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Why is there tax for the billing address on this transaction in Magento?

Overview

You have a transaction with billing and shipping addresses in different states and you see that tax was calculated for the billing address instead of the shipping address and you want to know why.

Environment

Magento

Resolution

  • The address type selected in Tax Calculation Based On will be used for tax calculation
  • Go to Configuration > Sales > Tax > Calculation Settings > Tax Calculation Based On and select one of the following: 
    • Shipping Address
    • Billing Address
    • Shipping Origin