How to setup an Order Item without Tax
If you wish to have a non-taxable item in an order display without tax, then the following steps will show you how.
Have "Enable Tax on Order" checked in the Tax Setup (under Orders Menu), and "Selected Price List Items" checked for the relevant Tax Option, then
Tax on Custom ExtrasIf you have enabled tax on orders and "Add tax to Selected Items" is selected (as mentioned above), then a checkbox will be shown next to the Custom Extras line so you can select whether tax is applicable to this item (Place Order --> Add with Extras).
KnowledgeBase Article: How to setup an Order Item without Tax