diff --git a/.changeset/honest-crabs-study.md b/.changeset/honest-crabs-study.md
new file mode 100644
index 0000000000..8e3137f46e
--- /dev/null
+++ b/.changeset/honest-crabs-study.md
@@ -0,0 +1,5 @@
+---
+"@medusajs/medusa": patch
+---
+
+Calculates correct taxes and totals on line items when carts and orders have gift cards
diff --git a/integration-tests/api/__tests__/totals/orders.js b/integration-tests/api/__tests__/totals/orders.js
new file mode 100644
index 0000000000..2cb3d2f2fe
--- /dev/null
+++ b/integration-tests/api/__tests__/totals/orders.js
@@ -0,0 +1,170 @@
+const path = require("path")
+
+const setupServer = require("../../../helpers/setup-server")
+const { useApi } = require("../../../helpers/use-api")
+const { initDb, useDb } = require("../../../helpers/use-db")
+const adminSeeder = require("../../helpers/admin-seeder")
+
+const {
+  simpleRegionFactory,
+  simpleCartFactory,
+  simpleGiftCardFactory,
+  simpleProductFactory,
+} = require("../../factories")
+
+jest.setTimeout(30000)
+
+describe("Order Totals", () => {
+  let medusaProcess
+  let dbConnection
+
+  const doAfterEach = async () => {
+    const db = useDb()
+    return await db.teardown()
+  }
+
+  beforeAll(async () => {
+    const cwd = path.resolve(path.join(__dirname, "..", ".."))
+    try {
+      dbConnection = await initDb({ cwd })
+      medusaProcess = await setupServer({ cwd })
+    } catch (error) {
+      console.log(error)
+    }
+  })
+
+  afterAll(async () => {
+    const db = useDb()
+    await db.shutdown()
+    medusaProcess.kill()
+  })
+
+  afterEach(async () => {
+    return await doAfterEach()
+  })
+
+  test("calculates totals correctly for order with non-taxable gift card", async () => {
+    await adminSeeder(dbConnection)
+    await simpleProductFactory(dbConnection, {
+      variants: [
+        { id: "variant_1", prices: [{ currency: "usd", amount: 95600 }] },
+        { id: "variant_2", prices: [{ currency: "usd", amount: 79600 }] },
+      ],
+    })
+
+    const region = await simpleRegionFactory(dbConnection, {
+      gift_cards_taxable: false,
+      tax_rate: 25,
+    })
+
+    const cart = await simpleCartFactory(dbConnection, {
+      id: "test-cart",
+      email: "testnation@medusajs.com",
+      region: region.id,
+      line_items: [],
+    })
+
+    const giftCard = await simpleGiftCardFactory(dbConnection, {
+      region_id: region.id,
+      value: 160000,
+      balance: 160000,
+    })
+
+    const api = useApi()
+
+    await api.post("/store/carts/test-cart/line-items", {
+      quantity: 1,
+      variant_id: "variant_1",
+    })
+    await api.post("/store/carts/test-cart/line-items", {
+      quantity: 1,
+      variant_id: "variant_2",
+    })
+    await api.post("/store/carts/test-cart", {
+      gift_cards: [{ code: giftCard.code }],
+    })
+    await api.post(`/store/carts/${cart.id}/payment-sessions`)
+    const response = await api.post(`/store/carts/test-cart/complete`)
+    expect(response.status).toEqual(200)
+    expect(response.data.type).toEqual("order")
+    const orderId = response.data.data.id
+
+    const { data } = await api.get(`/admin/orders/${orderId}`, {
+      headers: { Authorization: `Bearer test_token` },
+    })
+
+    expect(data.order.gift_card_transactions).toEqual([
+      expect.objectContaining({
+        amount: 160000,
+        is_taxable: false,
+        tax_rate: null,
+      }),
+    ])
+    expect(data.order.gift_card_total).toEqual(160000)
+    expect(data.order.gift_card_tax_total).toEqual(0)
+    expect(data.order.total).toEqual(59000)
+  })
+
+  test("calculates totals correctly for order with taxable gift card", async () => {
+    await adminSeeder(dbConnection)
