There are two ways to set up taxes in the store:
- Integrate with automated tax compliance services like Avalara for worry-free tax code compliance. You just need an account with such a service and we will set up the module for you. More details at avalara.com
- Manual tax setup
5.1. Setting up taxes manually
Go to: WooCommerce > Settings > General -> Select the Enable Taxes and Tax Calculations checkbox -> Save changes.
Go to: WooCommerce > Settings > Tax tab
For most US and Canadian businesses, there is nothing that needs to be changed in the Tax options tab
Click on the Standard rates tab to set up your state rate
For example, to add 7.25% California rate, click on "Insert row" and enter US, CA, *, *, 7.25, Tax, 1 and indicate if you want to tax the shipping like the screenshot below:
Click here for more details in WooCommerce documentation
Tip: Tax regulations are extremely complex and change often so it's highly recommended using an automated Tax compliance service like avalara.com to avoid any complications at the time you will need to file your return.
5.2. Test the taxes on the frontend
Go to the frontend (customer's part of your portal), register as a new user or use an exiting test user, add some items to the shopping cart, go to checkout and enter the shipping address for which you added a tax rate.
You should see your tax in the total.
Let us know if you need any help there.