Stripe Taxes WordPress: 3 Easy Setup Methods

Operating an online store might necessitate sales tax collection based on location and sales volume.

Tax rates differ across countries, states, and regions, making accurate calculation complex. 🤯

As a business with a global customer base, we have experienced these exact challenges.

Fortunately, WordPress plugins simplify automated tax collection, regardless of your product type.

For our software and plugin sales, we use Easy Digital Downloads, which streamlines tax collection. If you sell physical goods or services, a tool like WooCommerce may suit you better.

This guide provides a step-by-step walkthrough of collecting taxes for Stripe payments in WordPress for various scenarios.

Why Collect Taxes for Stripe Payments in WordPress?

For online businesses, tax collection is not merely advisable, but a legal necessity.

Whether you are selling physical products, digital downloads, or subscription services, you need to collect the appropriate taxes at checkout to comply with local, state, and international laws.

This is largely due to rules known as ‘economic nexus.’ In simple terms, this means you might need to collect sales tax in a state or country even if you don’t have a physical store there, simply because you’ve reached a certain amount of sales.

Failure to do so could lead to hefty penalties and also harm your business’s reputation. So, collecting taxes for all your Stripe payments in WordPress is not negotiable.

Keep in mind, though, that taxes are also an important part of the user experience.

When you calculate and display taxes clearly during checkout, customers are less likely to feel surprised or frustrated by final payment totals. Plus, it shows them that your business is legitimate and also simplifies your bookkeeping process.

Having said that, let’s take a look at how to easily collect taxes for Stripe payments in WordPress.

We will cover a few different methods, and you can use the quick links below to jump to the one you want to use:

Collect Taxes for Subscriptions, Services, and Single Products (WP Simple Pay)

If you sell subscriptions, services, or single products on your website, then the easiest way to make money and collect taxes is by creating a simple payment form.

For this, WP Simple Pay is a solid option, providing numerous pre-built payment templates, a user-friendly form builder, and thorough spam protection features.

During plugin testing, its automatic and fixed tax settings proved highly useful. The fixed tax rate setting allows manual tax rate configuration, ideal when focusing on regions with stable tax regulations.

Conversely, the automatic tax rate function determines and uses the correct rate according to the customer’s location, which streamlines workflows and minimizes potential mistakes.

Refer to our WP Simple Pay review for an in-depth account of our experiences using the plugin.

Begin by installing and activating the WP Simple Pay plugin. Refer to our guide on WordPress plugin installation for detailed instructions.

Upon plugin activation, a setup wizard will be displayed. Simply select the ‘Let’s Get Started’ button to proceed.

The next step is to input your plugin license key.

This key is available in your account on the WP Simple Pay website. After entering it, select ‘Activate and Continue’.

Following that, you’ll need to link your Stripe account to WP Simple Pay. Plugin operation is contingent on connecting it to a new or pre-existing Stripe account.

Initiate the process by clicking ‘Connect with Stripe’ and logging into your Stripe account. For detailed instructions, consult our tutorial on integrating Stripe payments in WordPress.

Once you have successfully connected your website with Stripe, the setup wizard will ask you to configure your emails.

Here, you can activate email notifications for payment confirmations, upcoming invoices, and payment alerts. You’ll also specify the email address where you want these notifications sent.

Then, select ‘Save and Continue.’ Proceed with the remaining steps, or exit the setup wizard.

After completing the setup, navigate to theWP Simple Pay » Payment Formssection of your WordPress admin area.

Next, click the ‘Create Your Payment Form’ button.

This action redirects you to a ‘Select a template’ screen, presenting available templates.

Select a template by clicking ‘Use Template’ below your choice. This example employs the basic ‘Payment Form’ template.

Once you’ve selected a template, the WP Simple Pay form builder will open. Begin by entering a title and a description for your form.

Then, select your form type as ‘On-site payment form.’

Now, head over to the ‘Form Fields’ tab. Here, you will find a dropdown menu where you can add a new form field.

Then, click the new field to expand its settings and customize it accordingly. Rearrange fields by dragging and dropping them as you prefer.

These fields will be visible on your payment form, so ensure you include all necessary fields to gather required customer information.

If you wish to display tax rates according to the customer’s location, incorporating an address field becomes necessary, prompting customers to input their address during purchases.

After that, navigate to the ‘Payment’ tab and specify a price for your product; the ‘Add Price’ button facilitates the inclusion of multiple products.

Conversely, if you intend to offer subscription services, opt for the ‘Subscription’ setting and proceed to establish various tiers.

When you are ready, scroll down to the ‘Payment Methods’ section to choose options like ACH direct debit, card, Klarna, Affirm, Cash App, and Bancontact to accept Stripe payments.

With that complete, proceed to the ‘Tax Collection’ area where you’ll choose one of two available tax collection approaches according to your needs.

