> For the complete documentation index, see [llms.txt](https://developer.paddle.com/llms.txt).

# Automatically show prices inclusive or exclusive of tax based on customer location

Increase conversion by automatically following local conventions for displaying prices as inclusive or exclusive of tax.

---

## What's new?

We've added a new `location` value for `price.tax_mode` to specify that [prices](https://developer.paddle.com/api-reference/prices/overview.md) should be automatically presented inclusive or exclusive of tax based on a customer's location.

- **tax_mode** (string): How tax is calculated for this price.. Allowed values: `location` (Prices are automatically inclusive or exclusive of tax based on customer location.)

## How it works

Customers have different expectations for how prices should be presented based on their location. For example, customers in the US typically expect prices to be exclusive of tax, while customers in Europe typically expect them to be inclusive of tax.

Previously, you could use the `tax_mode` field when [creating or updating prices](https://developer.paddle.com/build/products/create-products-prices.md) to determine whether they are inclusive or exclusive of tax. This meant that to present tax-inclusive or tax-exclusive prices for specific countries, you'd need to create multiple prices for the same product and write code to determine when to show them.

Now, we've added a new `location` value for the `tax_mode` field that lets you specify that prices should be automatically presented inclusive or exclusive of tax based on customer location. This helps you increase conversion by creating a more localized purchase experience for customers.

## Example

Assuming a price of $10.00 and a tax rate of 10% with automatic currency conversion turned off, this example shows how prices are presented based on the customer's location.

{% journey-comparison %}

{% comparison-column title="US" %}
In the US, prices are typically exclusive of tax. On a checkout, Paddle calculates and presents tax like this:

| Total                    | Amount    |
|--------------------------|----------:|
| **Price** (excl. of tax) |     10.00 |
| **Subtotal**             |     10.00 |
| **Tax** (10%)            |      1.00 |
| **Total**                | **11.00** |

{% /comparison-column %}

{% comparison-column title="EU" %}
In the EU, prices are typically inclusive of tax. On a checkout, Paddle calculates and presents tax like this:

| Total                    | Amount    |
|--------------------------|----------:|
| **Price** (incl. of tax) |     10.00 |
| **Subtotal**             |      9.09 |
| **Tax** (10%)            |      0.91 |
| **Total**                | **10.00** |

{% /comparison-column %}

{% /journey-comparison %}

{% callout type="info" %}
Tax rates are illustrative only. Tax varies across cities, counties, and states in the US; and across countries in Europe.
{% /callout %}

## Next steps

This change is available in version `1` of the Paddle API.

It's a non-breaking change, meaning it doesn't impact existing integrations. Existing prices continue to work exactly as before.

To start automatically presenting prices as inclusive or exclusive of tax based on customer location, [create or update prices using the API](https://developer.paddle.com/build/products/create-products-prices.md) or [the Paddle dashboard](https://developer.paddle.com/build/products/create-products-prices.md). Set the `tax_mode` to `location` to automatically present prices as inclusive or exclusive of tax based on customer location.

{% callout type="info" %}
The option to set `location` as the default `tax_mode` for new prices is now live, too. See [Set automatic tax localization for prices as your default](https://developer.paddle.com/changelog/2025/default-automatic-tax-setting.md) for more information.
{% /callout %}
## Summary of changes

| Name | Type | Change | Entity | Description |
| --- | --- | --- | --- | --- |
| `price.tax_mode` | Enum value | added | Price | Now accepts location value to specify that prices should be automatically presented inclusive or exclusive of tax based on customer location. |