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Taxes on modifiers

Menu items have tax configurations that determine which tax rates are applied when the menu item is added to a check. If a menu item has modifier options, you can use the Modifier Tax Behavior configuration option to specify how a modifier is taxed.

The Modifier Tax Behavior configuration option is on the detail page of the modifier option's menu item reference. For information on modifier option item references, see Understanding a modifier option's item reference.

Note

The modifier tax behavior feature is in limited release.

You can configure a modifier to use one of these tax behaviors:

  • Unique tax rate applied to modifiers: The modifier is configured with a tax rate which is different from the parent menu item and which is applied separately from the menu item tax rate. For example, a menu item is taxed at a 6.25% rate and the modifier is taxed at a 2.75% rate.

    Note that if the menu item has multiple modifiers, each modifier may have its own unique tax rate. For example, a pizza menu item is taxed at 6.25%, a pineapple modifier has a unique tax rate of 4.25%, and a pepperoni modifier has a unique tax rate of 3.50%.

  • Modifier tax rate overrides item tax rate: The modifier has a different tax rate than its parent menu item and the modifier tax rate overrides the menu item tax rate. This means that both the menu item and the modifier are taxed at the rate configured for the modifier. For example, if the menu item is configured for a 6.25% tax rate and the modifier is configured for a 2.75% tax rate, the menu item is taxed at the 2.75% tax rate, as is the modifier.

    Note that the menu item's tax rate is overridden only if the modifier is added to the menu item on the Toast POS device. If the modifier is configured on the item but is not applied on the Toast POS device, the menu item's tax rate will not be overridden.

  • Inherit item tax rate: The modifier is taxed at the same rate as the parent menu item. This is the default setting for the option. For example, if the menu item is taxed at 6.25%, then the modifier is also taxed at the 6.25% rate.

Keep the following important notes in mind when using the taxes on modifiers feature:

  • If two modifiers are set to override the tax rate of their parent menu item and both modifiers are added to the item, the item will default to using the tax rate configured for the parent item and disregard the tax rates configured for either of the modifiers. Both modifiers are ignored even if both have the same override tax rate.

  • If a nested modifier (for example, a dressing modifier on a side salad modifier for a sandwich entree) is configured to override its parent item’s tax rate, it will only override the tax rate for its parent modifier (the dressing modifier will override the tax rate of the side salad, not the sandwich entree).

  • If a modifier option is configured to use a unique tax rate but is not assigned a tax rate (from the Applicable taxes option), the modifier option is not taxed. Likewise, if a modifier option overrides the tax of its parent item but is not assigned a tax rate, both the modifier option and its parent item are not taxed.