We’ll demonstrate how to incorporate both a fixed and an automatic tax rate into your payment form.

Method 1: Incorporating a Fixed Tax Rate for Stripe Payments (For Single Region Sales)

This segment details the tax collection procedure when operating within a single region; an optimal choice for those selling and shipping solely within a limited area that features consistent taxes, like a province or state.

This requires manually setting the tax rate for your offerings.

First, access the ‘Payment’ tab within WP Simple Pay’s settings. Subsequently, from the Tax Collection dropdown, choose the ‘Fixed tax rates’ option.

After you’ve made your selection, just click the ‘Save Draft’ button for your form.

Next, navigate to the WP Simple Pay » Settings » General page from the WordPress dashboard and switch to the ‘Taxes’ tab.

On this page, enable the ‘Global Tax Rates’ option by checking the box next to it. This action will reveal new settings; click the ‘Add Rate’ button.

In the popup window, input a name and tax rate relevant to your products or services.

Next, define whether your tax calculation will be inclusive or exclusive.

Choosing inclusive tax means the tax is automatically rolled into the item’s total displayed price.

Exclusive tax presents a breakdown to customers, showing a subtotal for the base price, with the sales tax displayed as a separate line item.

Exclusive tax is recommended to avoid customer perceptions of overcharging.

After selecting your tax type, click ‘Add Tax Rate’. The popup will close; then save changes by clicking ‘Save Changes’.

Now, open up your form again and visit the ‘Payment Page’ section in the left column.

Here, you can check the ‘Enable a dedicated payment page’ box to create a custom payment form page. To customize the form, you can add a permalink, color scheme, image, and footer text.

Lastly, save your configurations by clicking the ‘Publish’ button.

You can now visit your website to see the payment form with a fixed tax rate.

However, if you’re incorporating the form into a pre-existing page, select ‘Publish’ after setting the tax rate.

Next, from your WordPress dashboard, access the desired page and select the ‘Add Block’ option.

When the block selection appears, find and insert the WP Simple Pay block, then select the form you previously configured from the presented list.

Afterward, save your modifications by clicking ‘Update’ or ‘Publish’.

You’ve successfully integrated a payment form, complete with a set tax rate, onto an existing WordPress page.

📌 Related Post: If you’re setting up taxes in WordPress, then understanding online payment trends can help you optimize your checkout process. Check out our post on important payment statistics, data, and trends to stay informed.

Method 2: Add Automatic Tax Rate for Your Stripe Payments (Selling in Multiple Locations)

This method is suitable if you wish to automatically determine the tax rate for customers based on their location, especially if you sell internationally.

To do this, you must choose the ‘Automatically calculated by location’ option from the ‘Tax Collection’ dropdown menu in the WP Simple Pay form builder.

For this functionality to work, you’ll need to enable Stripe’s automatic tax feature, Stripe Tax, through your Stripe account.

This Stripe tool manages the intricate calculations automatically.

From this dashboard, you can track regions where your business is approaching the tax threshold – the sales volume that triggers mandatory tax collection and registration.

Following that, you can readily incorporate registration and begin tax collection for those specific locations.

It’s important to verify your origin address and specify a default tax category for precise tax computations for your business.

Returning to your WordPress dashboard, you’ll observe that selecting this option has introduced new settings within the ‘Tax Collection’ area.

In this section, designate a tax category for the product or service you’re offering from the ‘Tax Category’ selection.

For example, if you’re selling skin care products, you can select that particular option.

Then, determine if you prefer to show tax inclusively or exclusively. Choosing the inclusive method means the tax is part of the total product cost.

Conversely, selecting the exclusive option means the tax will be displayed as a separate charge. The subtotal reflects the item’s base cost, with an additional line for sales tax.

We suggest using the exclusive option because it gives your customers greater transparency.

After completing those steps, navigate to the ‘Payment Page’ area.

If you desire the plugin to automatically create a dedicated payment page, check the box labeled ‘Enable a dedicated payment page’. You can customize that page to suit your needs.

When you’re satisfied with the settings, click ‘Publish’ to save your modifications.

Now, check your website to confirm the payment form functions, with automated tax calculation properly enabled.

Alternatively, if you don’t want a new payment page, simply hit the ‘Publish’ button after setting up the tax preferences.

To insert your payment form into an existing page, access the page via the block editor and select the WP Simple Pay block.

Then, from the block’s dropdown, select the specific form you designed.

After selecting the form, save the changes by clicking ‘Update’ or ‘Publish.’

Visit your website to see the Stripe payment form, which will now include a field for automatic tax calculation.

Collect Taxes for Physical Products (WooCommerce)

For online stores with various physical goods, standard payment forms might not suffice. You likely require broader eCommerce functionalities.

