> For the complete documentation index, see [llms.txt](https://docs.shortcutco.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.shortcutco.com/readme/finances-invoices-and-payments/sales-tax.md).
# Sales tax
Shortcut supports automatic sales tax calculation on invoices. When configured, sales tax is applied as a percentage of the invoice subtotal before any processing fees.
***
## How It Works
Sales tax in Shortcut is a **single company-wide percentage** that applies uniformly to all invoices generated for your company. The tax is:
* Calculated on the **invoice subtotal** (the sum of all line items).
* Applied **before** processing fees are added.
* Rounded to the nearest cent.
* Stored on each invoice as a separate line so customers see exactly how much tax they're paying.
**Invoice total formula:**
```
Total = Subtotal + Sales Tax + Processing Fee
```
{% hint style="info" %}
Sales tax is set at the company level. Per-customer or per-service tax rates are not currently supported. If you operate in multiple tax jurisdictions, set the rate that applies to the majority of your customers and adjust individual invoices as needed.
{% endhint %}
***
## Configuring Sales Tax
1. Open the **settings cog → Billing & Payments → Customer Payments**.
2. Under **Charges on invoices**, find the **Sales tax** card.
3. Enter your tax rate as a percentage (e.g., `8.25` for 8.25%).
4. Click **Save**.
Once saved, the tax rate will be applied to all new invoices going forward. Existing invoices are not retroactively updated.
Set the company-wide sales tax percentage in Customer Payments.
### Removing Sales Tax
To stop applying sales tax, clear the sales tax percentage field or set it to `0`, then save. Future invoices will be generated without a tax line.
***
## Where Sales Tax Appears
### On Invoices
When a customer views an invoice (via email link or the client portal), sales tax appears as a separate line item between the subtotal and the total:
| | Amount |
| ----------------- | ----------- |
| Service A | $80.00 |
| Service B | $40.00 |
| **Subtotal** | **$120.00** |
| Sales Tax (8.25%) | $9.90 |
| Processing Fee | $3.50 |
| **Total Due** | **$133.40** |
Customers see sales tax as a separate line on the invoice.
### In Invoice Previews
Before sending an invoice, the preview screen shows the calculated tax so you can verify the amount before it reaches the customer.
Review invoice tax before following up with a customer.
***
## Sales Tax Across Billing Modes
Sales tax is applied consistently regardless of how invoices are generated:
| Billing Mode | Tax Behavior |
| --------------------------- | ------------------------------------------------------------------------------- |
| **Automatic on Completion** | Tax calculated and included when the invoice is created at job completion. |
| **Manual** | Tax calculated when you manually create an invoice for selected completed jobs. |
| **Scheduled** | Tax calculated when the batch job creates invoices on the scheduled date. |
| **Pre-Pay** | Tax calculated and included on the prepay invoice at the time it is created. |
***
## Rounding
Tax amounts are rounded to the nearest cent using standard rounding (amounts ending in 0.5 cents round up). For example:
* $120.00 subtotal at 8.25% = $9.90
* $75.00 subtotal at 7.5% = $5.63 (rounded from $5.625)
***
## Limitations
* **Single rate per company** — One tax percentage applies to all customers and services.
* **No tax-exempt customers** — There is no per-customer tax exemption setting.
* **No tax remittance reporting** — Shortcut calculates and displays tax on invoices but does not file tax returns or generate tax remittance summaries. You should use the invoice data alongside your accounting software for tax filing.
* **No retroactive updates** — Changing the tax rate only affects future invoices. Previously issued invoices retain their original tax amount.