Understanding Tax Types and Tax Groups in NX Restaurant

Taxes in NX Restaurant are structured to support accurate charging and reporting of all local, state, and federal tax requirements. Rather than applying a single blanket tax, NX allows you to create a layered and flexible tax structure using Tax Types and Tax Groups.

This article explains what each component does and shares best practices for using them effectively.

What is a Tax Type?

A Tax Type represents a single tax rate, such as a state tax, city tax, or special district tax. 

Each Tax Type defines:

• Name: How the tax appears on reports and receipts.
• Tax Amount: The percentage rate of the tax (e.g., 1.5%).
• Computation Method:
  • Exclusive – tax is added to the price (most common).
  • Inclusive – tax is built into the price (used when prices must appear “all-in” on receipts or menus). 

💡 Tax Types are not assigned directly to menu items—they must be grouped into a Tax Group.

What is a Tax Group?

A Tax Group is a collection of one or more Tax Types that can be assigned to taxable items like menu items, gratuities, and service fees.

Tax Groups support:

• Multi-layered tax charging (e.g., applying state + city + local taxes together)
• Conditional tax logic (e.g., taxes only apply to dine-in orders)
• Centralized control: Any change to a tax rate only needs to be updated in the Tax Type, and the update automatically reflects in all associated Tax Groups.

Example

Let’s say a venue is in a location with the following taxes:

Each of these would be created as a Tax Type, then grouped into a Tax Group called “Sales Tax” that totals 9%.

That Tax Group would be assigned to all taxable menu items. On a $10 item, the POS would calculate and apply all three tax rates automatically.

Where Tax Groups Are Used

Once created, Tax Groups can be applied to:

• Menu Items
• Fees (e.g., service charges)
• Gratuities
• Surcharges

Best Practices

✅ Use Separate Tax Types for Each Jurisdiction

• Create one Tax Type per rate (e.g., state, city, local), even if they are applied together. This improves reporting accuracy and simplifies updates if rates change.

✅ Use Clear Naming Conventions

• Include the tax type in the name (e.g., “City Tax 1.5%”) so it’s easy to identify in reports and receipts.

✅ Use Tax Groups for All Taxable Items

• Always apply Tax Groups to items—not individual Tax Types. This ensures scalability and consistency across your menu.

✅ Take Advantage of Order Type Filters

• If a tax only applies to certain order types (e.g., Dine-In but not Takeout), configure that rule in the Tax Group.

✅ Keep Taxes Exclusive When Possible

• Unless your business is required to display “tax-inclusive” pricing, use Exclusive computation for clarity on pricing and receipt details.

Summary

This two-tiered approach gives operators complete control over tax setup, while remaining adaptable to complex tax laws and business needs.

Learn More About Setting Up Taxes

• Taxes > Tax Types
• Taxes > Tax Groups

For help determining the best Tax structure for your operation, contact your NX Support Partner or consult your accounting team.