Magento: No Tax for Wholesale Customers

We ran into the need today to not charge tax for wholesale customers. The good news is that no code modifications are needed to accomplish this. All the functionality is already built right into Magento. Here’s a step-by-step process on how to charge no tax for wholesale customers only:

  1. Go to Sales->Tax->Customer Tax Classes. Add a new class, and call it something like “Wholesale – No Tax” and save it.
  2. Go to Sales->Tax->Manage Tax Zones & Rates. Add a new tax rate, call it “Wholesale”, select your country, select “*” for state and zip, and give it a rate of 0. Save the new tax rate.
  3. Go to Customers->Customer Groups. Click on the Wholesale group. In the “Tax Class” drop down, select your new “Wholesale” tax class, and save it.

Now – any customers that you assign to the Wholesale customer group will no longer be charged any tax. Having walked through these steps, you can see how much flexibility Magento offers you.

This entry was posted in Magento. Bookmark the permalink.

9 Responses to Magento: No Tax for Wholesale Customers

  1. Ken says:

    Good post. I was wondering if it is possible to setup Magento tax rules to where if a wholesale customer buys a product wholesale and buys and product retail, the customer is only charged tax for the retail product and not the wholesale product ? Have a client that wants to create an order in the admin and wants to determine which product should be taxed or not.

  2. Daniel says:

    it seems that Magento 1.8.x does not allow a tax of 0%. How can the wholesale scenario still be achieved?

    • Josh Pratt says:

      Daniel – I have been stuck using Magento EE 1.9 (Community 1.4) for the last two years, so I’m not really sure. I have got to believe though that Magento allows you to not charge tax. Perhaps of trying to charge a 0% tax, can you just edit the product to make it not taxable?

      • Daniel says:

        Hi Josh. Thx for your reply.
        It seems one needs to make sure the customer group is assigned to a customer tax class that is not connected to a tax rate with a rule. This way no tax will be added. But I still haven’t solved yet how to NOT show any tax calculations for that group :)

  3. Christian says:

    Does anybody know why I cannot create a tax rule without having to select a state? I need to create a tax rule for wholesale customers in just one country and set it to zero. But I am prompted to select a state even though I have set it to *.

  4. Pam says:

    I found I had to do one more thing: Go to Sales –> Tax –> Manage Tax Rules. Then Add New Tax Rule, select my new customer tax class, select Taxable Goods, and then select my new tax rate. After that it worked perfectly.

  5. Bill says:

    I also did exactly this and find it is not working in version 1.3.1.

  6. Brant says:

    I did exactly this – didn’t work. Everything appears exactly right…not sure why it’s not working.