diff --git a/.changeset/rich-shrimps-learn.md b/.changeset/rich-shrimps-learn.md
new file mode 100644
index 0000000000..3e32fcce7f
--- /dev/null
+++ b/.changeset/rich-shrimps-learn.md
@@ -0,0 +1,6 @@
+---
+"@medusajs/medusa": minor
+---
+fix: Gift cart tax claculation wrongly calculated
+
+Adds tax_rate column to gift_card table to calculate tax accurately for a gift card. This change includes a backfill migration to update gift cards that were already created.
diff --git a/integration-tests/api/__tests__/store/cart/gift-cards/tax-calculation-ff-tax-inclusive.js b/integration-tests/api/__tests__/store/cart/gift-cards/tax-calculation-ff-tax-inclusive.js
new file mode 100644
index 0000000000..c7112228ce
--- /dev/null
+++ b/integration-tests/api/__tests__/store/cart/gift-cards/tax-calculation-ff-tax-inclusive.js
@@ -0,0 +1,244 @@
+const startServerWithEnvironment =
+  require("../../../../../helpers/start-server-with-environment").default
+const path = require("path")
+const { useApi } = require("../../../../../helpers/use-api")
+const { useDb } = require("../../../../../helpers/use-db")
+const { GiftCard, TaxRate } = require("@medusajs/medusa")
+
+const {
+  simpleRegionFactory,
+  simpleProductFactory,
+  simpleCartFactory,
+  simpleCustomerFactory,
+  simpleGiftCardFactory,
+} = require("../../../../factories")
+
+jest.setTimeout(30000)
+
+describe("[MEDUSA_FF_TAX_INCLUSIVE_PRICING] Gift Card - Tax calculations", () => {
+  let medusaProcess
+  let dbConnection
+  let customerData
+
+  beforeEach(async () => {
+    const cwd = path.resolve(path.join(__dirname, "..", "..", "..", ".."))
+    const [process, connection] = await startServerWithEnvironment({
+      cwd,
+      env: { MEDUSA_FF_TAX_INCLUSIVE_PRICING: true },
+    })
+    dbConnection = connection
+    medusaProcess = process
+  })
+
+  afterEach(async () => {
+    const db = useDb()
+    await db.shutdown()
+
+    medusaProcess.kill()
+  })
+
+  describe("POST /store/carts/:id", () => {
+    let product
+    let customer
+    let region
+
+    beforeEach(async () => {
+      region = await simpleRegionFactory(dbConnection, {
+        id: "tax-region",
+        currency_code: "usd",
+        countries: ["us"],
+        tax_rate: 19,
+        name: "region test",
+        includes_tax: true,
+      })
+
+      customer = await simpleCustomerFactory(dbConnection, { password: 'medusatest' })
+      customerData = {
+        email: customer.email,
+        password: "medusatest",
+        first_name: customer.first_name,
+        last_name: customer.last_name,
+      }
+
+      product = await simpleProductFactory(dbConnection, {
+        is_giftcard: true,
+        discountable: false,
+        options: [{ id: "denom", title: "Denomination" }],
+        variants: [{
+          title: "Gift Card",
+          prices: [{
+            amount: 30000,
+            currency: "usd",
+            region_id: region.id,
+          }],
+          options: [{ option_id: "denom", value: "Denomination" }],
+        }]
+      })
+    })
+
+    it("adding a gift card purchase to cart treats it like buying a product", async () => {
+      const api = useApi()
+      const customerRes = await api.post("/store/customers", customerData, {
+        withCredentials: true,
+      })
+
+      const createCartRes = await api.post("/store/carts", {
+        region_id: region.id,
+        items: [{
+          variant_id: product.variants[0].id,
+          quantity: 1,
+        }],
+      })
+
+      expect(createCartRes.status).toEqual(200)
+
+      const cartWithGiftcard = createCartRes.data.cart
+      await api.post(`/store/carts/${cartWithGiftcard.id}`, {
+        customer_id: customerRes.data.customer.id,
+      })
+
+      expect(cartWithGiftcard.items).toEqual(
+        expect.arrayContaining([
+          expect.objectContaining({
+            is_giftcard: true,
+            unit_price: 30000,
+            quantity: 1,
+            subtotal: 25210,
+            tax_total: 4790,
+            original_tax_total: 4790,
+            original_total: 30000,
+            total: 30000,
+            variant: expect.objectContaining({
+              id: product.variants[0].id,
+              product: expect.objectContaining({
+                is_giftcard: true,
+              })
+            })
+          }),
+        ])
+      )
+    })
+
+    it("purchasing a gift card via an order creates a gift card entity", async () => {
+      const api = useApi()
+      const customerRes = await api.post("/store/customers", customerData, {
+        withCredentials: true,
+      })
+
+      const cartFactory = await simpleCartFactory(dbConnection, {
+        customer,
+        region,
+      })
+
+      const response = await api.post(
+        `/store/carts/${cartFactory.id}/line-items`,
+        {
+          variant_id: product.variants[0].id,
+          quantity: 1,
+        },
+        { withCredentials: true }
+      )
+
+      const getCartResponse = await api.get(`/store/carts/${cartFactory.id}`)
+      const cart = getCartResponse.data.cart
+      await api.post(`/store/carts/${cart.id}/payment-sessions`)
+      const createdOrder = await api.post(`/store/carts/${cart.id}/complete-cart`)
+
+      const createdGiftCards = await dbConnection.manager.find(GiftCard, {
+        where: { order_id: createdOrder.data.data.id }
+      })
+      const createdGiftCard = createdGiftCards[0]
+
+      expect(createdOrder.data.type).toEqual("order")
+      expect(createdOrder.status).toEqual(200)
+      expect(createdGiftCards.length).toEqual(1)
+      expect(createdGiftCard.tax_rate).toEqual(19)
+      expect(createdGiftCard.value).toEqual(25210)
+      expect(createdGiftCard.balance).toEqual(25210)
+    })
+
+    it("applying a gift card shows correct total values", async () => {
+      const api = useApi()
+      const giftCard = await simpleGiftCardFactory(dbConnection, {
+        region_id: region.id,
+        value: 25210,
+        balance: 25210,
+        tax_rate: region.tax_rate,
+      })
+      const expensiveProduct = await simpleProductFactory(dbConnection, {
+        variants: [{
+          title: "Product cost higher than gift card balance",
+          prices: [{
+            amount: 50000,
+            currency: "usd",
+            region_id: region.id,
+          }],
+        }]
+      })
+
+      const customerRes = await api.post("/store/customers", customerData, {
+        withCredentials: true,
+      })
+
+      const cartFactory = await simpleCartFactory(dbConnection, {
+        customer,
+        region,
+        line_items: [],
+      })
+
+      const response = await api.post(
+        `/store/carts/${cartFactory.id}/line-items`,
+        {
+          variant_id: expensiveProduct.variants[0].id,
+          quantity: 1,
+        },
+        { withCredentials: true }
+      )
+
+      // Add gift card to cart
+      await api.post(`/store/carts/${cartFactory.id}`, {
+        gift_cards: [{ code: giftCard.code }],
+      })
+
+      const getCartResponse = await api.get(`/store/carts/${cartFactory.id}`)
+      const cart = getCartResponse.data.cart
+      await api.post(`/store/carts/${cart.id}/payment-sessions`)
+      const createdOrder = await api.post(`/store/carts/${cart.id}/complete-cart`)
+
+      expect(createdOrder.data.data).toEqual(
+        expect.objectContaining({
+          subtotal: 42017,
+          discount_total: 0,
+          shipping_total: 0,
+          refunded_total: 0,
+          paid_total: 20000,
+          refundable_amount: 20000,
+          gift_card_total: 25210,
+          gift_card_tax_total: 4790,
+          tax_total: 3193,
+          total: 20000,
+          items: expect.arrayContaining([
+            expect.objectContaining({
+              includes_tax: true,
+              unit_price: 50000,
+              is_giftcard: false,
+              quantity: 1,
+              subtotal: 42017,
+              discount_total: 0,
+              total: 50000,
+              original_total: 50000,
+              original_tax_total: 7983,
+              tax_total: 7983,
+              refundable: 50000,
+              tax_lines: expect.arrayContaining([
+                expect.objectContaining({
+                  rate: 19