+    await simpleProductFactory(dbConnection, {
+      variants: [
+        { id: "variant_1", prices: [{ currency: "usd", amount: 95600 }] },
+        { id: "variant_2", prices: [{ currency: "usd", amount: 79600 }] },
+      ],
+    })
+
+    const region = await simpleRegionFactory(dbConnection, {
+      gift_cards_taxable: true,
+      tax_rate: 25,
+    })
+
+    const cart = await simpleCartFactory(dbConnection, {
+      id: "test-cart",
+      email: "testnation@medusajs.com",
+      region: region.id,
+      line_items: [],
+    })
+
+    const giftCard = await simpleGiftCardFactory(dbConnection, {
+      region_id: region.id,
+      value: 160000,
+      balance: 160000,
+    })
+
+    const api = useApi()
+
+    await api.post("/store/carts/test-cart/line-items", {
+      quantity: 1,
+      variant_id: "variant_1",
+    })
+    await api.post("/store/carts/test-cart/line-items", {
+      quantity: 1,
+      variant_id: "variant_2",
+    })
+    await api.post("/store/carts/test-cart", {
+      gift_cards: [{ code: giftCard.code }],
+    })
+    await api.post(`/store/carts/${cart.id}/payment-sessions`)
+    const response = await api.post(`/store/carts/test-cart/complete`)
+    expect(response.status).toEqual(200)
+    expect(response.data.type).toEqual("order")
+    const orderId = response.data.data.id
+
+    const { data } = await api.get(`/admin/orders/${orderId}`, {
+      headers: { Authorization: `Bearer test_token` },
+    })
+
+    expect(data.order.gift_card_transactions).toEqual([
+      expect.objectContaining({
+        amount: 160000,
+        is_taxable: true,
+        tax_rate: 25,
+      }),
+    ])
+    expect(data.order.gift_card_total).toEqual(160000)
+    expect(data.order.gift_card_tax_total).toEqual(40000)
+    expect(data.order.tax_total).toEqual(3800)
+    expect(data.order.total).toEqual(19000)
+  })
+})
diff --git a/integration-tests/api/factories/index.ts b/integration-tests/api/factories/index.ts
index 720640d3ce..192646a0a0 100644
--- a/integration-tests/api/factories/index.ts
+++ b/integration-tests/api/factories/index.ts
@@ -1,3 +1,4 @@
+export * from "./simple-gift-card-factory"
 export * from "./simple-payment-factory"
 export * from "./simple-batch-job-factory"
 export * from "./simple-discount-factory"
diff --git a/integration-tests/api/factories/simple-gift-card-factory.ts b/integration-tests/api/factories/simple-gift-card-factory.ts
new file mode 100644
index 0000000000..4e80a83f3c
--- /dev/null
+++ b/integration-tests/api/factories/simple-gift-card-factory.ts
@@ -0,0 +1,33 @@
+import { GiftCard } from "@medusajs/medusa"
+import faker from "faker"
+import { Connection } from "typeorm"
+
+export type GiftCardFactoryData = {
+  id?: string
+  code?: string
+  region_id: string
+  value: number
+  balance: number
+}
+
+export const simpleGiftCardFactory = async (
+  connection: Connection,
+  data: GiftCardFactoryData,
+  seed?: number
+): Promise<GiftCard> => {
+  if (typeof seed !== "undefined") {
+    faker.seed(seed)
+  }
+
+  const manager = connection.manager
+
+  const toSave = manager.create(GiftCard, {
+    id: data.id,
+    code: data.code ?? "TESTGCCODE",
+    region_id: data.region_id,
+    value: data.value,
+    balance: data.balance,
+  })
+
+  return await manager.save(toSave)
+}
diff --git a/integration-tests/api/factories/simple-product-factory.ts b/integration-tests/api/factories/simple-product-factory.ts
index a4670d4ecf..c8d36389cc 100644
--- a/integration-tests/api/factories/simple-product-factory.ts
+++ b/integration-tests/api/factories/simple-product-factory.ts
@@ -112,5 +112,9 @@ export const simpleProductFactory = async (
     await simpleProductVariantFactory(connection, factoryData)
   }
 
