# Setup - Sales Tax

PhreeBooks has a multilevel sales tax rate calculator built in. Sales tax is comprised of Tax Authorities and Tax Rates. Tax authorities are defined as the agencies that collect the tax and tax rates are a collection of one or more authorities.

Phreebooks inventory items can be individually set as taxable or non-taxable. When an order is placed, one sales tax rate is applied to the entire order, but will not be calculated if the inventory item is tagged as non-taxable. For example, if a labor item is included in the invoice and is not taxable, it shouldbe flagged as non-taxable in the inventory database and thus will not be included in the sales tax calculation for the invoice.

See the links below for detailed information on setting up, managing and removing sales tax authorities and rates.

### Related Links

Sales Tax Authorities
Sales Tax Rates