+                })
+              ]),
+            })
+          ]),
+        }),
+      )
+    })
+  })
+})
diff --git a/integration-tests/api/__tests__/store/cart/gift-cards/tax-calculation.js b/integration-tests/api/__tests__/store/cart/gift-cards/tax-calculation.js
new file mode 100644
index 0000000000..427cfd2d2b
--- /dev/null
+++ b/integration-tests/api/__tests__/store/cart/gift-cards/tax-calculation.js
@@ -0,0 +1,240 @@
+const startServerWithEnvironment =
+  require("../../../../../helpers/start-server-with-environment").default
+const path = require("path")
+const { useApi } = require("../../../../../helpers/use-api")
+const { useDb } = require("../../../../../helpers/use-db")
+const { GiftCard } = require("@medusajs/medusa")
+
+const {
+  simpleRegionFactory,
+  simpleProductFactory,
+  simpleCartFactory,
+  simpleCustomerFactory,
+  simpleGiftCardFactory,
+} = require("../../../../factories")
+
+jest.setTimeout(30000)
+
+describe("Gift Card - Tax calculations", () => {
+  let medusaProcess
+  let dbConnection
+  let customerData
+
+  beforeEach(async () => {
+    const cwd = path.resolve(path.join(__dirname, "..", "..", "..", ".."))
+    const [process, connection] = await startServerWithEnvironment({
+      cwd,
+      env: {}
+    })
+    dbConnection = connection
+    medusaProcess = process
+  })
+
+  afterEach(async () => {
+    const db = useDb()
+    await db.shutdown()
+
+    medusaProcess.kill()
+  })
+
+  describe("POST /store/carts/:id", () => {
+    let product
+    let customer
+    let region
+
+    beforeEach(async () => {
+      region = await simpleRegionFactory(dbConnection, {
+        id: "tax-region-1",
+        currency_code: "usd",
+        countries: ["us"],
+        tax_rate: 19,
+        name: "region test",
+      })
+
+      customer = await simpleCustomerFactory(dbConnection, { password: 'medusatest' })
+
+      customerData = {
+        email: customer.email,
+        password: "medusatest",
+        first_name: customer.first_name,
+        last_name: customer.last_name,
+      }
+
+      product = await simpleProductFactory(dbConnection, {
+        is_giftcard: true,
+        discountable: false,
+        options: [{ id: "denom", title: "Denomination" }],
+        variants: [{
+          title: "Gift Card",
+          prices: [{ currency: "usd", amount: 30000, region_id: region.id }],
+          options: [{ option_id: "denom", value: "Denomination" }],
+        }]
+      })
+    })
+
+    it("adding a gift card purchase to cart treats it like buying a product", async () => {
+      const api = useApi()
+      const customerResponse = await api.post("/store/customers", customerData, {
+        withCredentials: true,
+      })
+
+      const createCartResponse = await api.post("/store/carts", {
+        region_id: region.id,
+        items: [
+          {
+            variant_id: product.variants[0].id,
+            quantity: 1,
+          },
+        ],
+      })
+
+      expect(createCartResponse.status).toEqual(200)
+
+      const cartWithGiftcard = createCartResponse.data.cart
+      await api.post(`/store/carts/${cartWithGiftcard.id}`, {
+        customer_id: customerResponse.data.customer.id,
+      })
+
+      expect(cartWithGiftcard.items).toEqual(
+        expect.arrayContaining([
+          expect.objectContaining({
+            is_giftcard: true,
+            unit_price: 30000,
+            quantity: 1,
+            subtotal: 30000,
+            tax_total: 5700,
+            original_tax_total: 5700,
+            original_total: 35700,
+            total: 35700,
+            variant: expect.objectContaining({
+              id: product.variants[0].id,
+              product: expect.objectContaining({
+                is_giftcard: true,
+              })
+            })
+          }),
+        ])
+      )
+    })
+
+    it("purchasing a gift card via an order creates a gift card entity", async () => {
+      const api = useApi()
+      const customerResponse = await api.post("/store/customers", customerData, {
+        withCredentials: true,
+      })
+
+      const cartFactory = await simpleCartFactory(dbConnection, { customer, region })
+
+      const response = await api.post(
+        `/store/carts/${cartFactory.id}/line-items`,
+        {
+          variant_id: product.variants[0].id,
+          quantity: 1,
+        },
+        { withCredentials: true }
+      )
+
+      const cartResponse = await api.get(`/store/carts/${cartFactory.id}`)
+
+      const cart = cartResponse.data.cart
+
+      await api.post(`/store/carts/${cart.id}/payment-sessions`)
+
+      const createdOrderResponse = await api.post(`/store/carts/${cart.id}/complete-cart`)
+      const createdGiftCards = await dbConnection.manager.find(GiftCard, {
+        where: { order_id: createdOrderResponse.data.data.id }
+      })
+      const createdGiftCard = createdGiftCards[0]
+
+      expect(createdOrderResponse.data.type).toEqual("order")
+      expect(createdOrderResponse.status).toEqual(200)
+      expect(createdGiftCards.length).toEqual(1)
+      expect(createdGiftCard.tax_rate).toEqual(19)
+      expect(createdGiftCard.value).toEqual(30000)
+      expect(createdGiftCard.balance).toEqual(30000)
+    })
+
+    it("applying a gift card shows correct total values", async () => {
+      const api = useApi()
+      const giftCard = await simpleGiftCardFactory(dbConnection, {
+        region_id: region.id,
+        value: 30000,
+        balance: 30000,
+        tax_rate: region.tax_rate,
+      })
+      const expensiveProduct = await simpleProductFactory(dbConnection, {
+        variants: [{
+          title: "Product cost higher than gift card balance",
+          prices: [{
+            amount: 50000,
+            currency: "usd",
+            region_id: region.id,
+          }],
+        }]
+      })
+
+      const customerRes = await api.post("/store/customers", customerData, {
+        withCredentials: true,
+      })
+
+      const cartFactory = await simpleCartFactory(dbConnection, {
+        customer,
+        region,
+        line_items: [],
+      })
+
+      const response = await api.post(
+        `/store/carts/${cartFactory.id}/line-items`,
+        {
+          variant_id: expensiveProduct.variants[0].id,
+          quantity: 1,
+        },
+        { withCredentials: true }
+      )
+
+      // Add gift card to cart
+      await api.post(`/store/carts/${cartFactory.id}`, {
+        gift_cards: [{ code: giftCard.code }],
+      })
+
+      const getCartResponse = await api.get(`/store/carts/${cartFactory.id}`)
+      const cart = getCartResponse.data.cart
+      await api.post(`/store/carts/${cart.id}/payment-sessions`)
+      const createdOrder = await api.post(`/store/carts/${cart.id}/complete-cart`)
+
+      expect(createdOrder.data.data).toEqual(
+        expect.objectContaining({
+          subtotal: 50000,
+          discount_total: 0,
+          shipping_total: 0,
+          refunded_total: 0,
+          paid_total: 23800,
+          refundable_amount: 23800,
+          gift_card_total: 30000,
+          gift_card_tax_total: 5700,
+          tax_total: 3800,
+          total: 23800,
+          items: expect.arrayContaining([
+            expect.objectContaining({
+              unit_price: 50000,
+              is_giftcard: false,
+              quantity: 1,
+              subtotal: 50000,
+              discount_total: 0,
+              total: 59500,
+              original_total: 59500,
+              original_tax_total: 9500,
+              tax_total: 9500,
+              refundable: 59500,
+              tax_lines: expect.arrayContaining([
+                expect.objectContaining({
+                  rate: 19
+                })
+              ]),
+            })
+          ]),
+        }),
+      )
+    })
+  })
+})
diff --git a/integration-tests/api/__tests__/totals/orders.js b/integration-tests/api/__tests__/totals/orders.js
index 72620d858f..ff250f1fb9 100644
--- a/integration-tests/api/__tests__/totals/orders.js
+++ b/integration-tests/api/__tests__/totals/orders.js
@@ -139,6 +139,7 @@ describe("Order Totals", () => {
         region_id: region.id,
         value: 160000,
         balance: 160000,
+        tax_rate: 25,
       })
 