-  return manager.findOne(Product, { id: prodId }, { relations: ["tags", "variants", "variants.prices"] })
+  return manager.findOne(
+    Product,
+    { id: prodId },
+    { relations: ["tags", "variants", "variants.prices"] }
+  )
 }
diff --git a/integration-tests/api/factories/simple-region-factory.ts b/integration-tests/api/factories/simple-region-factory.ts
index 0cd08ea702..185d02cfb8 100644
--- a/integration-tests/api/factories/simple-region-factory.ts
+++ b/integration-tests/api/factories/simple-region-factory.ts
@@ -9,6 +9,7 @@ export type RegionFactoryData = {
   tax_rate?: number
   countries?: string[]
   automatic_taxes?: boolean
+  gift_cards_taxable?: boolean
 }
 
 export const simpleRegionFactory = async (
@@ -29,6 +30,7 @@ export const simpleRegionFactory = async (
     currency_code: data.currency_code || "usd",
     tax_rate: data.tax_rate || 0,
     payment_providers: [{ id: "test-pay" }],
+    gift_cards_taxable: data.gift_cards_taxable ?? true,
     automatic_taxes:
       typeof data.automatic_taxes !== "undefined" ? data.automatic_taxes : true,
   })
diff --git a/integration-tests/plugins/__tests__/medusa-plugin-sendgrid/__snapshots__/index.js.snap b/integration-tests/plugins/__tests__/medusa-plugin-sendgrid/__snapshots__/index.js.snap
index e80d777ab5..64e61d8209 100644
--- a/integration-tests/plugins/__tests__/medusa-plugin-sendgrid/__snapshots__/index.js.snap
+++ b/integration-tests/plugins/__tests__/medusa-plugin-sendgrid/__snapshots__/index.js.snap
@@ -753,6 +753,7 @@ Object {
   "external_id": null,
   "fulfillment_status": "canceled",
   "fulfillments": Array [],
+  "gift_card_tax_total": 0,
   "gift_card_total": "0.00 USD",
   "gift_card_transactions": Array [],
   "gift_cards": Array [],
@@ -975,6 +976,7 @@ Object {
   "external_id": null,
   "fulfillment_status": "fulfilled",
   "fulfillments": Array [],
+  "gift_card_tax_total": 0,
   "gift_card_total": "0.00 USD",
   "gift_card_transactions": Array [],
   "gift_cards": Array [],
@@ -1244,6 +1246,7 @@ Object {
         "updated_at": Any<Date>,
       },
     ],
+    "gift_card_tax_total": 0,
     "gift_card_total": 0,
     "gift_card_transactions": Array [],
     "gift_cards": Array [],
diff --git a/packages/medusa/src/migrations/1657098186554-taxed_gift_card_transactions.ts b/packages/medusa/src/migrations/1657098186554-taxed_gift_card_transactions.ts
new file mode 100644
index 0000000000..f96cc2cd3a
--- /dev/null
+++ b/packages/medusa/src/migrations/1657098186554-taxed_gift_card_transactions.ts
@@ -0,0 +1,25 @@
+import { MigrationInterface, QueryRunner } from "typeorm"
+
+export class taxedGiftCardTransactions1657098186554
+  implements MigrationInterface
+{
+  name = "taxedGiftCardTransactions1657098186554"
+
+  public async up(queryRunner: QueryRunner): Promise<void> {
+    await queryRunner.query(
+      `ALTER TABLE "gift_card_transaction" ADD "is_taxable" boolean`
+    )
+    await queryRunner.query(
+      `ALTER TABLE "gift_card_transaction" ADD "tax_rate" real`
+    )
+  }
+
+  public async down(queryRunner: QueryRunner): Promise<void> {
+    await queryRunner.query(
+      `ALTER TABLE "gift_card_transaction" DROP COLUMN "is_taxable"`
+    )
+    await queryRunner.query(
+      `ALTER TABLE "gift_card_transaction" DROP COLUMN "tax_rate"`
+    )
+  }
+}
diff --git a/packages/medusa/src/models/cart.ts b/packages/medusa/src/models/cart.ts
index ba4ea47880..26cab6cc0e 100644
--- a/packages/medusa/src/models/cart.ts
+++ b/packages/medusa/src/models/cart.ts
@@ -252,6 +252,7 @@ export class Cart extends SoftDeletableEntity {
   subtotal?: number
   refundable_amount?: number
   gift_card_total?: number
+  gift_card_tax_total?: number
 
   @AfterLoad()
   private afterLoad(): void {
diff --git a/packages/medusa/src/models/gift-card-transaction.ts b/packages/medusa/src/models/gift-card-transaction.ts
index 867ac9faf1..5f0d0871b6 100644
--- a/packages/medusa/src/models/gift-card-transaction.ts
+++ b/packages/medusa/src/models/gift-card-transaction.ts
@@ -42,6 +42,12 @@ export class GiftCardTransaction {
   @CreateDateColumn({ type: resolveDbType("timestamptz") })
   created_at: Date
 
