Product categories

Note

This guide is for merchants who sell in the United States. It's your responsibility to consult with local tax authorities or a tax professional to verify that you charge your customers the correct tax rates, and to ensure you file and remit your taxes correctly.

Early access

A new Shopify product taxonomy and category metafields are in early access and only available to certain merchants. If you're interested in using the features on your Shopify store, then you can request access by visiting the Winter '24 Edition, and then click SIGN UP in the Rich attributes for each product category section. If your store is selected, then you will receive an email from the early access team.

Product categories are labels that are assigned to products or to collections of products. They indicate the tax obligations and exemptions that customers have when they purchase those particular products. Product categories are selected from the Shopify Product Taxonomy, which is a predefined and standardized list.

Product categories are also useful for managing your products, and can be used for the following:

• filtering your product list
• creating automatic collections
• selling on channels that require a standardized product type, such as Facebook
• adding category metafields that can be used for your variants

Automatic product category suggestions

When you create a product, a suggestion for a standard product category is generated based information like title, description, and related media.

This category is only a suggestion, and shouldn't be considered tax advice. It's important that you verify the accuracy of the product category before you accept it, and to speak to a tax professional if necessary.

You can access and review suggested product categories in your Shopify admin. You can also access a list of all products that you need to manually select a product category for.

Access product categories

1. From your Shopify admin, go to Settings > Taxes and duties.
2. In the Manage sales tax collection section, click United States.
3. In the Categorize products for tax purposes section, click Manage categories.
4. Do one of the following actions to assign product categories:
   • Select and approve product categories individually.
   • Select and approve product categories in bulk.
   • Select and approve product categories using a CSV file.

Choosing and managing product categories

Caution

It's your responsibility to verify that your product categories are correct, including those that are automatically suggested in your Shopify admin. Applying inaccurate product categories might result in collecting too much or not enough tax when product categories are used to calculate taxes. If you're not sure that your product categories are correct, then contact a tax expert.

On the Product categories page, a notification is displayed if you have products that don't have product categories applied to them, or if you have suggestions for product categories that need to be reviewed. There are two tabs that display products in need of review. The Pending review tab displays products that have product categories suggested for them. Product categories that are suggested in this tab don't apply unless you accept them. The Pending selection tab displays products that don't have suggestions, and must be manually selected.

There are multiple ways that you can apply product categories to your products.

Select or approve a product category individually

1. On the Product categories page, find the product to select or approve.
2. Do one of the following:
   1. If a suggested product category is provided, then approve the suggestion:
      1. Click the check mark in the Product category box.
      2. Click Save.
   2. Search for and select a product category:
      1. Click the x in the Product category box.
      2. In the Product category box, start typing a description of the product.
      3. Click the product category when the correct suggestion is offered.
      4. Click Save.

Select or approve product categories in bulk

1. On the Product categories page, click the checkbox next to all products that you want to select or approve.
2. Do one of the following:
   1. If suggestions are provided, then approve the suggested product category for all selected products:
      1. Beneath the product list, click Accept and save.
      2. Click Accept and save all.
   2. If suggestions are provided, then search for and select a product category for selected products:
      1. Beneath the product list, click Edit products.
      2. In the Product category box, start typing a description of the product.
      3. Click the product category when the correct suggestion is offered.
      4. Click Save.
   3. If suggestions aren't provided, then search for and select a product category for all selected products:
      1. Beneath the product list, click Choose category.
      2. In the Choose category box, start typing a description of the product.
      3. Click the product category when the correct suggestion is offered.
      4. Click Accept and save all.

Select a product category by using a CSV file

Note

Before you begin, review the details about using a CSV file to manage your product categories.

You can import product categories using a CSV product import. To verify that your product category values matches Shopify's predefined list, refer to the Shopify Product Taxonomy.

You can download and view a sample product CSV file to use as a template.

Tax calculation by using product categories

After you categorize your products, the categories are used to automatically determine your tax obligations when selling into a particular state. Using product categories increases the accuracy of tax calculations, and reduces the need for tax overrides.

For example, suppose that you sell t-shirts. In New York, clothing and footwear under $110 USD are exempt from New York City and New York State sales tax. If the correct product categories are set for your products, then these taxes are not charged when you sell your products to customers in New York. If the rules that govern these products change in the future, then the way tax is calculated for your products is automatically updated, with no action required on your part.

If you set a product category for a product that has an override in place, then the override takes precedence over product category tax calculations. This includes collection-based tax overrides. Consider removing any product tax overrides that conflict with your product categories. However, if you're aware of tax rules that aren't calculated by product categories, then keep your product tax overrides.

You're not required to use product categories. However, if you choose not to apply product categories to your products, then you need to use tax overrides and manually update them.

Limitations

There are some situations in which product categories can't be used to calculate taxes:

• Industry-specific or product-specific taxes that result in a separate tax line item, such as e-waste fees.
• Taxes that are based on volume, weight, ingredients, or size, such as excise taxes.
• Variants of a single product can't have different product categories.
• Bundled goods that are created as a single product have a single product category.
• Product categories don't sync between Shopify and marketplaces, such as Meta or Google.
• Product categories aren't applied to orders that don't qualify for Shopify Tax.
• Products and categories with tax overrides.

Preview your tax calculations

1. From your Shopify admin, go to Settings > Taxes and duties.
2. In the Manage sales tax collection section, click United States.
3. In the Categorize products for tax purposes section, click Manage categories.
4. Click Preview rates.
5. Choose a product category by searching or selecting from the drop-down menu and fill in a price amount.
6. Click View preview, and then you can repeat the process for other categories.
7. Click Close when done.

Testing tax calculated by using product categories

Because there isn't a way to preview specific tax rates, it's best to create draft orders to validate that your products are taxed as expected. If the resulting tax calculation isn't what you expect, then review the product code to ensure that it's accurate. For help setting your product categories, contact Shopify Support. If you're not sure that you've set the correct product categories, then contact a tax professional.