       // Add variant 1 to cart
diff --git a/integration-tests/api/factories/simple-gift-card-factory.ts b/integration-tests/api/factories/simple-gift-card-factory.ts
index 4e80a83f3c..0baaf2b1c5 100644
--- a/integration-tests/api/factories/simple-gift-card-factory.ts
+++ b/integration-tests/api/factories/simple-gift-card-factory.ts
@@ -8,6 +8,7 @@ export type GiftCardFactoryData = {
   region_id: string
   value: number
   balance: number
+  tax_rate?: number
 }
 
 export const simpleGiftCardFactory = async (
@@ -27,6 +28,7 @@ export const simpleGiftCardFactory = async (
     region_id: data.region_id,
     value: data.value,
     balance: data.balance,
+    tax_rate: data.tax_rate,
   })
 
   return await manager.save(toSave)
diff --git a/integration-tests/api/factories/simple-line-item-factory.ts b/integration-tests/api/factories/simple-line-item-factory.ts
index aac65d870b..fbae1a2f15 100644
--- a/integration-tests/api/factories/simple-line-item-factory.ts
+++ b/integration-tests/api/factories/simple-line-item-factory.ts
@@ -23,6 +23,7 @@ export type LineItemFactoryData = {
   thumbnail?: string
   should_merge?: boolean
   allow_discounts?: boolean
+  is_giftcard?: boolean
   unit_price?: number
   quantity?: number
   fulfilled_quantity?: boolean
@@ -74,6 +75,7 @@ export const simpleLineItemFactory = async (
     adjustments: data.adjustments,
     includes_tax: data.includes_tax,
     order_edit_id: data.order_edit_id,
+    is_giftcard: data.is_giftcard || false
   })
 
   const line = await manager.save(toSave)
diff --git a/packages/medusa/src/api/routes/admin/gift-cards/create-gift-card.ts b/packages/medusa/src/api/routes/admin/gift-cards/create-gift-card.ts
index fc4a53ea6a..affd3eda9a 100644
--- a/packages/medusa/src/api/routes/admin/gift-cards/create-gift-card.ts
+++ b/packages/medusa/src/api/routes/admin/gift-cards/create-gift-card.ts
@@ -3,7 +3,6 @@ import { defaultAdminGiftCardFields, defaultAdminGiftCardRelations } from "."
 