+  @Column({ nullable: true })
+  is_taxable: boolean
+
+  @Column({ type: "real", nullable: true })
+  tax_rate: number | null
+
   @BeforeInsert()
   private beforeInsert(): void {
     this.id = generateEntityId(this.id, "gct")
diff --git a/packages/medusa/src/models/order.ts b/packages/medusa/src/models/order.ts
index 7bb16a3242..fd64620788 100644
--- a/packages/medusa/src/models/order.ts
+++ b/packages/medusa/src/models/order.ts
@@ -249,6 +249,7 @@ export class Order extends BaseEntity {
   paid_total: number
   refundable_amount: number
   gift_card_total: number
+  gift_card_tax_total: number
 
   @BeforeInsert()
   private async beforeInsert(): Promise<void> {
diff --git a/packages/medusa/src/services/__mocks__/totals.js b/packages/medusa/src/services/__mocks__/totals.js
index 13dc49497e..2825ea0230 100644
--- a/packages/medusa/src/services/__mocks__/totals.js
+++ b/packages/medusa/src/services/__mocks__/totals.js
@@ -1,13 +1,19 @@
 import { IdMap } from "medusa-test-utils"
 
 export const TotalsServiceMock = {
-  getTotal: jest.fn().mockImplementation(cart => {
+  getTotal: jest.fn().mockImplementation((cart) => {
     if (cart.total) {
       return cart.total
     }
     return 0
   }),
-  getSubtotal: jest.fn().mockImplementation(cart => {
+  getGiftCardableAmount: jest.fn().mockImplementation((cart) => {
+    if (cart.subtotal) {
+      return cart.subtotal
+    }
+    return 0
+  }),
+  getSubtotal: jest.fn().mockImplementation((cart) => {
     if (cart.subtotal) {
       return cart.subtotal
     }
diff --git a/packages/medusa/src/services/__tests__/order.js b/packages/medusa/src/services/__tests__/order.js
index 66bb41f46f..903c92c938 100644
--- a/packages/medusa/src/services/__tests__/order.js
+++ b/packages/medusa/src/services/__tests__/order.js
@@ -8,6 +8,9 @@ describe("OrderService", () => {
     getTotal: (o) => {
       return o.total || 0
     },
+    getGiftCardableAmount: (o) => {
+      return o.subtotal || 0
+    },
     getRefundedTotal: (o) => {
       return o.refunded_total || 0
     },
@@ -33,7 +36,7 @@ describe("OrderService", () => {
 
   const eventBusService = {
     emit: jest.fn(),
-    withTransaction: function() {
+    withTransaction: function () {
       return this
     },
   }
@@ -78,20 +81,20 @@ describe("OrderService", () => {
     })
     const lineItemService = {
       update: jest.fn(),
-      withTransaction: function() {
+      withTransaction: function () {
         return this
       },
     }
     const shippingOptionService = {
       updateShippingMethod: jest.fn(),
-      withTransaction: function() {
+      withTransaction: function () {
         return this
       },
     }
     const giftCardService = {
       update: jest.fn(),
       createTransaction: jest.fn(),
-      withTransaction: function() {
+      withTransaction: function () {
         return this
       },
     }
@@ -103,7 +106,7 @@ describe("OrderService", () => {
       cancelPayment: jest.fn().mockImplementation((payment) => {
         return Promise.resolve({ ...payment, status: "cancelled" })
       }),
-      withTransaction: function() {
+      withTransaction: function () {
         return this
       },
     }
@@ -142,7 +145,7 @@ describe("OrderService", () => {
           total: 100,
         })
       }),
-      withTransaction: function() {
+      withTransaction: function () {
         return this
       },
     }
@@ -281,6 +284,7 @@ describe("OrderService", () => {
           id: "test",
           currency_code: "eur",
           name: "test",
+          gift_cards_taxable: true,
           tax_rate: 25,
         },
         shipping_address_id: "1234",
@@ -339,6 +343,8 @@ describe("OrderService", () => {
       expect(giftCardService.createTransaction).toHaveBeenCalledWith({
         gift_card_id: "gid",
         order_id: "id",
+        is_taxable: true,
+        tax_rate: 25,
         amount: 80,
       })
 
