--- title: "Apply vendor tax to material costs on estimates" slug: "apply-vendor-tax-to-material-costs-on-estimates" tags: ["Area - Estimates and Sales", "Focus - Construction", "Focus - Service Replacement", "Role - Admin", "Role - CSR Dispatch", "Type - Commercial", "Type - Residential"] updated: 2026-10-15T03:43:29Z published: 2026-10-15T03:43:29Z canonical: "help.servicetitan.com/apply-vendor-tax-to-material-costs-on-estimates" --- > ## Documentation Index > Fetch the complete documentation index at: https://help.servicetitan.com/llms.txt > Use this file to discover all available pages before exploring further. # Apply vendor tax to material costs on estimates # **Overview** Some vendors charge tax on the materials you buy from them. Vendor tax applies that rate to material line items on your estimates. Office employees then see a rolled up vendor tax total alongside material cost. This gives you a truer cost basis before you sell the Estimate, so your margin reflects what you actually pay your vendor. --- ### #### Who uses this feature - Office employees - Applies to all business types - Applies to all trades #### Feature configuration - This feature is currently in Early Access and available for specific accounts. It is subject to change. If you want to enable this feature for your account, please contact your CSM. - Account configuration is required to use this feature. Please contact [Technical Support](http://go.servicetitan.com/ask) for details. ### ## **Things to know** - Vendor tax is charged by your supplier on materials you purchase. It is not the sales tax you charge your customer. - Vendor tax applies to material line items only. Equipment line items are never taxed, even when the vendor has a tax rate set. - Vendor tax applies only to materials linked to a vendor that has a tax rate set on its vendor record. - Vendor tax appears as a rolled up total. It is not shown on individual line items. - A Business Unit specific tax rate overrides the vendor's default tax rate. - Vendor tax is a cost value. It affects your estimate cost and margin, not the price your customer sees. - Your estimate recalculates vendor tax when you change quantity, add or remove an eligible material, change the vendor, or change the business unit. ## **Best practices** - Confirm your vendor tax rates are current before you build estimates, since the rate is captured when you add the material. - Set business unit tax rates when you operate across areas with different tax obligations. - Review the vendor tax total in the Cost section before you sell, so your margin reflects your true material cost. - Check the vendor tax total again if you edit an estimate after a long gap, because rates might have changed. ## **Use cases** - A roofing company buys shingles from a supplier that charges tax. The estimate now reflects the taxed material cost, so the crew does not underprice the Job. - An HVAC company sources equipment parts through two business units in different tax areas. Each estimate applies the rate for its own business unit. - A plumbing company reviews estimate margin before selling. The Cost section shows material cost and vendor tax separately, so the office can see what drives the total. ## **Set vendor tax rates** Vendor tax rates live on the vendor record. Set a default rate for the vendor, then add business unit rates if a unit has different tax obligations. 1. Go to the top toolbar and click **Settings** ![A simple icon representing a settings gear.](https://cdn.document360.io/961862ab-d0f2-4d91-bb62-a62ee8184eff/Images/Documentation/icon-gnav-settings-inactive.png?sv=2026-02-06&spr=https&st=2026-10-31T01%3A49%3A43Z&se=2026-10-31T02%3A49%3A43Z&sr=c&sp=r&sig=Ac%2B5qjDyhM1GWZhcm683BXCo3aOZZdBeI8BVUbBjKEw%3D). 2. From the side menu, select **Purchasing** or **Inventory > Vendors**. ![](https://cdn.document360.io/961862ab-d0f2-4d91-bb62-a62ee8184eff/Images/Documentation/accurate-tax-calculation-on-estimates-using-vendor-tax-rates-image-mg7gjrkg.png?sv=2026-02-06&spr=https&st=2026-10-31T01%3A49%3A43Z&se=2026-10-31T02%3A49%3A43Z&sr=c&sp=r&sig=Ac%2B5qjDyhM1GWZhcm683BXCo3aOZZdBeI8BVUbBjKEw%3D) 3. On the *Vendors* screen that opens, select the vendor you want to edit. 4. On the vendor profile screen that opens, click **Edit**. 