From the Configuration Menu, click Taxes → Product Tax Classes
Tax classes allow store admins to assign different tax rates to different products, as is required by law in some areas. While many stores will be able to account for all the tax rates they need with the default classes that come preloaded in the software, new classes can easily be added from this page. Existing classes can also be edited or removed.
To create a new tax class, simple click 'Add New' and fill in the required fields. The tax code is optional, and serves as merely a notes field for store administrators.
Products are assigned to tax classes through
Manage Products, through the Tax Class dropdown menu.