@@ -633,14 +639,14 @@ describe("OrderService", () => {
 
     const fulfillmentService = {
       cancelFulfillment: jest.fn(),
-      withTransaction: function() {
+      withTransaction: function () {
         return this
       },
     }
 
     const paymentProviderService = {
       cancelPayment: jest.fn(),
-      withTransaction: function() {
+      withTransaction: function () {
         return this
       },
     }
@@ -737,7 +743,7 @@ describe("OrderService", () => {
             ? Promise.reject()
             : Promise.resolve({ ...p, captured_at: "notnull" })
         ),
-      withTransaction: function() {
+      withTransaction: function () {
         return this
       },
     }
@@ -842,7 +848,7 @@ describe("OrderService", () => {
 
     const lineItemService = {
       update: jest.fn(),
-      withTransaction: function() {
+      withTransaction: function () {
         return this
       },
     }
@@ -855,7 +861,7 @@ describe("OrderService", () => {
           },
         ])
       }),
-      withTransaction: function() {
+      withTransaction: function () {
         return this
       },
     }
@@ -1022,7 +1028,7 @@ describe("OrderService", () => {
             })
         }
       }),
-      withTransaction: function() {
+      withTransaction: function () {
         return this
       },
     }
@@ -1091,7 +1097,7 @@ describe("OrderService", () => {
         .mockImplementation((p) =>
           p.id === "payment_fail" ? Promise.reject() : Promise.resolve()
         ),
-      withTransaction: function() {
+      withTransaction: function () {
         return this
       },
     }
@@ -1232,7 +1238,7 @@ describe("OrderService", () => {
         .fn()
         .mockImplementation(() => Promise.resolve({})),
 
-      withTransaction: function() {
+      withTransaction: function () {
         return this
       },
     }
@@ -1366,7 +1372,7 @@ describe("OrderService", () => {
 
     const lineItemService = {
       update: jest.fn(),
-      withTransaction: function() {
+      withTransaction: function () {
         return this
       },
     }
@@ -1389,7 +1395,7 @@ describe("OrderService", () => {
             ],
           })
         }),
-      withTransaction: function() {
+      withTransaction: function () {
         return this
       },
     }
@@ -1416,9 +1422,7 @@ describe("OrderService", () => {
       )
 
       expect(fulfillmentService.createShipment).toHaveBeenCalledTimes(1)
-      expect(
-        fulfillmentService.createShipment
-      ).toHaveBeenCalledWith(
+      expect(fulfillmentService.createShipment).toHaveBeenCalledWith(
         IdMap.getId("fulfillment"),
         [{ tracking_number: "1234" }, { tracking_number: "2345" }],
         { metadata: undefined, no_notification: true }
@@ -1510,7 +1514,7 @@ describe("OrderService", () => {
       refundPayment: jest
         .fn()
         .mockImplementation((p) => Promise.resolve({ id: "ref" })),
-      withTransaction: function() {
+      withTransaction: function () {
         return this
       },
     }
diff --git a/packages/medusa/src/services/cart.ts b/packages/medusa/src/services/cart.ts
index 9a2f1b3a74..2a4348b57c 100644
--- a/packages/medusa/src/services/cart.ts
+++ b/packages/medusa/src/services/cart.ts
@@ -234,9 +234,12 @@ class CartService extends TransactionBaseService<CartService> {
             options.force_taxes
           )
           break
-        case "gift_card_total":
-          totals.gift_card_total = this.totalsService_.getGiftCardTotal(cart)
+        case "gift_card_total": {
+          const giftCardBreakdown = this.totalsService_.getGiftCardTotal(cart)
+          totals.gift_card_total = giftCardBreakdown.total
+          totals.gift_card_tax_total = giftCardBreakdown.tax_total
           break
+        }
         case "subtotal":
           totals.subtotal = this.totalsService_.getSubtotal(cart)
           break
diff --git a/packages/medusa/src/services/order.js b/packages/medusa/src/services/order.js
index 06ee77bb93..4214f15892 100644
--- a/packages/medusa/src/services/order.js
+++ b/packages/medusa/src/services/order.js
@@ -464,20 +464,21 @@ class OrderService extends BaseService {
    */
   async createFromCart(cartId) {
     return this.atomicPhase_(async (manager) => {
-      const cart = await this.cartService_
-        .withTransaction(manager)
-        .retrieve(cartId, {
-          select: ["subtotal", "total"],
-          relations: [
-            "region",
-            "payment",
-            "items",
-            "discounts",
-            "discounts.rule",
-            "gift_cards",
-            "shipping_methods",
-          ],
-        })
+      const cartService = this.cartService_.withTransaction(manager)
+      const inventoryService = this.inventoryService_.withTransaction(manager)
+
+      const cart = await cartService.retrieve(cartId, {
+        select: ["subtotal", "total"],
+        relations: [
+          "region",
+          "payment",
+          "items",
+          "discounts",
+          "discounts.rule",
+          "gift_cards",
+          "shipping_methods",
+        ],
+      })
 
