Get Help With Modifier Tax Rates in the US

In this Article:

• Frequently Asked Questions
  • Can I set a different tax rate on a modifier in the US?
  • How are modifiers taxed without the Modifier Tax Behavior setting?
  • Why doesn't the tax rate I assigned to a modifier apply at checkout?
  • How can I charge a different tax rate for an add-on?
  • Can I get the Modifier Tax Behavior setting for my location?
  • How do I set a modifier tax rate if my location has the setting?
• Related Articles

Note: If your business is in Australia, Canada, Ireland, or the UK, see Set Up Tax Rates on Modifiers (Australia, Canada, Ireland and U.K.) instead.

Frequently Asked Questions

Can I set a different tax rate on a modifier in the US?

Setting a different tax rate on a modifier isn't available to most US locations. The Modifier Tax Behavior setting lets a modifier use its own tax rate or override the parent item's tax rate, and it's in limited release with select customers in the US.

If your location doesn't have this setting, your modifiers use the tax rates of the menu item they're added to. You can still charge a different tax rate by setting up the add-on as its own menu item. See How can I charge a different tax rate for an add-on? below.

Also asked as:

• Can a modifier override the item's tax rate?
• Where is the modifier tax setting in Toast Web?
• Why don't I see Modifier Tax Behavior?

How are modifiers taxed without the Modifier Tax Behavior setting?

Modifiers are taxed at the parent item's tax rates when your location doesn't have the Modifier Tax Behavior setting. Tax is still collected on the modifier's price. The modifier uses the same tax rates as the menu item it's added to.

For example, a latte is taxed at 8%. A guest adds an oat milk modifier. The oat milk is also taxed at 8%, even if you assigned a different tax rate to the oat milk modifier.

Why doesn't the tax rate I assigned to a modifier apply at checkout?

The tax rate you assigned to a modifier doesn't apply at checkout because, without the Modifier Tax Behavior setting, the modifier follows the parent item's tax rates. This happens on the Toast POS and in online ordering.

Adding a tax rate to a modifier, or removing a tax rate from a modifier, doesn't change the tax charged on that modifier. To change the tax on a modifier, change the tax rates on the parent menu item. Keep in mind that this changes the tax for every modifier on that item.

Also asked as:

• My modifier tax isn't being charged
• My modifier is still charging tax after I removed it

How can I charge a different tax rate for an add-on?

You can charge a different tax rate for an add-on by setting it up as its own menu item instead of a modifier. Apply the tax rate the add-on needs at the item level.

The add-on then appears as a separate line on the check. For steps, see Create and Manage Menu Items and the Apply Tax Rates at the Item Level section of Set Up Tax Rates and Adjust Tax Options.

Can I get the Modifier Tax Behavior setting for my location?

The Modifier Tax Behavior setting is available only to select US customers during its limited release. Contact Toast Customer Care to submit a feature request.

How do I set a modifier tax rate if my location has the setting?

You can set a modifier tax rate in Toast Web if your location has the Modifier Tax Behavior setting.

Environment: Toast Web. Permissions needed: 4.5 Edit Full Menu.

1. In Toast Web, navigate to Menus and find the modifier option you want to update.
2. Select the arrow icon next to the modifier option to open its item reference page.
3. Scroll to the Taxes section.
4. For Inherit Tax Rates from Menu Group?, select No, specify tax rates here.
5. Select a tax rate under Applicable taxes.
6. For Modifier Tax Behavior, select one of these options:
   • Inherit item tax rate — the modifier uses the parent item's tax rate. This is the default.
   • Unique tax rate applied to modifiers — the modifier uses its own tax rate. The parent item keeps its tax rate.
   • Modifier tax rate overrides item tax rate — the modifier's tax rate applies to both the modifier and the parent item.
7. Select Save, then Publish.

Expected outcome: The modifier is taxed according to the option you selected the next time it's ordered.

Note: If you don't see Modifier Tax Behavior in the Taxes section, your location doesn't have the setting. Your modifiers use the parent item's tax rates.

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Related Articles

• Set Up Tax Rates and Adjust Tax Options
• Add a Tax to an Individual Item
• Create and Manage Modifier Groups and Modifier Options
• Understand Tax Rate Discrepancies
• Set Up Tax Rates on Modifiers (Australia, Canada, Ireland and U.K.)

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This content is for informational purposes and is not intended as legal, tax, HR, or any other professional advice. Please contact an attorney or other professional for advice.