The use of zip codes in your cart tax settings is pretty straightforward. Create your tax settings according to the manual; the only difference to the manual is that you can now specify zip codes for a tax zone to limit the tax zone "area". If a zip code is selected for an area, the tax zone is only "valid", if - additionally to the country and state/province - that zip code is used by the customer during checkout for his billing or shipping address. If you leave the zip code field blank, the tax zone is "valid", if the country and state/province is used by the customer during checkout no matter the zip code.

The information below will help you understand how the tax system works in the cart. 1) Tax Class: You specify a tax class for certain types of products:

e.g., Usually, you will need at least one tax class for your products. You will need additional tax classes if you sell unique products that are taxed differently (if they have a reduced or special higher tax rate).

2) Tax Zone: You specify tax zones to identify whether a specific tax should be "added" to a product.

For example, If you have an item taxed for 5% when the customer's address is in the United States, in New York, and the customer's zip code is 10001, you will add this area to your "5% tax zone". If the same tax is collected when the zip code is 10002, you would add this area to the same tax zone.

3) Tax Rate: A tax rate specifies a tax percentage in a tax zone for a tax class

e.g: Your items are sold with a tax rate of 5%, if the products are of a certain type (tax class) and the customer is in a certain area (tax zone).