       if (cart.items.length === 0) {
         throw new MedusaError(
@@ -490,18 +491,17 @@ class OrderService extends BaseService {
 
       for (const item of cart.items) {
         try {
-          await this.inventoryService_
-            .withTransaction(manager)
-            .confirmInventory(item.variant_id, item.quantity)
+          await inventoryService.confirmInventory(
+            item.variant_id,
+            item.quantity
+          )
         } catch (err) {
           if (payment) {
             await this.paymentProviderService_
               .withTransaction(manager)
               .cancelPayment(payment)
           }
-          await this.cartService_
-            .withTransaction(manager)
-            .update(cart.id, { payment_authorized_at: null })
+          await cartService.update(cart.id, { payment_authorized_at: null })
           throw err
         }
       }
@@ -564,8 +564,7 @@ class OrderService extends BaseService {
         toCreate.no_notification = draft.no_notification_order
       }
 
-      const o = await orderRepo.create(toCreate)
-
+      const o = orderRepo.create(toCreate)
       const result = await orderRepo.save(o)
 
       if (total !== 0) {
@@ -576,19 +575,25 @@ class OrderService extends BaseService {
           })
       }
 
-      let gcBalance = cart.subtotal
+      let gcBalance = await this.totalsService_.getGiftCardableAmount(cart)
+      const gcService = this.giftCardService_.withTransaction(manager)
+
       for (const g of cart.gift_cards) {
         const newBalance = Math.max(0, g.balance - gcBalance)
         const usage = g.balance - newBalance
-        await this.giftCardService_.withTransaction(manager).update(g.id, {
+        await gcService.update(g.id, {
           balance: newBalance,
           disabled: newBalance === 0,
         })
 
-        await this.giftCardService_.withTransaction(manager).createTransaction({
+        await gcService.createTransaction({
           gift_card_id: g.id,
           order_id: result.id,
           amount: usage,
+          is_taxable: cart.region.gift_cards_taxable,
+          tax_rate: cart.region.gift_cards_taxable
+            ? cart.region.tax_rate
+            : null,
         })
 
         gcBalance = gcBalance - usage
@@ -600,16 +605,13 @@ class OrderService extends BaseService {
           .updateShippingMethod(method.id, { order_id: result.id })
       }
 
+      const lineItemService = this.lineItemService_.withTransaction(manager)
       for (const item of cart.items) {
-        await this.lineItemService_
-          .withTransaction(manager)
-          .update(item.id, { order_id: result.id })
+        await lineItemService.update(item.id, { order_id: result.id })
       }
 
       for (const item of cart.items) {
-        await this.inventoryService_
-          .withTransaction(manager)
-          .adjustInventory(item.variant_id, -item.quantity)
+        await inventoryService.adjustInventory(item.variant_id, -item.quantity)
       }
 
       await this.eventBus_
@@ -619,9 +621,7 @@ class OrderService extends BaseService {
           no_notification: result.no_notification,
         })
 
-      await this.cartService_
-        .withTransaction(manager)
-        .update(cart.id, { completed_at: new Date() })
+      await cartService.update(cart.id, { completed_at: new Date() })
 
       return result
     })
@@ -1383,7 +1383,9 @@ class OrderService extends BaseService {
           break
         }
         case "gift_card_total": {
-          order.gift_card_total = this.totalsService_.getGiftCardTotal(order)
+          const giftCardBreakdown = this.totalsService_.getGiftCardTotal(order)
+          order.gift_card_total = giftCardBreakdown.total
+          order.gift_card_tax_total = giftCardBreakdown.tax_total
           break
         }
         case "discount_total": {
diff --git a/packages/medusa/src/services/totals.ts b/packages/medusa/src/services/totals.ts
index ad2a327bd0..7f1838b0f5 100644
--- a/packages/medusa/src/services/totals.ts
+++ b/packages/medusa/src/services/totals.ts
@@ -1,4 +1,3 @@
-import _ from "lodash"
 import { MedusaError } from "medusa-core-utils"
 import { BaseService } from "medusa-interfaces"
 import { ITaxCalculationStrategy, TaxCalculationContext } from "../interfaces"
@@ -64,6 +63,7 @@ type TotalsServiceProps = {
 }
 
 type GetTotalsOptions = {
+  exclude_gift_cards?: boolean
   force_taxes?: boolean
 }
 
