a tax override in the Dashboard.

However, you can’t create a tax override at the software platform level that applies to all of your connected accounts.