Tax calculation method options include Unit Price, Row Total, and Total. The following table explains how rounding (to two digits) is handled for different settings.

• Tax Configuration Options

  Setting	Calculation and Display
  Unit Price	Magento calculates the tax for each item and displays prices tax-inclusive. To calculate the tax total, Magento rounds the tax for each item, and then adds them together.
  Row Total	Magento calculates the tax for each line. To calculate the tax total, Magento rounds the tax for each line item and then adds them together.
  Total	Magento calculates the tax for each item and adds those tax values to calculate the total unrounded tax amount for the order. Magento then applies the specified rounding mode to the total tax to determine the total tax for the order.

The possible display fields vary depending on the calculation method and whether the catalog prices include or exclude taxes. Display fields have two-decimal precision in normal computations. Some combinations of price settings display prices that both include and exclude tax. When both appear on the same line item, it can be confusing to customers, and triggers a warning.

• Tax Configuration Options

  Setting	Calculation and Display
  Excluding Tax	Using this setting, the base item price is used as it is entered and the tax calculation methods are applied.
  IncludingTax	Using this setting, the base item price excluding tax is calculated first. This value is used as the base price, and the tax calculation methods are applied.

Important! Changes have been made from earlier versions for EU merchants or other VAT merchants who display prices including tax and operate in several countries with multiple store views. If you load prices with more than two digits of precision, Magento automatically rounds all prices to two digits to ensure that a consistent price is presented to buyers.

• Tax Configuration Options

  Setting	Display	Calculation
  Excluding Tax	Appears without tax.	Normal calculation. Shipping is added to cart total, typically displayed as a separate item.
  Including Tax	Can be tax inclusive, or tax can be displayed separately.	Shipping is treated as another item in cart with taxes, using the same calculations.

To display two different tax amounts as separate line items, such as GST and PST for Canadian stores, you must set different priorities for the related tax rules. However, in previous tax calculations, taxes with different priorities would automatically be compounded. To correctly display separate tax amounts without an incorrect compounding of the tax amounts, you can set different priorities, and also select the Calculate off subtotal only checkbox. This produces correctly calculated tax amounts that appear as separate line items.