@@ -111,10 +111,14 @@ class TotalsService extends BaseService {
     const taxTotal =
       (await this.getTaxTotal(cartOrOrder, options.force_taxes)) || 0
     const discountTotal = this.getDiscountTotal(cartOrOrder)
-    const giftCardTotal = this.getGiftCardTotal(cartOrOrder)
+    const giftCardTotal = options.exclude_gift_cards
+      ? { total: 0 }
+      : this.getGiftCardTotal(cartOrOrder)
     const shippingTotal = this.getShippingTotal(cartOrOrder)
 
-    return subtotal + taxTotal + shippingTotal - discountTotal - giftCardTotal
+    return (
+      subtotal + taxTotal + shippingTotal - discountTotal - giftCardTotal.total
+    )
   }
 
   /**
@@ -292,6 +296,7 @@ class TotalsService extends BaseService {
     }
 
     const calculationContext = this.getCalculationContext(cartOrOrder)
+    const giftCardTotal = this.getGiftCardTotal(cartOrOrder)
 
     let taxLines: (ShippingMethodTaxLine | LineItemTaxLine)[]
     if (isOrder(cartOrOrder)) {
@@ -317,9 +322,8 @@ class TotalsService extends BaseService {
         const subtotal = this.getSubtotal(cartOrOrder)
         const shippingTotal = this.getShippingTotal(cartOrOrder)
         const discountTotal = this.getDiscountTotal(cartOrOrder)
-        const giftCardTotal = this.getGiftCardTotal(cartOrOrder)
         return this.rounded(
-          (subtotal - discountTotal - giftCardTotal + shippingTotal) *
+          (subtotal - discountTotal - giftCardTotal.total + shippingTotal) *
             (cartOrOrder.tax_rate / 100)
         )
       }
@@ -354,6 +358,10 @@ class TotalsService extends BaseService {
       calculationContext
     )
 
+    if (cartOrOrder.region.gift_cards_taxable) {
+      return this.rounded(toReturn - giftCardTotal.tax_total)
+    }
+
     return this.rounded(toReturn)
   }
 
@@ -385,13 +393,13 @@ class TotalsService extends BaseService {
         if (allocationMap[ld.item.id]) {
           allocationMap[ld.item.id].discount = {
             amount: ld.amount,
-            unit_amount: ld.amount / ld.item.quantity,
+            unit_amount: Math.round(ld.amount / ld.item.quantity),
           }
         } else {
           allocationMap[ld.item.id] = {
             discount: {
               amount: ld.amount,
-              unit_amount: ld.amount / ld.item.quantity,
+              unit_amount: Math.round(ld.amount / ld.item.quantity),
             },
           }
         }
@@ -406,13 +414,13 @@ class TotalsService extends BaseService {
 
         // If the fixed discount exceeds the subtotal we should
         // calculate a 100% discount
-        const nominator = Math.min(giftCardTotal, subtotal)
+        const nominator = Math.min(giftCardTotal.total, subtotal)
         const percentage = nominator / subtotal
 
         lineGiftCards = orderOrCart.items.map((l) => {
           return {
             item: l,
-            amount: l.unit_price * l.quantity * percentage,
+            amount: Math.round(l.unit_price * l.quantity * percentage),
           }
         })
       }
@@ -421,13 +429,13 @@ class TotalsService extends BaseService {
         if (allocationMap[lgc.item.id]) {
           allocationMap[lgc.item.id].gift_card = {
             amount: lgc.amount,
-            unit_amount: lgc.amount / lgc.item.quantity,
+            unit_amount: Math.round(lgc.amount / lgc.item.quantity),
           }
         } else {
           allocationMap[lgc.item.id] = {
-            discount: {
+            gift_card: {
               amount: lgc.amount,
-              unit_amount: lgc.amount / lgc.item.quantity,
+              unit_amount: Math.round(lgc.amount / lgc.item.quantity),
             },
           }
         }
@@ -821,31 +829,91 @@ class TotalsService extends BaseService {
     return toReturn
   }
 