5. In the *Purchase Order Details* section, enter a rate in the **Default Tax Rate** field. This rate applies to all business units unless you override it. ![Default tax rate section showing a 30% rate for vendor transactions and settings.](https://cdn.document360.io/961862ab-d0f2-4d91-bb62-a62ee8184eff/Images/Documentation/accurate-tax-calculation-on-estimates-using-vendor-tax-rates-image-mj89ou9c.png?sv=2026-02-06&spr=https&st=2026-10-31T01%3A49%3A43Z&se=2026-10-31T02%3A49%3A43Z&sr=c&sp=r&sig=Ac%2B5qjDyhM1GWZhcm683BXCo3aOZZdBeI8BVUbBjKEw%3D) 6. To set a rate for a specific business unit, click **Add Tax Rate**, then: 1. In the **Tax Rate** field, enter the rate for the business unit. 2. From the **Business Unit** dropdown, select the business unit you want to apply the rate to. ![Default tax rates section showing specific tax rate for business unit 11-Commercial Replacement.](https://cdn.document360.io/961862ab-d0f2-4d91-bb62-a62ee8184eff/Images/Documentation/accurate-tax-calculation-on-estimates-using-vendor-tax-rates-image-st8lc4f1.png?sv=2026-02-06&spr=https&st=2026-10-31T01%3A49%3A43Z&se=2026-10-31T02%3A49%3A43Z&sr=c&sp=r&sig=Ac%2B5qjDyhM1GWZhcm683BXCo3aOZZdBeI8BVUbBjKEw%3D) > [!TIP] > **Tip:** Click **Add Tax Rate** to add more rates. Click **Delete** to remove a rate. 1. When finished, click **Save**. > [!NOTE] > **Note:** For full vendor setup steps, see [Set up vendors](https://claude.ai/v1/docs/set-up-vendors-1). ## **Review vendor tax on an estimate** 1. Open the estimate you want to review. 2. Add a material supplied by a vendor that has a tax rate set. 3. Go to the *Material* section of the estimate. The **Total Vendor Tax** subtotal shows the vendor tax for the materials on the estimate. ![Estimate for boiler circulator replacement showing total vendor tax and costs.](https://cdn.document360.io/961862ab-d0f2-4d91-bb62-a62ee8184eff/Images/Documentation/accurate-tax-calculation-on-estimates-using-vendor-tax-rates-image-tsisqusa.png?sv=2026-02-06&spr=https&st=2026-10-31T01%3A49%3A43Z&se=2026-10-31T02%3A49%3A43Z&sr=c&sp=r&sig=Ac%2B5qjDyhM1GWZhcm683BXCo3aOZZdBeI8BVUbBjKEw%3D) 4. Go to the *Cost* section of the estimate. The **Material Vendor Tax** row shows the same rolled up total. The estimate's total cost includes this value. ![Estimate for boiler circulator replacement including costs and vendor tax details.](https://cdn.document360.io/961862ab-d0f2-4d91-bb62-a62ee8184eff/Images/Documentation/accurate-tax-calculation-on-estimates-using-vendor-tax-rates-image-qt7uhxq0.png?sv=2026-02-06&spr=https&st=2026-10-31T01%3A49%3A43Z&se=2026-10-31T02%3A49%3A43Z&sr=c&sp=r&sig=Ac%2B5qjDyhM1GWZhcm683BXCo3aOZZdBeI8BVUbBjKEw%3D) > [!NOTE] > **Note:** Change a quantity or swap a vendor and these totals update automatically. ## **Want to learn more?** - See [Set up vendors](/v1/docs/set-up-vendors) - See [Set up vendor list and primary vendor for pricebook items](/v1/docs/procure-vendor-list) A formal price quote presented to a customer before work begins, created from Pricebook items in ServiceTitan. **What it does:** Gives customers a transparent breakdown of costs and enables the business to track conversion from estimate to sold job. **Also called:** Quote, Proposal **Tags:** Core [See the full glossary →](https://help.servicetitan.com/docs/glossary-overview) An internal division within ServiceTitan used to segment work, reporting, and accounting — for example, “Resi HVAC” vs. “Commercial Plumbing.” **What it does:** Lets multi-trade or multi-division businesses track performance, capacity, and financials separately per division. **Where to find it:** Settings › Business Units. **Also called:** Trade division, Service line, BU **Tags:** Core [Learn more →](https://help.servicetitan.com/docs/add-and-edit-a-trade-or-division) · [See the full glossary →](https://help.servicetitan.com/docs/glossary-overview) The core work record in ServiceTitan representing a service request, containing appointments, invoices, estimates, and notes. **What it does:** Acts as the operational and financial center of gravity for all work performed — everything is tied to a Job. **Also called:** Work order, Service ticket **Tags:** Core [Learn more →](https://help.servicetitan.com/docs/servicetitan-glossary) · [See the full glossary →](https://help.servicetitan.com/docs/glossary-overview)