 import { GiftCardService } from "../../../../services"
 import { Type } from "class-transformer"
-import { validator } from "../../../../utils/validator"
 import { EntityManager } from "typeorm"
 
 /**
@@ -87,16 +86,13 @@ import { EntityManager } from "typeorm"
  *     $ref: "#/components/responses/500_error"
  */
 export default async (req, res) => {
-  const validated = await validator(AdminPostGiftCardsReq, req.body)
+  const validatedBody: AdminPostGiftCardsReq & { balance?: number } = req.validatedBody
+  validatedBody.balance = validatedBody.value
 
   const giftCardService: GiftCardService = req.scope.resolve("giftCardService")
-
   const manager: EntityManager = req.scope.resolve("manager")
   const newly = await manager.transaction(async (transactionManager) => {
-    return await giftCardService.withTransaction(transactionManager).create({
-      ...validated,
-      balance: validated.value,
-    })
+    return await giftCardService.withTransaction(transactionManager).create(validatedBody)
   })
 
   const giftCard = await giftCardService.retrieve(newly.id, {
diff --git a/packages/medusa/src/api/routes/admin/gift-cards/index.ts b/packages/medusa/src/api/routes/admin/gift-cards/index.ts
index b08e7c0c6e..10b284d576 100644
--- a/packages/medusa/src/api/routes/admin/gift-cards/index.ts
+++ b/packages/medusa/src/api/routes/admin/gift-cards/index.ts
@@ -2,8 +2,9 @@ import { Router } from "express"
 import "reflect-metadata"
 import { GiftCard } from "../../../.."
 import { DeleteResponse, PaginatedResponse } from "../../../../types/common"
-import middlewares, { transformQuery } from "../../../middlewares"
+import middlewares, { transformQuery, transformBody } from "../../../middlewares"
 import { AdminGetGiftCardsParams } from "./list-gift-cards"
+import { AdminPostGiftCardsReq } from './create-gift-card'
 
 const route = Router()
 
@@ -20,7 +21,11 @@ export default (app) => {
     middlewares.wrap(require("./list-gift-cards").default)
   )
 
-  route.post("/", middlewares.wrap(require("./create-gift-card").default))
+  route.post(
+    "/",
+    transformBody(AdminPostGiftCardsReq),
+    middlewares.wrap(require("./create-gift-card").default)
+  )
 
   route.get("/:id", middlewares.wrap(require("./get-gift-card").default))
 
@@ -39,6 +44,7 @@ export const defaultAdminGiftCardFields: (keyof GiftCard)[] = [
   "region_id",
   "is_disabled",
   "ends_at",
+  "tax_rate",
   "created_at",
   "updated_at",
   "deleted_at",
diff --git a/packages/medusa/src/migrations/1670855241304-add-tax-rate-to-gift-cards.ts b/packages/medusa/src/migrations/1670855241304-add-tax-rate-to-gift-cards.ts
new file mode 100644
index 0000000000..cf7f8c063c
--- /dev/null
+++ b/packages/medusa/src/migrations/1670855241304-add-tax-rate-to-gift-cards.ts
@@ -0,0 +1,17 @@
+import { MigrationInterface, QueryRunner } from "typeorm"
+
+export class addTaxRateToGiftCards1670855241304 implements MigrationInterface {
+  name = "addTaxRateToGiftCards1670855241304"
+
+  public async up(queryRunner: QueryRunner): Promise<void> {
+    await queryRunner.query(
+      `ALTER TABLE "gift_card" ADD COLUMN IF NOT EXISTS tax_rate REAL`
+    )
+  }
+
+  public async down(queryRunner: QueryRunner): Promise<void> {
+    await queryRunner.query(
+      `ALTER TABLE "gift_card" DROP COLUMN IF EXISTS "tax_rate"`
+    )
+  }
+}
diff --git a/packages/medusa/src/models/gift-card.ts b/packages/medusa/src/models/gift-card.ts
index 21bed5ed65..e2cd68a150 100644
--- a/packages/medusa/src/models/gift-card.ts
+++ b/packages/medusa/src/models/gift-card.ts
@@ -50,6 +50,9 @@ export class GiftCard extends SoftDeletableEntity {
   })
   ends_at: Date
 
+  @Column({ type: "real", nullable: true })
+  tax_rate: number | null
+
   @DbAwareColumn({ type: "jsonb", nullable: true })
   metadata: Record<string, unknown>
 
