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Why Tax Still Appears on a “Non-Taxable” Item in Square

If you marked an item as non-taxable in Square but the tax is still being applied at checkout, this is caused by a Square tax setting, not Birrdi or the item itself.

Square has a global tax rule that can override your item-level taxable toggle.


Why This Happens

Every Sales Tax in Square has a setting called “Apply tax to”.

There are two modes:

1. “All current and future taxable items at selected locations”

(This is Square’s default and it often causes confusion.)

When this is selected:

  • Square automatically applies this tax to all items, regardless of whether you toggle an item as taxable or non-taxable.

  • Your item-level setting is overridden.

This is why operators still see tax even after marking an item as non-taxable.


How to Fix It

To allow Square to respect your item-level taxable settings, you must switch the tax rule to Select items.

Steps

  1. Open your Square Dashboard

  2. Go to Settings → Payments --> Sales Taxes

  3. Click on your Sales Tax

  4. Scroll to the section labeled Tax application

  5. Change the dropdown from:

    “All current and future taxable items at selected locations”
    TO
    ​“Select items”

  6. Once “Select items” is selected, Square will allow you to choose exactly which items the tax applies to.

Summary

If you toggle an item as non-taxable, but Square still charges tax:

  • It’s because your Sales Tax is globally set to apply to all items.

  • Update the Sales Tax rule to Select items.

  • Square will then only apply tax to the items you choose, and non-taxable items will be correctly left tax-free.

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