TaxJar API: Which endpoint should I use for calculations?

Both the Rates and Taxes endpoints provide a sales tax rate for a specific address, but they serve two very different purposes. The Taxes endpoint calculates tax for a specific transaction. The Rates endpoint displays the combined tax rate for a given location. To better understand the difference between these two endpoints, let’s look at how each works.

The Taxes endpoint

To determine how much tax to charge on an order, the Taxes endpoint considers numerous factors:

• Does your business have physical or economic nexus in the ship-to state?
• Does the state use origin or destination sourcing?
• Is shipping taxable in the state?
• Are each of the products sold taxable, partially taxable, or nontaxable? 
• Is the customer exempt?
• Is there a sales tax holiday taking place at the time of the sale? 

In short, the Taxes endpoint looks at all the possible variables that can impact the taxability of a specific sale (the who, what, when, where, and how) and calculates the precise amount of sales tax to collect in that exact scenario. 

The Rates endpoint

By contrast, the Rates endpoint only provides the combined sales tax rate for a given address. That is, the highest possible tax rate that could be charged in that location. It doesn’t consider any of the variables that might impact the amount of tax to collect for a specific sale. For instance, it doesn’t check to see if your business actually has nexus in that location, whether the customer is exempt, or if the products sold are taxable. The Rates endpoint is not intended to be used for tax calculation, but to confirm local tax rates or build a backup rate table for a specific point of sale.

For more information 

To learn more about the TaxJar API, check out Getting Started with the TaxJar API and our Integration Guide.