+  /**
+   * Gets the amount that can be gift carded on a cart. In regions where gift
+   * cards are taxable this amount should exclude taxes.
+   * @param cartOrOrder - the cart or order to get gift card amount for
+   * @return the gift card amount applied to the cart or order
+   */
+  async getGiftCardableAmount(cartOrOrder: Cart | Order): Promise<number> {
+    if (cartOrOrder.region?.gift_cards_taxable) {
+      return this.getSubtotal(cartOrOrder) - this.getDiscountTotal(cartOrOrder)
+    }
+
+    return await this.getTotal(cartOrOrder, {
+      exclude_gift_cards: true,
+    })
+  }
+
   /**
    * Gets the gift card amount on a cart or order.
    * @param cartOrOrder - the cart or order to get gift card amount for
    * @return the gift card amount applied to the cart or order
    */
-  getGiftCardTotal(cartOrOrder: Cart | Order): number {
+  getGiftCardTotal(cartOrOrder: Cart | Order): {
+    total: number
+    tax_total: number
+  } {
     const giftCardable =
       this.getSubtotal(cartOrOrder) - this.getDiscountTotal(cartOrOrder)
 
     if ("gift_card_transactions" in cartOrOrder) {
+      // gift_card_transactions only exist on orders so we can
+      // safely calculate the total based on the gift card transactions
+
       return cartOrOrder.gift_card_transactions.reduce(
-        (acc, next) => acc + next.amount,
-        0
+        (acc, next) => {
+          let taxMultiplier = (next.tax_rate || 0) / 100
+
+          // Previously we did not record whether a gift card was taxable or not.
+          // All gift cards where is_taxable === null are from the old system,
+          // where we defaulted to taxable gift cards.
+          //
+          // This is a backwards compatability fix for orders that were created
+          // before we added the gift card tax rate.
+          if (
+            next.is_taxable === null &&
+            cartOrOrder.region?.gift_cards_taxable
+          ) {
+            taxMultiplier = cartOrOrder.region.tax_rate / 100
+          }
+
+          return {
+            total: acc.total + next.amount,
+            tax_total: acc.tax_total + next.amount * taxMultiplier,
+          }
+        },
+        {
+          total: 0,
+          tax_total: 0,
+        }
       )
     }
 
     if (!cartOrOrder.gift_cards || !cartOrOrder.gift_cards.length) {
-      return 0
+      return {
+        total: 0,
+        tax_total: 0,
+      }
     }
 
     const toReturn = cartOrOrder.gift_cards.reduce(
       (acc, next) => acc + next.balance,
       0
     )
-    return Math.min(giftCardable, toReturn)
+    const orderGiftCardAmount = Math.min(giftCardable, toReturn)
+
+    if (cartOrOrder.region?.gift_cards_taxable) {
+      return {
+        total: orderGiftCardAmount,
+        tax_total: (orderGiftCardAmount * cartOrOrder.region.tax_rate) / 100,
+      }
+    }
+
+    return {
+      total: orderGiftCardAmount,
+      tax_total: 0,
+    }
   }
 
   /**
diff --git a/packages/medusa/src/strategies/__tests__/tax-calculation.js b/packages/medusa/src/strategies/__tests__/tax-calculation.js
index efe741355b..1590a745b3 100644
--- a/packages/medusa/src/strategies/__tests__/tax-calculation.js
+++ b/packages/medusa/src/strategies/__tests__/tax-calculation.js
@@ -64,7 +64,7 @@ const toTest = [
      * Taxline 2 = 180 * 0.125 = 23
      * Total tax = 38
      */
-    expected: 38,
+    expected: 40,
     items: [
       {
         id: "item_1",
diff --git a/packages/medusa/src/strategies/tax-calculation.ts b/packages/medusa/src/strategies/tax-calculation.ts
index 564ad9d742..4e1cec1c9b 100644
--- a/packages/medusa/src/strategies/tax-calculation.ts
+++ b/packages/medusa/src/strategies/tax-calculation.ts
@@ -38,11 +38,6 @@ class TaxCalculationStrategy implements ITaxCalculationStrategy {
 
       let taxableAmount = i.quantity * i.unit_price
 
-      if (context.region.gift_cards_taxable) {
-        taxableAmount -=
-          (allocations.gift_card && allocations.gift_card.amount) || 0
-      }
-
       taxableAmount -=
         ((allocations.discount && allocations.discount.unit_amount) || 0) *
         i.quantity
diff --git a/packages/medusa/src/types/common.ts b/packages/medusa/src/types/common.ts
index 040105e02e..09378d4dfb 100644
--- a/packages/medusa/src/types/common.ts
+++ b/packages/medusa/src/types/common.ts
@@ -67,6 +67,7 @@ export type TotalField =
   | "subtotal"
   | "refundable_amount"
   | "gift_card_total"
+  | "gift_card_tax_total"
 
 export interface FindConfig<Entity> {
   select?: (keyof Entity)[]