14.4. Configure MSP Tax Rates by Region with Composite, Bracket, and Holiday Support

Tax rate configuration in Alga PSA gives MSPs precise control over how tax is calculated on client invoices. From the Billing > Pricing > Tax Rates page you can define region-based rates, layer composite components for jurisdictions with stacked taxes, set progressive brackets for usage-based or graduated tax structures, and declare tax holidays — all while relying on a clear precedence order so the right rate is always picked at invoice time.

Viewing Tax Rates

The Tax Rates page lists every configured rate in a single table with the following columns:

• Region — The tax region this rate belongs to (resolved from the region code to the region name).
• Tax Percentage — The flat percentage applied when no brackets are configured.
• Description — The free-text note saved with the rate. Composite rates display a Composite badge inline next to the description so they are easy to spot.
• Start Date — The date the rate becomes effective.
• End Date — The date the rate stops applying. Rates with no end date are open-ended.

This view is the operational source of truth for which rates are currently live for a given region. Pair it with 14.5. Client Billing Settings when you need to confirm how a specific client is being taxed.

Adding a Tax Rate

Click Add New Tax Rate and complete the dialog:

1. Tax Region — Select from the dropdown of configured tax regions. Regions are managed in tenant-level billing settings (see 14.2. Tenant Billing Settings).
2. Tax Percentage — The flat rate to apply (for example, 8.25 for 8.25%).
3. Description (optional) — A short note about the rate.
4. Start Date — The effective date.
5. End Date (optional) — The expiration date. Leave blank for an open-ended rate.

Click Save to commit. The Add and Edit dialogs share the same five fields. There is no inline composite toggle on either dialog — see Composite Rates below for how that flag is managed.

Date overlap rule: Alga rejects new or edited rates whose date range overlaps another rate in the same region. You will see an error stating that the date range overlaps with existing rate(s) in that region. Close the gap or adjust an existing rate's end date before retrying.

Brackets and holidays are configured in the Advanced Settings panel after the rate is saved.

Tax Rate Row Actions

Every row in the Tax Rates table exposes an Actions menu with three items. The same three items are available regardless of whether the rate is currently active, future-dated, or expired — date-based status does not change menu availability:

• Advanced Settings — Opens the Tax Rate Detail Panel covered below.
• Edit — Reopens the dialog with the region, percentage, description, start date, and end date fields prefilled.
• Delete — Removes the rate. A pre-deletion validation runs and blocks the removal if the rate is referenced by any client, service, or invoice records, listing the dependencies so you can resolve them first.

Advanced Tax Rate Settings

Choose Actions > Advanced Settings on any row to open the Tax Rate Detail Panel. The panel always shows four sub-tabs — they are visible at all times and do not appear or disappear based on configuration state.

Details Sub-Tab

A read-only summary of the rate showing Region Code, Tax Percentage, Description, Tax Type, Start Date, End Date, Is Composite, and Is Active. Below the summary, a Tax Calculation Precedence info card documents the order Alga uses when picking a rate during invoice generation:

1. Client tax exempt flag — If the client is marked tax exempt, no tax is applied and the lookup stops here.
2. Service-specific tax rate — If the service line item has its own assigned rate, that rate wins.
3. Client default tax rate — If the client record has a default rate assigned, it is used next.
4. Tax region lookup — Otherwise, Alga resolves the rate from the client's region code and the invoice date — these are the rates managed on this page.

This precedence is enforced inside the billing engine itself, so the Details panel reflects the live behavior used at invoice time (see 14.12. Generating Invoices).

Components Sub-Tab

Always visible. Behavior depends on whether the rate is composite:

• On a simple (non-composite) rate, the tab shows an info message: "This is a simple tax rate, not a composite rate. Tax components are only used for composite taxes." No editor is rendered.
• On a composite rate, the tab renders the component editor. Each component carries:
  • Name — The component label (e.g., "State", "County", "Special District").
  • Rate — The percentage for this component.
  • Sequence — The order in which components are applied.
  • Is Compound — When enabled, the component is calculated against the subtotal plus all previously applied components rather than the bare subtotal.
  • The effective composite rate is the combined result of all components.

Brackets Sub-Tab

Always visible. Configures progressive, threshold-based tax similar to graduated income tax:

1. Add bracket entries with a Minimum Amount, Maximum Amount, and Rate.
2. Tax is calculated progressively across the configured brackets.

Important: When brackets are defined, the bracket calculation replaces the flat percentage rate — brackets are not added on top of it. The flat rate from the Details tab is only used when no brackets are configured.

Holidays Sub-Tab

Always visible. Defines date ranges during which this tax rate does not apply, such as government-declared sales tax holidays. Each holiday entry has a start and end date, and Alga skips the rate for invoice dates falling inside any active holiday range.

Composite Rates

A composite rate combines multiple layered components — for example, state plus local plus a special district — into a single effective rate that's then applied as one line on the invoice.

The standard Add New Tax Rate and Edit Tax Rate dialogs do not expose an inline composite toggle. The is_composite flag is established when a composite rate is first created; the standard edit dialog will not flip an existing rate from simple to composite (or vice versa). Plan composite rates accordingly when setting up new jurisdictions.

Once a rate is composite, it is surfaced in two places:

• On the Tax Rates list, a Composite badge appears next to the description.
• On the Tax Rate Detail Panel, the Details sub-tab shows Is Composite: Yes, and the Components sub-tab renders the component editor instead of the simple-rate info message.

Tax Regions

Tax regions are the geographic or jurisdictional identifiers (e.g., CA, TX, EU-VAT) that link clients to their applicable rates. They are managed in the tenant-level billing settings — see 14.2. Tenant Billing Settings for region setup and activation.

Client Tax Settings

Individual clients can override or refine the region-based rate through their billing settings:

• Tax Exempt — When enabled, no tax is applied to that client's invoices. An optional exemption certificate reference can be recorded for audit.
• Reverse Charge — For B2B transactions where the client self-assesses tax (configured on the client's tax settings).
• Region Code — The region used to look up the applicable rate when no client default or service-specific rate is in play.
• Default Tax Rate — A specific rate assigned to the client that takes precedence over the region lookup.

Configure these on each client record per 14.5. Client Billing Settings.

How Tax Is Applied at Invoice Time

When 14.12. Generating Invoices runs, Alga evaluates each charge line in this order:

1. Check whether the client is tax exempt — if so, apply no tax.
2. Check for a service-specific tax rate — if assigned to the service, use it.
3. Check for a client default tax rate — if assigned to the client, use it.
4. Fall back to the tax region lookup by the client's region code and the invoice date.

Tax is calculated individually for each charge line, so different services on the same invoice can resolve to different rates depending on their tax assignments.