As we're expanding into the United States & Canada, we've had to review how we manage tax.
In the USA & Canada, they have different tax rates per state. With that in mind, we've released Tax Zones. These can be set globally, by country or by state. You can have as many zones as you like.
For example, if you had to charge tax in California and New York, and shipped overseas, you might have the following tax zones:
California -> 7.5%
New York -> 7%
Rest of the world -> 0%
The correct tax zone is automatically chosen when the customer selects a shipping address. Tax is then calculated accordingly and added to the customer's order (if pricing is tax exclusive).
To add/edit your tax zones, go to Orders > Tax zones.