What is an Inclusive vs. an Exclusive Tax Rate?

What is an Inclusive vs. an Exclusive Tax Rate?

When you set a Tax Rate within your Payments dashboard, you will be asked whether to designate the rate as Inclusive or Exclusive.

There are two ways to charge tax on a purchase:

  1. Inclusive tax - when the taxes are already included in the product or service's advertised retail price. With an inclusive tax, there is no need to tack on an additional tax to the transaction's subtotal.
  2. Exclusive tax - the taxes are not included as part of the retail price. The tax amount would need to be added separately to the transaction's subtotal before the customer pays.

Below, see how a 25% tax rate would affect the total amount due on a transaction depending on whether the tax rate is inclusive or exclusive.

Tax Subtotal Tax Due Total
25% Inclusive $5.00 $1.00 (already included in the total) $5.00 ($4.00 + $1.00)
25% Exclusive $5.00 $1.25 $6.25 ($5.00 + $1.25)

 


    • Related Articles

    • Add or Manage Tax Rates

      You can add, edit, and manage different Tax Rates for different regions or categories. To view your existing saved Tax Rates or add a new Tax Rate, navigate to the Settings dashboard within your Payments app. On the left-hand sidebar, select Tax ...

    • Payments Overview - Getting Started

      The Payments tool allows you to accept payments from your customers quickly, easily, and securely. You can collect payments from your customers using the following methods: Invoices - Email an invoice that the customer can pay directly online. ...

    • Sync Your Bank Account to Payments

      When setting up Payments on your Marketing 360® account, you will need to link your bank account by using the Payments dashboard. Link your bank account to process payments Note: You can only sync one bank account to your Payments App, and it must be ...

    • Connecting Marketing 360® Payments to QuickBooks Online

      If you'd like to take advantage of all the benefits of Marketing 360® Payments, but you'd also like to use QuickBooks Online to manage your bookkeeping tasks, you can integrate the two in the Accounting Integrations settings in the Payments app. ...

    • Managing Your Payments Customers

      Use the Customers page in Marketing 360® Payments to manage your Payments customers. Keep in mind that this page displays Payments customers only. This is a separate list and does not include other contacts from sources like your CRM. From here, you ...