> For the complete documentation index, see [llms.txt](https://docs.rmhpos.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.rmhpos.com/store-manager/manage-items/bag-fees-and-bag-taxes/setting-up-bag-taxes.md).
# Configure bag taxes
There are three steps required to set up bag taxes:
1. Set up a sales tax for the bag tax.
2. Set up an item tax for the bag tax.
3. Create a non-inventory item for the bag and assign the item tax.
These steps are described in more detail below.
{% hint style="success" %}
It is also recommended that you define a custom POS button or add a button on the store's POS task pads to allow cashiers and salespeople to quickly add bags to transactions in POS. For more information, refer to [**Configure custom POS buttons**](/readme-1/customize-the-pos-screen/setting-up-pos-buttons.md) and [**Configure custom POS task pads**](/readme-1/customize-the-pos-screen/setting-up-pos-task-pads.md) for more information.
{% endhint %}
## Configure a sales tax for the bag tax
1. Click **Setup**.
2. Expand **Financial**.
3. Click **Sales Tax**.
4. Click **New**.
5. For **Description**, enter a unique name for the sales tax, e.g., \[State/County] Bag Tax.
6. For **Code**, enter a unique code for the sales tax.
7. For **Fixed Amount**, enter the amount of the bag tax, e.g., $0.05.
8. Click **Save And Close**.
## Configure an item tax for the bag tax
1. Click **Setup**.
2. Expand **Financial**.
3. Click **Item Taxes**.
4. Click **New**.
5. For **Description**, enter a unique name for the item tax, e.g., \[State/County] Bag Tax.
6. For **Code**, enter a unique code for the item tax.
7. Select **Compute tax on Item Weight instead of Price**.
8. Under **Sales tax selection**, select the sales tax.
9. (Optional) Select **On Receipt** beside the sales tax to display the sales tax on the customer's receipt.
{% hint style="info" %}
Check the bag tax regulations in the jurisdiction where the store operates to determine if displaying the bag tax on the customer's receipt is required or optional.
{% endhint %}
10. Click **Save And Close**.
## Add a non-inventory item and assign the item tax
1. Click **Merchandising**.
2. Click **Items**.
3. Click **New**.
4. Select **Standard Item** and click **OK**.
5. For **Item Lookup Code**, enter a unique lookup code such as **Plastic Bag**.
6. (Optional) Enter a **Description**.
7. From **Item type**, select **Non-Inventory**.
8. From **Item tax**, select the item tax that you created for the bag tax.
9. Select **Item is taxable**.
10. For **Price** enter zero (e.g., $0.00).
11. For **Cost** enter zero (e.g., $0.00).
{% hint style="info" %}
The bag fee is a non-inventory item, so it is not necessary to enter an **On hand** quantity on the **Inventory** tab, or to enter a **Restock Level** or **Reorder Point** for purchasing.
{% endhint %}
12. On the **Special** tab, enter **1** in the **Weight** field.
13. (Optional) On the **Options** tab, select **Item is not discountable at the POS**.
14. Click **Save And Close**.
---
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