In such instances, WooCommerce is a great choice. This free plugin simplifies physical product sales, Stripe payment acceptance, and tax collection.

We’ve worked with this tool a lot, so we know it like the back of our hand. For more insights on what it can do, check out our detailed WooCommerce review.

The advantage is that WooCommerce’s integrated capabilities enable automatic sales tax calculation based on your store’s and your customers’ locations.

Furthermore, it accommodates diverse tax rates, encompassing state, national, and even city-level taxes.

Begin by installing and activating the WooCommerce plugin. Our tutorial provides guidance on WordPress plugin installation.

With the plugin active, configure your WooCommerce store to enable product sales. Integrate Stripe with WooCommerce to process payments.

Refer to our comprehensive WooCommerce guide for detailed assistance during this setup process.

After setting up your store, navigate to theWooCommerce » Settings » Generalsection within your WordPress dashboard and locate the ‘Enable Taxes’ area.

Select the checkbox provided and then click the ‘Save Changes’ button to apply the setting.

After enabling taxes, a ‘Tax’ tab will appear in the main menu. On that page, you’ll begin by selecting your tax display preferences.

You can opt to display taxes exclusively, which means taxes are itemized at checkout instead of being integrated into the product’s price. This way, customers can see their total tax amount before finishing the purchase.

You can also choose to display prices inclusively.

This means the price you enter in the ‘Product data’ section of your WooCommerce product will already include tax.

Next, you need to define your tax calculation method. Access the ‘Calculate tax based on’ dropdown and choose your preferred option.

You can choose to calculate taxes based on the customer’s shipping address, which is great if you are shipping to different regions with varying tax rates.

If you would rather use the address entered for payment, choose the billing address instead.

Alternatively, you can use your store’s base location, simplifying the process by applying your local tax rate universally to every order.

Next, adjust the shipping tax class. Here, you’ll determine how WooCommerce calculates tax on shipping costs.

If you choose ‘Shipping tax class based on cart items’, then the shipping tax cost will be calculated based on the tax class assigned to the product being shipped. 

Consider a cart containing a t-shirt (standard tax rate) and coffee beans (tax-free). This setting ensures shipping is taxed only on the t-shirt, not the coffee, for accurate calculations.

Selecting the ‘Standard’ tax class applies your default product tax rate to the shipping cost as well.

The reduced tax class is for items that have a lower tax rate, like certain food products or books, depending on your region.

Finally, the zero tax class applies no tax to shipping at all, which might be useful if you’re offering tax-free shipping promotions.

It’s advisable to check the ‘Round tax at subtotal level, instead of rounding per line’ option.

This setting rounds taxes on the total order subtotal instead of individual product lines.

You can now adjust the rest of the settings to fit your store’s needs.

A critical setting is how prices are displayed on your shop, cart, and checkout pages.

You can choose to show prices including tax, so customers see the final amount upfront, or excluding tax, which adds transparency by showing taxes separately.

Additionally, you can configure the ‘Price display suffix’ setting to add text after your product prices. This can help show customers whether tax is included or excluded in the price they see.

For example, if you enter “Price incl. VAT: {price_including_tax}”, your store will display something like Price incl. VAT: $50.40.

Next, change the ‘Display tax totals’ setting to control how taxes appear during checkout. You can choose to show all taxes as a single total or display each tax as an itemized list.

If you choose the ‘As a Single Total’ option, WooCommerce will combine all applicable taxes into one total amount. Customers will see just a single tax line instead of separate breakdowns.

For example, if a product has multiple tax rates (like state tax and local tax), they will all be merged and simply shown as ‘Taxes’ at checkout. This keeps things clean and simple.

On the other hand, if you set it to ‘Itemized,’ then customers will see each tax rate separately. This means WooCommerce will list out every applicable tax, such as state and local taxes, on their own lines.

This provides more transparency, so customers know exactly what they’re paying for. The tax names shown will be the ones you enter in your WooCommerce settings.

We’ll walk you through how to do that in the next step. Once you are done, just click the ‘Save Changes’ button to store your settings.

Then, switch to the ‘Standard Rates’ page from the top and click the ‘Insert Row’ button.

You can now add the country code, state code, postcode, city name, and tax rate for each location where you want to collect taxes.

If you only want to collect taxes according to your store’s location, then you will only need to add one row. You can also add a tax name for each row so you can easily differentiate them.

If you select the itemized option in the ‘Display tax totals’ section, then the name you choose for each tax row will be the one displayed on the checkout page.

For example, if you set up separate tax rates for goods and services (GST) and provinces (PST), those exact labels will appear in the order summary.

Finally, click the ‘Save Changes’ button.

Now, visit your WooCommerce store to see the tax rate displayed on your checkout page.

Depending on your settings, the rate may also be displayed on your product and cart page.

