---
title: "How to Create a New Tax"
canonical: "https://help.spoton.com/space/SK/2659287399/How%20to%20Create%20a%20New%20Tax"
format: markdown
---
## Overview

Adding a new tax in the Back Office (BOH) helps ensure accurate tax calculation and reporting across your restaurant locations. This article explains how to create a new tax, configure tax percentages by Order Type, and optionally apply different tax rates by location.

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**Quick Links**

> Macro (toc)

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## Step-by-Step Instructions

#### Create a New Tax

1. From the main BOH menu, select the **Taxes** icon.
2. Select **New +** to create a new tax.
3. In the **General Information** section, enter a name for the tax in the **Name** field.
  - Examples:
    - Sales Tax
    - Sugar Tax
    - Liquor Tax
    - Tourism Tax
4. Under **Tax Rates**, enter the correct tax percentage for each **Order Type**.
5. If the tax rate differs by location, select **Edit Specific Locations** to configure location-specific tax rates.

> ℹ️ Click <u>[here](https://help.spoton.com/space/SK/2660894300/Taxes+-+Edit+Specific+Locations)</u> to learn more about **Taxes – Edit Specific Locations**

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#### Optional: Edit Tax Rates by Location

If tax percentages vary by location:

1. Select **Edit Specific Locations**.
2. Choose the location(s) where the tax rate should differ.
3. Enter the appropriate tax percentage for each **Order Type**.

> **Important:** Location-specific tax settings override the default tax rate configured in the main tax setup.

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#### Next Step: Test the Tax Configuration

After saving the new tax:

1. Create a test order in the POS.
2. Verify the correct tax is applied based on:
  - Order Type
  - Location
  - Tax percentage configured

Testing helps confirm taxes are calculating correctly before using the configuration in live transactions.  


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#### **Make a Menu Item Tax-Exempt / Non-Taxable**

To configure a menu item so that tax is not charged, assign the item a tax configured with a **0% tax rate**. Do not leave the item's **Taxes** section empty.

1. From the BOH, select **Taxes**.
2. Select **New +**.
3. Enter a descriptive name, such as **Non-Taxable**.
4. Under **Tax Rates**, enter **0%** for each applicable **Order Type**.
5. Save the tax.
6. Navigate to **Menu Items**.
7. Select the menu item that should be non-taxable.
8. Scroll to **Taxes**.
9. Select **+ New Tax**.
10. Select the newly created **Non-Taxable** 0% tax.
11. Create a test order in FOH and confirm that tax is not charged for the item.

> ℹ️ **Important:** Do not remove all assigned taxes and leave the **Taxes** section empty when configuring a non-taxable menu item. Assign a **0% tax** instead.

> ⚠️ <span style="color: #bf2600">**Note:**</span><span style="color: #bf2600"> Configuring a menu item as non-taxable is different from making an individual transaction tax-exempt. If a guest qualifies for a transaction-level tax exemption, use </span><span style="color: #bf2600">**Make Tax Exempt**</span><span style="color: #bf2600"> from </span><span style="color: #bf2600">**Ticket Commands**</span><span style="color: #bf2600"> in FOH and enter the applicable tax exemption certificate number. See </span><span style="color: #bf2600">**[Tax Exempt | SpotOn Restaurant (FOH)](https://help.spoton.com/space/SK/3259367425/Tax+Exempt+%7C+SpotOn+Restaurant+(FOH))**</span><span style="color: #bf2600"> for instructions.</span>

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## FAQs

**Can I create multiple taxes?**

Yes. Multiple taxes can be created for different business needs, such as alcohol tax, sugar tax, or local city taxes.

**Can tax rates differ by location?**

Yes. Use **Edit Specific Locations** to configure unique tax percentages for individual locations.

**Where does a newly created tax apply?**

Once created, the tax applies according to the **Order Types** and **locations** configured for that tax.

**Can different Order Types use different tax percentages?**

Yes. Tax percentages can be customized by Order Type during setup.

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## Tips

- Double-check tax percentages before saving changes.
- Verify that the correct Order Types are configured.
- Test transactions after making updates to confirm taxes calculate properly.
- If taxes are not applying correctly, review location-specific overrides.

> **Tip:** Naming taxes clearly (for example, “Liquor Tax” or “Delivery Tax”) makes reporting and troubleshooting easier.

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## Related Articles

- [How to Add or Customize Taxes on Menu Items](https://help.spoton.com/space/SK/2659287469)
- [Tax/Fee Rounding](https://help.spoton.com/space/SK/2659516793)
- [Using New Tax Calculation for Fixing Rounding Errors](https://help.spoton.com/space/SK/2659516863)