diff --git a/classes/customer.class.php b/classes/customer.class.php
index d8b50d8610e..86e083c4eb1 100644
--- a/classes/customer.class.php
+++ b/classes/customer.class.php
@@ -53,7 +53,8 @@ class woocommerce_customer {
         		$state = '';
         	endif;
         	
-			if ($country!==$_SESSION['customer']['country']) return true;
+			if ($country!==$_SESSION['customer']['shipping_country']) return true;
+			if ($state && $state!==$_SESSION['customer']['shipping_state']) return true;
 			
 		endif;
 		return false;
diff --git a/classes/tax.class.php b/classes/tax.class.php
index dcd6ac98403..ea40a49e86a 100644
--- a/classes/tax.class.php
+++ b/classes/tax.class.php
@@ -117,8 +117,8 @@ class woocommerce_tax {
 		/* Checkout uses customer location, otherwise use store base rate */
 		if ( defined('WOOCOMMERCE_CHECKOUT') && WOOCOMMERCE_CHECKOUT ) :
 			
-			$country 	= $woocommerce->customer->get_country();
-			$state 		= $woocommerce->customer->get_state();
+			$country 	= $woocommerce->customer->get_shipping_country();
+			$state 		= $woocommerce->customer->get_shipping_state();
 			
 			$rate = $this->find_rate( $country, $state, $tax_class );
 			
@@ -160,8 +160,8 @@ class woocommerce_tax {
 		global $woocommerce;
 		
 		if (defined('WOOCOMMERCE_CHECKOUT') && WOOCOMMERCE_CHECKOUT) :
-			$country 	= $woocommerce->customer->get_country();
-			$state 		= $woocommerce->customer->get_state();
+			$country 	= $woocommerce->customer->get_shipping_country();
+			$state 		= $woocommerce->customer->get_shipping_state();
 		else :
 			$country 	= $woocommerce->countries->get_base_country();
 			$state 		= $woocommerce->countries->get_base_state();
diff --git a/readme.txt b/readme.txt
index 34eaf8e1f85..69afcd8e1f2 100644
--- a/readme.txt
+++ b/readme.txt
@@ -94,6 +94,7 @@ Yes you can! Join in on our GitHub repository :) https://github.com/woothemes/wo
 * Customer note field quote fix
 * Moved product-category and tag slugs to settings (page)
 * % coupon fix
+* Tax rates based on shipping address
 
 = 1.3 - 01/12/2011 =
 * Minor bug fixes + localisations