@@ -108,6 +111,10 @@ export class GiftCard extends SoftDeletableEntity {
  *     description: "The time at which the Gift Card can no longer be used."
  *     type: string
  *     format: date-time
+ *   tax_rate:
+ *     description: The gift cards's tax rate that will be applied on calculating totals
+ *     type: number
+ *     example: 0
  *   created_at:
  *     type: string
  *     description: "The date with timezone at which the resource was created."
diff --git a/packages/medusa/src/scripts/db-config.ts b/packages/medusa/src/scripts/db-config.ts
new file mode 100644
index 0000000000..6cab6b01ea
--- /dev/null
+++ b/packages/medusa/src/scripts/db-config.ts
@@ -0,0 +1,10 @@
+export const typeormConfig = {
+  type: process.env.TYPEORM_CONNECTION,
+  url: process.env.TYPEORM_URL,
+  username: process.env.TYPEORM_USERNAME,
+  password: process.env.TYPEORM_PASSWORD,
+  database: process.env.TYPEORM_DATABASE,
+  migrations: [process.env.TYPEORM_MIGRATIONS as string],
+  entities: [process.env.TYPEORM_ENTITIES],
+  logging: true,
+}
diff --git a/packages/medusa/src/scripts/discount-rule-migration.ts b/packages/medusa/src/scripts/discount-rule-migration.ts
index 2268edfe0c..f77a0e96a2 100644
--- a/packages/medusa/src/scripts/discount-rule-migration.ts
+++ b/packages/medusa/src/scripts/discount-rule-migration.ts
@@ -11,18 +11,9 @@ import {
 import { DiscountConditionProduct } from "../models/discount-condition-product"
 import { DiscountRule } from "../models/discount-rule"
 import { DiscountConditionRepository } from "../repositories/discount-condition"
-dotenv.config()
+import { typeormConfig } from "./db-config"
 
-const typeormConfig = {
-  type: process.env.TYPEORM_CONNECTION,
-  url: process.env.TYPEORM_URL,
-  username: process.env.TYPEORM_USERNAME,
-  password: process.env.TYPEORM_PASSWORD,
-  database: process.env.TYPEORM_DATABASE,
-  migrations: [process.env.TYPEORM_MIGRATIONS as string],
-  entities: [process.env.TYPEORM_ENTITIES],
-  logging: true,
-}
+dotenv.config()
 
 const migrate = async function ({ typeormConfig }): Promise<void> {
   const connection = await createConnection(typeormConfig)
diff --git a/packages/medusa/src/scripts/gift-card-tax-rate-migration.ts b/packages/medusa/src/scripts/gift-card-tax-rate-migration.ts
new file mode 100644
index 0000000000..e8b9f1d0a7
--- /dev/null
+++ b/packages/medusa/src/scripts/gift-card-tax-rate-migration.ts
@@ -0,0 +1,101 @@
+import dotenv from "dotenv"
+import { createConnection, IsNull } from "typeorm"
+import Logger from "../loaders/logger"
+import { GiftCard } from "../models/gift-card"
+import { typeormConfig } from "./db-config"
+
+dotenv.config()
+
+const BATCH_SIZE = 1000
+const migrationName = 'gift-card-tax-rate-migration'
+
+Logger.info(`typeormConfig: ${JSON.stringify(typeormConfig)}`)
+
+const migrate = async function ({ typeormConfig }): Promise<void> {
+  const connection = await createConnection(typeormConfig)
+
+  await connection.transaction(async (manager) => {
+    let offset = 0
+
+    // Get all the GiftCards where the gift_card.tax_rate is null
+    const giftCardsCount = await manager
+      .createQueryBuilder()
+      .withDeleted()
+      .from(GiftCard, "gc")
+      .select("gc.id")
+      .where("gc.tax_rate IS NULL")
+      .getCount()
+
+    const totalBatches = Math.ceil(giftCardsCount / BATCH_SIZE)
+
+    if (totalBatches == 0) {
+      Logger.info(`${migrationName}: No records to update, skipping migration!`)
+
+      return
+    }
+
+    Logger.info(`${migrationName}: Running migration for ${giftCardsCount} GiftCards`)
+    Logger.info(`${migrationName}: Running migration in ${totalBatches} batch(es) of ${BATCH_SIZE}`)
+
+    for (let batch = 1; batch <= totalBatches; batch++) {
+      Logger.info(`${migrationName}: Starting batch ${batch} of ${totalBatches}`)
+
+      // Get all the GiftCards and its region where the gift_card.tax_rate is null
+      const giftCardRegionRecords = await manager
+        .createQueryBuilder()
+        .withDeleted()
+        .from(GiftCard, "gc")
+        .select("gc.id, gc.region_id, gc.tax_rate, r.tax_rate as region_tax_rate")
+        .innerJoin("region", "r", "gc.region_id = r.id")
+        .where("gc.tax_rate IS NULL")
+        .limit(BATCH_SIZE)
+        .offset(offset)
+        .getRawMany()
+
+      // Loop through each gift card record and update the value of gift_card.tax_rate
+      // with region.tax_rate value
+      giftCardRegionRecords.forEach(async (gcr) => {
+        await manager
+          .createQueryBuilder()
+          .update(GiftCard)
+          .set({ tax_rate: gcr.region_tax_rate })
+          .where("id = :id", { id: gcr.id })
+          .execute()
+      })
+
+      offset += BATCH_SIZE
+
+      Logger.info(`${migrationName}: Finished batch ${batch} of ${totalBatches}`)
+    }
+
+    const recordsFailedToBackfill = await manager
+      .createQueryBuilder()
+      .withDeleted()
+      .from(GiftCard, "gc")
+      .select("gc.id")
+      .where("gc.tax_rate IS NULL")
+      .getCount()
+
+    if (recordsFailedToBackfill == 0) {
+      Logger.info(`${migrationName}: successfully ran for ${giftCardsCount} GiftCards`)
+    } else {
+      Logger.info(`${migrationName}: ${recordsFailedToBackfill} GiftCards have no tax_rate set`)
+      Logger.info(`${migrationName}: 1. Check if all GiftCards have a region associated with it`)
+      Logger.info(`${migrationName}: If not, they need to be associated with a region & re-run migration`)
+      Logger.info(`${migrationName}: 2. Check if regions have a tax_rate added to it`)
+      Logger.info(`${migrationName}: If regions intentionally have no tax_rate, this can be ignored`)
+      Logger.info(`${migrationName}: If not, add a tax_rate to region & re-run migration`)
+    }
+  })
+}
+
+migrate({ typeormConfig })
+  .then(() => {
+    Logger.info("Database migration completed")
+    process.exit()
+  }).catch((err) => {
+    Logger.error(`Database migration failed - ${JSON.stringify(err)}`)
+    process.exit(1)
+  })
+
+export default migrate
diff --git a/packages/medusa/src/scripts/line-item-adjustment-migration.ts b/packages/medusa/src/scripts/line-item-adjustment-migration.ts
index 4b9b669b1c..39be902262 100644
--- a/packages/medusa/src/scripts/line-item-adjustment-migration.ts
+++ b/packages/medusa/src/scripts/line-item-adjustment-migration.ts
@@ -3,18 +3,9 @@ import { createConnection, SelectQueryBuilder } from "typeorm"
 import Logger from "../loaders/logger"
 import { LineItem } from "../models/line-item"
 import { LineItemAdjustment } from "../models/line-item-adjustment"
-dotenv.config()
+import { typeormConfig } from "./db-config"
 
