---
title: Manage tax exemptions
slug: configured-commerce/docs/manage-tax-exemptions
docTags: 
createdAt: 2026-08-13T10:46:27.000Z
---

:::hint{type="info"}
**Note**

By default, this is a hidden feature and can be exposed by adjusting the permissions in the [Application Dictionary](docId\:Emhpsq17K4r88gtU5EfCF). Additionally, custom development may be required to reveal tax fields and render tax exemptions fully operational. Optimizely recommends the use of Avalara or other third-party utilities for working with taxes, as they allow for increased functionality.
:::

## Create a tax exemption

Prior to completing the steps listed below, the permissions in the **Application Dictionary** must be customized to expose the **taxExemption** entity. Review the Application Dictionary article for more information: [Work with properties in the application dictionary](docId:3dVrvc5guFRbUj4I798TF)

Use the **Admin Console** to create a tax exemption for locations, products, or categories.

1. In the **Admin Console**, go to **Administration** > **Taxes** > **Exemptions**.
2. Click **Add Tax Exemption**.
3. Fill in the corresponding information on the **Details** tab, including the **Exemption Name**, **Description**, **Amount**, and **Activate On/Deactivate On** dates. If the tax exemption should be live for an indefinite amount of time, leave the **Deactivate On** field blank.
4. Click **Save**.
5. Click the **Exempt States** finger tab to assign tax exempt states.
   1. Click **Assign States**.
   2. Select one or multiple states using the checkboxes on the left.
   3. Click **Assign**, then click **Done** to save changes.
6. Click the **Local Tax Rates** finger tab to assign any existing local tax rates.
7. Click the **Exempt Categories** finger tab to assign any tax exempt categories.
8. Click the **Exempt Products** finger tab to assign any tax exempt products.
9. Click **Save**.

## Set up website and customer tax codes

Alternately, set up website and customer tax codes to create tax exemptions based on customers instead of locations, products, or categories.

### Set up a website tax code

1. In the **Admin Console**, go to **Administration** > **System** > **Settings.**
2. Use the search box to search for **Tax Free Tax Code**.

   :::hint{type="info"}
   **Note**

   The **Tax Calculator** setting needs to be set to **Standard** in order to display the **Tax Free Tax Code** setting and it can be applied uniquely per website.
   :::
3. Additionally, the following three fields need to be populated:
   - **Tax Free Tax Code** - the code entered here is compared against the code entered in the customer **Tax Code** field to determine if the customer should be taxed. This setting also applies to both State and Local taxes.
   - **Tax Amount** - This is the sales tax rate used for orders, and is used in conjunction with **Tax Calculation** setting to determine how this rate is calculated. The default value is 0.
   - **Tax Calculation** - If this setting is set to **None**, sales tax is not charged. If set to **Percent**, the defined percentage of the order total will be charged as sales tax for all orders. If set to **Calculate**, sales tax is calculated using the configured tax rates based on the customer order. The default value is None
4. Click **Save**.

### Set up a customer tax code

1. In the **Admin Console**, go to **Customers**.
2. Click **Edit** to edit a customer.
3. Scroll down to the **Billing** section of the **Details** tab.
4. In the **Tax Code** field, enter the same code entered in the website's **Tax Free Tax Code** field.
5. Click **Save**.

Now, when the customer in question logs into the commerce site and orders a product, they are not taxed.