Collect Taxes for Digital Products (Easy Digital Downloads)

If you want to collect taxes when selling your digital products through Stripe, then Easy Digital Downloads (EDD) is the best option.

This plugin is built specifically for selling digital products and offers seamless tax collection, including for Stripe transactions. The plugin handles everything from setting rates to generating reports, making tax management easier for stores.

We use EDD to sell our plugins and software. So, we’ve seen firsthand how easy it is to collect Stripe payments and manage taxes. To learn more, see our complete Easy Digital Downloads review.

First, you need to install and activate the Easy Digital Downloads plugin. For more instructions, see our guide on how to install a WordPress plugin.

Once you activate the plugin, you will need to set up your store, add products, and connect Stripe with the plugin.

To get started, follow our beginner’s guide on how to sell digital downloads in WordPress.

When that is done, head over to the Downloads » Settings » Taxes page in the WordPress admin sidebar.

Here, enable the ‘Taxes’ option by checking the box next to it.

Then, choose if you want to display taxes exclusively or inclusively.

If you choose ‘Yes, I will enter prices inclusive of tax’, then the price you entered in a product’s data is the total amount the customer will pay after taxes.

So, if you set the price of a product as $20, the customer will pay $20 at checkout. The exact amount that will go towards taxes will be calculated automatically.

If you select ‘No,’ the price you entered on the product edit screen will not include the tax amount.

After that, we recommend checking the ‘Show Tax Rate on Prices’ option. This way, the customer will see the amount they are expected to pay in tax below the purchase button.

Next, decide how you want to display product prices on the checkout page. You can choose to show prices including tax, which means the total price customers see will have tax added.

Or, you can show prices excluding tax, where the price shown is just the product amount before tax (also called the subtotal). The tax will then be added separately at checkout.

Finally, click the ‘Save Changes’ button to store your settings.

Now, switch to the ‘Rates’ section from the top. Here, you can add tax rates for specific countries or states/provinces in those countries.

To do this, choose a country/ state from the dropdown menu and add its tax rate. Then, click the ‘Add Rate’ button.

You can repeat this step as many times as you like.

Once you are done, just click the ‘Save Changes’ button.

Now, just visit your digital products store to check how taxes are being collected for Stripe payments.

Bonus: Create Visually-Appealing Invoices for Customers

Managing tax collection is a legal requirement for eCommerce sites. But if you sell business products or services (or you just want to go above and beyond), then you can also offer your customers eye-catching invoices for their records.

An invoice that shows the subtotal, tax amount, and total cost helps with transparency and makes it easier for customers to track expenses, handle reimbursements, and even deal with customs claims.

To create professional-looking invoices, we recommend using FreshBooks.

It is a popular accounting software for small businesses that offers an easy way to create customizable invoices with your logo and personalized notes.

Plus, it automates reminders for overdue payments, securely processes recurring credit card payments, and notifies both you and your customers.

You can also include tax information, payment terms, discounts, and currency in your invoices, providing a clear breakdown of payments.

Although it is a third-party tool, FreshBooks seamlessly integrates with top website builders, including WordPress.

For step-by-step instructions, see our tutorial on how to create invoices for clients using WordPress.

Frequently Asked Questions About Collecting Taxes in WordPress

Here are answers to some of the most common questions we get about setting up tax collection for Stripe payments.

1. Do I need to charge sales tax for my online store?

Yes, in most regions, you are legally required to collect sales tax if your business meets certain criteria. This can include having a physical presence (nexus) or exceeding a specific sales threshold in a state or country.

Tax laws can be complex and vary widely, so we always recommend consulting with a tax professional to understand your specific obligations.

2. What is the difference between inclusive and exclusive tax?

Inclusive tax means the tax amount is already included in the final price you show customers. For example, a product listed at $20 already has the tax factored in.

Exclusive tax means the tax is calculated and added separately during checkout. A customer would see the product price plus a separate line item for the tax before they pay.

3. Does Stripe automatically calculate sales tax?

Stripe offers a feature called Stripe Tax that can automatically calculate sales tax. However, you need to enable and configure it within your Stripe account.

You also need to use a WordPress plugin like WP Simple Pay or WooCommerce that properly integrates with this feature to apply the correct rates based on your customer’s location.

4. Can I set different tax rates for different products?

Yes, this is a common requirement. Plugins like WooCommerce allow you to create different tax classes (e.g., standard rate, reduced rate, zero rate) and assign them to specific products.

This is useful for stores that sell a mix of items with different tax requirements.

Related Guides for Accepting Payments in WordPress

Need more information on accepting payments in your online store? Check out our related guides:

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• How to Accept Deposit Payments in WordPress (Easy Methods)
• Best Credit Card Processing Plugins for WordPress (Compared)
• How to Add Stripe QR Code Payment in WordPress
• How to Test Stripe Payments on a WordPress Site (Easy Methods)

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