-const typeormConfig = {
-  type: process.env.TYPEORM_CONNECTION,
-  url: process.env.TYPEORM_URL,
-  username: process.env.TYPEORM_USERNAME,
-  password: process.env.TYPEORM_PASSWORD,
-  database: process.env.TYPEORM_DATABASE,
-  migrations: [process.env.TYPEORM_MIGRATIONS as string],
-  entities: [process.env.TYPEORM_ENTITIES],
-  logging: true,
-}
+dotenv.config()
 
 const migrate = async function({ typeormConfig }) {
   const connection = await createConnection(typeormConfig)
diff --git a/packages/medusa/src/scripts/sales-channels-migration.ts b/packages/medusa/src/scripts/sales-channels-migration.ts
index f74660be1c..a3a48681f3 100644
--- a/packages/medusa/src/scripts/sales-channels-migration.ts
+++ b/packages/medusa/src/scripts/sales-channels-migration.ts
@@ -3,20 +3,10 @@ import { createConnection } from "typeorm"
 import Logger from "../loaders/logger"
 import { Product } from "../models/product"
 import { Store } from "../models/store"
+import { typeormConfig } from "./db-config"
 
 dotenv.config()
 
-const typeormConfig = {
-  type: process.env.TYPEORM_CONNECTION,
-  url: process.env.TYPEORM_URL,
-  username: process.env.TYPEORM_USERNAME,
-  password: process.env.TYPEORM_PASSWORD,
-  database: process.env.TYPEORM_DATABASE,
-  migrations: [process.env.TYPEORM_MIGRATIONS as string],
-  entities: [process.env.TYPEORM_ENTITIES],
-  logging: true,
-}
-
 const migrate = async function ({ typeormConfig }): Promise<void> {
   const connection = await createConnection(typeormConfig)
 
diff --git a/packages/medusa/src/services/__fixtures__/new-totals.ts b/packages/medusa/src/services/__fixtures__/new-totals.ts
index 0784e218c8..912b37c488 100644
--- a/packages/medusa/src/services/__fixtures__/new-totals.ts
+++ b/packages/medusa/src/services/__fixtures__/new-totals.ts
@@ -70,3 +70,13 @@ export const giftCards = [
     balance: 10000,
   },
 ] as GiftCard[]
+
+export const giftCardsWithTaxRate = [
+  {
+    id: IdMap.getId("gift_card_1"),
+    code: "CODE",
+    value: 10000,
+    balance: 10000,
+    tax_rate: 20,
+  },
+] as GiftCard[]
diff --git a/packages/medusa/src/services/__tests__/gift-card.js b/packages/medusa/src/services/__tests__/gift-card.js
index e144fd4bac..1603815f86 100644
--- a/packages/medusa/src/services/__tests__/gift-card.js
+++ b/packages/medusa/src/services/__tests__/gift-card.js
@@ -27,6 +27,7 @@ describe("GiftCardService", () => {
       retrieve: () => {
         return Promise.resolve({
           id: IdMap.getId("region-id"),
+          tax_rate: 19,
         })
       },
     }
@@ -57,6 +58,7 @@ describe("GiftCardService", () => {
         order_id: IdMap.getId("order-id"),
         is_disabled: true,
         code: expect.any(String),
+        tax_rate: null
       })
     })
   })
diff --git a/packages/medusa/src/services/__tests__/new-totals.ts b/packages/medusa/src/services/__tests__/new-totals.ts
index dcf798e6c7..0bff38ae2c 100644
--- a/packages/medusa/src/services/__tests__/new-totals.ts
+++ b/packages/medusa/src/services/__tests__/new-totals.ts
@@ -2,6 +2,7 @@ import { asClass, asValue, createContainer } from "awilix"
 import {
   defaultContainerMock,
   giftCards,
+  giftCardsWithTaxRate,
   lineItems,
   shippingMethods,
 } from "../__fixtures__/new-totals"
@@ -528,14 +529,17 @@ describe("New totals service", () => {
         )
       })
 
-      it("should compute the gift cards totals amount in a taxable region", async () => {
+      it("should compute the gift cards totals amount using the gift card tax rate", async () => {
         const maxAmount = 1000
 
-        const testGiftCard = giftCards[0]
+        const testGiftCard = giftCardsWithTaxRate[0]
 
         const region = {
+          // These values aren't involved in calculating tax rates for a gift card
+          // GiftCard.tax_rate will be the source of truth for tax calculations
+          // This is needed for giftCardTransactions backwards compatability reasons
           gift_cards_taxable: true,
-          tax_rate: 20,
+          tax_rate: 0,
         } as Region
 
         const gitCardTotals = await newTotalsService.getGiftCardTotals(
@@ -556,12 +560,13 @@ describe("New totals service", () => {
 
       it("should compute the gift cards totals amount in non taxable region using gift card transactions", async () => {
         const maxAmount = 1000
-
+        const testGiftCard = giftCards[0]
         const giftCardTransactions = [
           {
             tax_rate: 20,
             is_taxable: false,
             amount: 1000,
+            gift_card: testGiftCard
           },
         ]
 
