The Tax Rules allow you to set up custom tax rules for your shop.
Creating A New Tax Rule
From the Tax Rule page, click New in the upper right.
Enter the new tax class name and choose whether it's published or not.
Now click the Save & Close button in the upper right.
You have now created a new Tax Class Name.
Customizing Tax Rates
Now that you've created the new tax rule, you have to add the tax rates. To do so, go back to the main tax class page and find your new tax class in the table shown.
In the image above, you see that the new tax class, I gave the name New Tax Class appears in the green box. To add the tax rates, we now click View Tax Rates, indicated by the red arrow.
Tax Rates - New Tax Class View
Click the New button in the upper right to add a new entry.
Tax Rate Name - Give your tax rate a name - Preferably the location this applies to.
Tax Classes - Choose which tax class this belongs to (ours would be the "New Tax Class" we just created)
Country - The country this applies to
State - If a country with states (USA) or Territories (Canada) for example, select it here
Zipcode From & To create the zip code range that this tax parameter applies to if pertinent.
Tax Rate - The percentage of tax
Priority Where this tax parameter shows up in the list, Zero being first.
Published - Choose yes or no.
Just click Save to save and continue editing, Save and Close or Save and New