---
title: "Setup: Tax Rates And Labor Burden"
description: "Set Exterio tax and labor burden rates: material and customer tax defaults, state or ZIP overrides, and applying customer tax to new projects by default."
---
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October 27, 2026
# Setup: Tax Rates And Labor Burden
## Rates & Fees settings page holds the three rates Exterio uses to price your jobs: Material Tax Rate, Labor Burden Rate and Customer Tax Rate. Each has a company default, and you can override it by state or province, or by ZIP or postal code, if you work in more than one tax area.
### When would I use this?
- You need your estimates to include sales tax as an expected expense on materials.
- You work across a state line or county line where the tax rate changes.
- You want estimates to account for payroll taxes, workers’ comp and insurance on top of labor.
- Your state requires sales tax shown to the customer on proposals and invoices.
- **Only Admins can open this page.** **Rates & Fees** is under **Account Settings**, which only Admins can see.
- **Input your unique rates.** Exterio applies the rates you enter. It doesn’t look up tax rates for you, and it doesn’t advise on which jobs are taxable.
- **Know where you work.** Have a list of the states, provinces or ZIP codes where your rate is different from your default.
### Before you start
### How do I open Rates & Fees in Exterio?
Go to **Settings** \> **Account Settings** \> **Rates & Fees**.
### ****
### What’s the difference between material tax, labor burden and customer tax?
Material tax and labor burden affect your costs in estimates. Customer tax is the tax your customer sees.
| **Rate** | **What it does** | **Where it shows up** |
| --- | --- | --- |
| **Material Tax Rate** | Tax rate applied to material costs in estimates | Estimates |
| **Labor Burden Rate** | Extra cost on top of labor, such as payroll taxes, workers’ comp and insurance | Estimates |
| **Customer Tax Rate** | Tax rate shown to the customer | Proposals, change orders and invoices |
### How do I set a default rate in Exterio?
Enter a percentage in **Default Rate** for each rate, then click **Save Changes**. The default is **Applied when no override matches**.
1. Go to **Settings** \> **Account Settings** \> **Rates & Fees**.
2. Under **Material Tax Rate**, enter your rate in **Default Rate**, for example 6.
3. Under **Labor Burden Rate**, enter your rate in **Default Rate**.
4. Under **Customer Tax Rate**, enter your rate in **Default Rate**. Enter 0 if you don’t charge customers sales tax.
5. Click **Save Changes**. The button appears once you’ve changed something.
6. Under the rate you want to override, find **Location Overrides**.
7. Choose one option:
8. Click **Add**.
9. Pick the state or province, or type the ZIP or postal code.
10. Enter the rate for that location.
11. Repeat for each location, then click **Save Changes**.
Rates are percentages from 0 to 100 and can include decimals, like 7.25.
### How do I override a rate by state or ZIP code?
Choose **By State/Province** or **By ZIP/Postal Code** under **Location Overrides**, click **Add**, and enter the location and its rate.
| **Option** | **What it does** |
| --- | --- |
| **None** | Uses the default rate everywhere |
| **By State/Province** | Uses a different rate for the states or provinces you list |
| **By ZIP/Postal Code** | Uses a different rate for the ZIP or postal codes you list |
Each location can only be listed once per rate. To remove an override, click the trash icon next to it. Each rate uses one kind of override at a time, so you can’t mix states and ZIP codes on the same rate.
### ****
### How do I apply customer tax to new projects automatically?
Turn on **Apply to projects by default** under **Customer Tax Rate** and click **Save Changes**. This automatically applies the customer tax rate to new projects.
Leave it off if most of your work isn’t taxable to the customer, and turn tax on for individual projects instead.
### Tips and gotchas
- **Set your rates before your team builds estimates.** Every estimate’s costs depend on these rates. If material tax or labor burden is missing, your estimates look more profitable than they are, and the difference comes out of your margin on every job.
- **Use ZIP codes when the rate changes inside a state.** City and county taxes can change the rate from one town to the next. If your rate depends on more than the state, use **By ZIP/Postal Code**. The default still covers every ZIP you don’t list.
- **Customer tax and material tax are not the same number.** Material tax is what you pay on materials and it’s part of your cost. Customer tax is what you charge the customer and it shows on their paperwork. Which one applies depends on your state and the type of job. Ask your accountant, and set both on purpose.
- **Decide on Apply to projects by default as a company.** If it’s on, every new project starts with customer tax, and reps have to remember to remove it on jobs that aren’t taxable. If it’s off, they have to remember to add it. Pick the one that matches most of your jobs.
- **Click Save Changes before you leave the page.** Rate changes aren’t saved until you do. Fees are the exception: they save when you click **Create** or **Update** in the fee window.
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