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I am attempting to have sales tax calculated before shipping fees are added using Magento CE 1.8.1.0. Currently, the cart adds shipping to the subtotal, and then taxes are applied to everything in the subtotal, including shipping (this appears to be Magento's default behavior). The client wants shipping charges to be excluded from tax. The only option that I can locate in Magento's backend to change this is System > Configuration > Sales > Tax > Calculation Settings, where "Shipping Prices" is set to "Excluding Tax." This has no effect. I have also tried re-ordering the checkout totals under System > Configuration > Sales > Sales > Checkout Totals Sort Order, where I have placed shipping after tax. This also has no effect.

Seems like this should be a relatively straight-forward issue to fix, but I'm not seeing anything available. Am I missing the configuration? Or does this need to be solved programmatically? If so, guidance is appreciated. Thanks!

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Figured this out...the issue was that the product tax class applies to shipping. This can be changed in System > Configuration > Sales > Tax > Tax Classes. Set "Tax Class for Shipping" to "None."

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