This article shows you how taxes are calculated for your invoices and estimates.
Is Customer Tax Exempt?
If the selected customer is tax exempt taxes will always be 0.
You can add entries to the property's Items & Services section and also set their tax values.
If you selected a property for your line item we are going to check if you have a matching Items & Services entry for that property and we'll use the tax value of the matching Items & Services entry.
Line Item Dropdown
If you choose a line item from the dropdown we are going to use the tax value that was used in the past for that line item.
Your Default Tax Rate
If none of the above apply we'll just use your default tax rate (if it's set).
The default tax rate can be set on the Settings > Invoices & Estimates page.