@@ -572,7 +577,7 @@ describe("New totals service", () => {
         const gitCardTotals = await newTotalsService.getGiftCardTotals(
           maxAmount,
           {
-            giftCardTransactions: giftCardTransactions,
+            giftCardTransactions,
             region,
           }
         )
@@ -587,12 +592,13 @@ describe("New totals service", () => {
 
       it("should compute the gift cards totals amount in a taxable region using gift card transactions", async () => {
         const maxAmount = 1000
-
+        const testGiftCard = giftCards[0]
         const giftCardTransactions = [
           {
             tax_rate: 20,
             is_taxable: null,
             amount: 1000,
+            gift_card: testGiftCard
           },
         ]
 
@@ -616,6 +622,42 @@ describe("New totals service", () => {
           })
         )
       })
+
+      it("should compute the gift cards totals amount using gift card transactions for gift card with tax_rate", async () => {
+        const maxAmount = 1000
+        const testGiftCard = giftCardsWithTaxRate[0]
+        const giftCardTransactions = [
+          {
+            tax_rate: 20,
+            is_taxable: null,
+            amount: 1000,
+            gift_card: testGiftCard
+          },
+        ]
+
+        const region = {
+          // These values aren't involved in calculating tax rates for a gift card
+          // GiftCard.tax_rate will be the source of truth for tax calculations
+          // This is needed for giftCardTransactions backwards compatability reasons
+          gift_cards_taxable: false,
+          tax_rate: 99,
+        } as Region
+
+        const gitCardTotals = await newTotalsService.getGiftCardTotals(
+          maxAmount,
+          {
+            giftCardTransactions: giftCardTransactions,
+            region,
+          }
+        )
+
+        expect(gitCardTotals).toEqual(
+          expect.objectContaining({
+            total: 1000,
+            tax_total: 200,
+          })
+        )
+      })
     })
   })
 
diff --git a/packages/medusa/src/services/__tests__/order.js b/packages/medusa/src/services/__tests__/order.js
index f3aa48f1db..7e349c7daa 100644
--- a/packages/medusa/src/services/__tests__/order.js
+++ b/packages/medusa/src/services/__tests__/order.js
@@ -75,6 +75,7 @@ describe("OrderService", () => {
       },
     }
     const giftCardService = {
+      create: jest.fn(),
       update: jest.fn(),
       createTransaction: jest.fn(),
       withTransaction: function () {
@@ -128,6 +129,7 @@ describe("OrderService", () => {
           total: 100,
         })
       }),
+      update: jest.fn(() => Promise.resolve()),
       withTransaction: function () {
         return this
       },
@@ -191,10 +193,7 @@ describe("OrderService", () => {
         discount_total: 0,
       }
 
-      orderService.cartService_.retrieveWithTotals = jest.fn(() =>
-        Promise.resolve(cart)
-      )
-      orderService.cartService_.update = jest.fn(() => Promise.resolve())
+      orderService.cartService_.retrieveWithTotals = jest.fn(() => Promise.resolve(cart))
 
       await orderService.createFromCart("cart_id")
       const order = {
@@ -214,7 +213,7 @@ describe("OrderService", () => {
 
       expect(cartService.retrieveWithTotals).toHaveBeenCalledTimes(1)
       expect(cartService.retrieveWithTotals).toHaveBeenCalledWith("cart_id", {
-        relations: ["region", "payment"],
+        relations: ["region", "payment", "items"],
       })
 
       expect(paymentProviderService.updatePayment).toHaveBeenCalledTimes(1)
@@ -248,6 +247,85 @@ describe("OrderService", () => {
       expect(orderRepo.save).toHaveBeenCalledWith(order)
     })
 
+    describe("gift card creation", () => {
+      const taxLineRateOne = 20
+      const taxLineRateTwo = 10
+      const giftCardValue = 100
+      const totalGiftCardsPurchased = 2
+      const expectedGiftCardTaxRate = taxLineRateOne + taxLineRateTwo
+      const lineItemWithGiftCard = {
+        id: "item_1",
+        variant_id: "variant-1",
+        quantity: 2,
+        is_giftcard: true,
+        subtotal: giftCardValue * totalGiftCardsPurchased,
+        quantity: totalGiftCardsPurchased,
+        metadata: {},
+        tax_lines: [{
+          rate: taxLineRateOne
+        }, {
+          rate: taxLineRateTwo
+        }]
+      }
+
+      const lineItemWithoutGiftCard = {
+        ...lineItemWithGiftCard,
+        is_giftcard: false
+      }
+
+      const cartWithGiftcard = {
+        id: "id",
+        email: "test@test.com",
+        customer_id: "cus_1234",
+        payment: {},
+        region_id: "test",
+        region: {
+          id: "test",
+          currency_code: "eur",
+          name: "test",
+          tax_rate: 25,
+        },
+        shipping_address_id: "1234",
+        billing_address_id: "1234",
+        gift_cards: [],
+        discounts: [],
+        shipping_methods: [{ id: "method_1" }],
+        items: [lineItemWithGiftCard],
+        total: 100,
+        subtotal: 100,
+        discount_total: 0,
+      }
+
+      const cartWithoutGiftcard = {
+        ...cartWithGiftcard,
+        items: [lineItemWithoutGiftCard],
+      }
+
+      it("creates gift cards when a lineItem contains a gift card variant", async () => {
+        orderService.cartService_.retrieveWithTotals = jest.fn(() => Promise.resolve(cartWithGiftcard))
+
+        await orderService.createFromCart("id")
+
+        expect(giftCardService.create).toHaveBeenCalledTimes(totalGiftCardsPurchased)
+        expect(giftCardService.create).toHaveBeenCalledWith({
+          order_id: "id",
+          region_id: "test",
+          value: giftCardValue,
+          balance: giftCardValue,
+          metadata: {},
+          tax_rate: expectedGiftCardTaxRate
+        })
+      })
+
+      it("does not create gift cards when a lineItem doesn't contains a gift card variant", async () => {
+        orderService.cartService_.retrieveWithTotals = jest.fn(() => Promise.resolve(cartWithoutGiftcard))
+
+        await orderService.createFromCart("id")
+
+        expect(giftCardService.create).not.toHaveBeenCalled()
+      })
+    })
+
     it("creates gift card transactions", async () => {
       const cart = {
         id: "cart_id",
@@ -273,6 +351,7 @@ describe("OrderService", () => {
             id: "gid",
             code: "GC",
             balance: 80,
+            tax_rate: 25,
           },
         ],
         discounts: [],
@@ -289,7 +368,6 @@ describe("OrderService", () => {
       orderService.cartService_.retrieveWithTotals = () => {
         return Promise.resolve(cart)
       }
-      orderService.cartService_.update = () => Promise.resolve()
 
