# Understanding Tax inclusive and Tax Exclusive pricing with Managed Payments

Learn how to adjust the tax behavior of a price and its significance for tax compliance.
### What is tax inclusive and tax exclusive pricing and how can I change it?
The tax behavior of a price indicates whether tax is added on top of the price you set or included within it.
* **Inclusive tax** is already included in the price. For example, a product has the price defined as 5.00 USD. The final price the customer pays is 5.00 USD.
* **Exclusive tax** is added on top of the price. For example, a product has the price defined as 5.00 USD. The tax charged on this product could be 10% and would result in a final price of 5.50 USD. (Tax rates might differ—this is only an explanatory example.)
Managed Payments follows the [tax behavior you specify for your price](https://docs.stripe.com/tax/products-prices-tax-codes-tax-behavior#setting-tax-behavior-on-a-price-\(optional\)).
If you don’t specify, Managed Payments will add tax on top of the set price by default. To change this default setting, go to the Dashboard, select [Tax settings](https://dashboard.stripe.com/settings/tax), and update the "Include tax in prices" option.
### Why is tax inclusive pricing important?
In many countries with VAT or GST regulations, tax inclusive pricing is not just a best practice but a legal requirement for B2C transactions. It ensures that consumers are fully informed about the total price they will pay, fostering trust and compliance with consumer protection laws. In contrast, exclusive pricing is commonly used in B2B transactions, where businesses are more accustomed to handling taxes separately.
While tax exclusive pricing has its advantages, businesses should be aware of local regulations regarding pricing transparency. In some jurisdictions, laws may require pricing to be presented in a tax-inclusive manner to comply with consumer protection standards. It’s essential for companies to balance their pricing strategies with legal requirements and customer expectations.
### Does tax inclusive pricing make it more complicated for sellers?
Yes, tax inclusive pricing can introduce complexities for sellers. By setting prices that include taxes, sellers must account for varying tax rates across different regions and adjust their pricing strategies accordingly. This requires careful consideration, as the tax component reduces the revenue the seller retains from the set price. In contrast, exclusive pricing offers a more straightforward approach, as sellers always know the exact amount they will keep after taxes are applied.
### Can you provide guidance on how to implement tax inclusive pricing?
While we can provide information on tax inclusive pricing and its implications, we do not offer specific advice on how sellers should price their products. Each seller should evaluate their unique circumstances and consult with legal and tax professionals as needed to ensure compliance with local laws and regulations.