Magento – How to change Tax percentage during checkout

How I've done this in the past was to extend the Mage_Tax_Model_Calculation class. Then creating a copy of the function calcTaxAmount we return a value of 0 if the conditions are met. In your case you could look up the quote from the customer session and get the customer's billing address information.

I think I also made the function compareRequests always return true as well, it's been a while.

Since you've referenced a previous question of mine, I feel I should respond.

In the research I've done on modifying tax rates based on various factors (in my case, mostly an API call to a tax rate provider to discover a user's current/accurate tax rate) it seems safest to me to get out of Magento's way when possible.

By this, I mean that modifying core processes to change how tax is calculated is going to give you all sorts of fits and it may be less cumbersome and cleaner overall to instead create your own tax rates/rules dynamically based on the factors you require.

In my case it ended up being much cleaner to observe the same sales_quote_collect_totals_before event and simply determine if an existing rate/rule has been created and can be used based on current context (in my case, postal codes). If it is, then use it, if not, then let's create a new tax rate/rule programmatically which is then available to be used during collectTotals().

When I say "much cleaner", the main things are what Magento will already do with your tax rates if they exist as expected. If I was trying to set the tax rate itself, then you have additional areas you need to cover so that these values display properly during checkout. In contrast, simply creating a new tax rate/rule dynamically removes this constraint and all the other areas of Magento (frontend or backend) that display/modify/use these rates will function normally as if nothing changed.

Again, just to reiterate, I did try doing this both ways, using $item->setTaxAmount() as well as programmatically create tax rules. The module where I was modifying the item/quote's tax was much more complex and prone to error (especially front-end display issues). In the end I decided my method was better simply because we are dealing with monetary values that the customer is required to pay. I would rather have a server process that was a little "heavier" but did things correctly than one that was prone to error but was more obvious in its implementation. I cannot accept losing a customer because they were confused by the taxes during checkout.