In this tutorial we will guide you in setting up taxes in osCommerce, which allows you to charge a tax based on the buyer's region or state. Tax zones allow you to create groups of places or regions, then tax rates can be assigned to them, and also shipping options. This is helpful because tax rates differ between states, countries and regions of the world.

After setting up these tax zones or groups, when customers checkout they will be charged the assigned tax rate on products that were added as taxable.

I am setting up taxes for the state of Virgina (only as an example). Be sure to research the tax laws based on state, country, and region, since they are being updated and modified at the time this article was written and can differ.
Here is a helpful link to the Federation of Tax Administrators page on State Tax Rates. 

1. Login to the osCommerce Admin panel.
2. Select Locations / Taxes from the menu, then click Tax Zones.
3. Click the +Insert button.
   
   Under the New Zone menu enter the Zone Name, in my tests I entered VA. Then type a Description, this is optional.
4. Click the Save button below. You will see the new Tax Zone listed, click it. 
5. Under the New Sub Zone menu, choose the country from the drop-down box (I selected United States), then select the Zone from the drop down menu (I chose Virginia) and click the Save button below.

Setup Tax Rates:

1. Under the Locations / Taxes menu select Tax rates.
2. Click the +New Tax Rate button.
   
   Under the New Tax Rate menu enter the Tax Rate (I entered 5 for 5%) and Description(I entered VA state tax here). For the Priority field, if 2 taxes with the same priority (for example 1 & 1) apply to the customer, the taxes will be applied to the total before tax, then added together. If they are set with different priorities (for example 1 & 2) they will be compounded, the first tax (with the lower priority number) will be added to the total, then that sum will be taxed with the next tax (this only applies to a small population of the world).
   
   Click the Save button.

Congratulations, now you know how to set up taxes in your osCommerce eShop! The next article in our osCommerce Educational series will cover setting up flat rate shipping in osCommerce. This is part of a section that covers configuring taxes and shipping.