Tax Groups allow you to specify taxes for specific groups of items. For example, if your store sells jewelry, clothing and furniture, and your region requires that these items be taxed at different rates, you can create Tax Groups for these products, and assign the Group to the products individually.
This feature is similar to Shipping Groups, which allow different shipping rates to be applied to items of differing weight, dimensions, etc...
If this need does not apply to your store, you can leave the Tax Group area to "default tax group." This will automatically apply the rate you enter to all items.
Adding a Tax Group
To add a new Tax Group, click on “Manage Groups” in the Tax Groups dropdown menu within a new Tax Rule in the Taxes section of the Shipping and Tax menu. Add a title for your Tax Group in the “Name” field and click “Add Group.” The title should refer to the type of products to which the rule will apply, i.e. Furniture.
After adding the new group, it will be added to the Tax Group dropdown. Select the new group from the dropdown menu to create a tax rule for that group.
Enter the Country, Region or State, and percentage tax rate in the respective fields, click Done, and then click Save on the main Shipping & Tax page to save your Tax Group settings.
Applying a Tax Group to a Product
To assign a tax group to a product, go to the Products menu and click on the Edit option for the product. Select the matching group from the Tax Group dropdown menu in the Details section. Click Save at the bottom of the page.