       await orderService.createFromCart("cart_id")
       const order = {
@@ -308,6 +386,7 @@ describe("OrderService", () => {
             id: "gid",
             code: "GC",
             balance: 80,
+            tax_rate: 25,
           },
         ],
         metadata: {},
@@ -438,7 +517,6 @@ describe("OrderService", () => {
         total: 100,
       }
       orderService.cartService_.retrieveWithTotals = () => Promise.resolve(cart)
-      orderService.cartService_.update = () => Promise.resolve()
       const res = orderService.createFromCart(cart)
       await expect(res).rejects.toThrow(
         "Variant with id: variant-1 does not have the required inventory"
diff --git a/packages/medusa/src/services/__tests__/totals.js b/packages/medusa/src/services/__tests__/totals.js
index 70ebbcb191..57d613ad2c 100644
--- a/packages/medusa/src/services/__tests__/totals.js
+++ b/packages/medusa/src/services/__tests__/totals.js
@@ -122,7 +122,6 @@ describe("TotalsService", () => {
   const featureFlagRouter = new FlagRouter({
     [TaxInclusivePricingFeatureFlag.key]: false,
   })
-
   const container = {
     taxProviderService: {
       withTransaction: function () {
@@ -130,6 +129,14 @@ describe("TotalsService", () => {
       },
       getTaxLines: getTaxLinesMock,
     },
+    newTotalsService: {
+      getGiftCardTotals: jest.fn(() => {
+        return {
+          total: 0,
+          tax_total: 0,
+        }
+      }),
+    },
     taxCalculationStrategy: {},
     featureFlagRouter,
   }
@@ -889,6 +896,14 @@ describe("TotalsService", () => {
       taxCalculationStrategy: {
         calculate: calculateMock,
       },
+      newTotalsService: {
+        getGiftCardTotals: jest.fn(() => {
+          return {
+            total: 0,
+            tax_total: 0,
+          }
+        }),
+      },
       featureFlagRouter,
     }
 
diff --git a/packages/medusa/src/services/gift-card.ts b/packages/medusa/src/services/gift-card.ts
index f69f33824a..ed2edf70fe 100644
--- a/packages/medusa/src/services/gift-card.ts
+++ b/packages/medusa/src/services/gift-card.ts
@@ -3,7 +3,7 @@ import randomize from "randomatic"
 import { EntityManager } from "typeorm"
 import { EventBusService } from "."
 import { TransactionBaseService } from "../interfaces"
-import { GiftCard } from "../models"
+import { GiftCard, Region } from "../models"
 import { GiftCardRepository } from "../repositories/gift-card"
 import { GiftCardTransactionRepository } from "../repositories/gift-card-transaction"
 import {
@@ -160,11 +160,12 @@ class GiftCardService extends TransactionBaseService {
         .retrieve(giftCard.region_id)
 
       const code = GiftCardService.generateCode()
-
+      const taxRate = GiftCardService.resolveTaxRate(giftCard.tax_rate || null, region)
       const toCreate = {
         code,
         ...giftCard,
         region_id: region.id,
+        tax_rate: taxRate,
       }
 
       const created = giftCardRepo.create(toCreate)
@@ -180,6 +181,30 @@ class GiftCardService extends TransactionBaseService {
     })
   }
 
+   /**
+   * The tax_rate of the giftcard can depend on whether regions tax gift cards, an input
+   * provided by the user or the tax rate. Based on these conditions, tax_rate changes.
+   * @return the tax rate for the gift card
+   */
+  protected static resolveTaxRate(
+    giftCardTaxRate: number | null,
+    region: Region
+  ): number | null {
+    // A gift card is always associated with a region. If the region doesn't tax gift cards,
+    // return null
+    if (!region.gift_cards_taxable) return null
+
+    // If a tax rate has been provided as an input from an external input, use that
+    // This would handle cases where gift cards are created as a part of an order where taxes better defined
+    // or to handle usecases outside of the opinions of the core.
+    if (giftCardTaxRate) {
+      return giftCardTaxRate
+    }
+
+    // Outside the context of the taxRate input, it picks up the tax rate directly from the region
+    return region.tax_rate || null
+  }
+
   protected async retrieve_(
     selector: Selector<GiftCard>,
     config: FindConfig<GiftCard> = {}
diff --git a/packages/medusa/src/services/new-totals.ts b/packages/medusa/src/services/new-totals.ts
index 17a3aeec8c..602add9a68 100644
--- a/packages/medusa/src/services/new-totals.ts
+++ b/packages/medusa/src/services/new-totals.ts
@@ -33,6 +33,13 @@ type LineItemTotals = {
   discount_total: number
 }
 
+type GiftCardTransaction = {
+  tax_rate: number | null
+  is_taxable: boolean | null
+  amount: number
+  gift_card: GiftCard
+}
+
 type ShippingMethodTotals = {
   price: number
   tax_total: number
@@ -214,6 +221,7 @@ export default class NewTotalsService extends TransactionBaseService {
         totals.tax_lines,
         calculationContext
       )
+
       const noDiscountContext = {
         ...calculationContext,
         allocation_map: {}, // Don't account for discounts
@@ -451,11 +459,7 @@ export default class NewTotalsService extends TransactionBaseService {
       giftCards,
     }: {
       region: Region
-      giftCardTransactions?: {
-        tax_rate: number | null
-        is_taxable: boolean | null
-        amount: number
-      }[]
+      giftCardTransactions?: GiftCardTransaction[]
       giftCards?: GiftCard[]
     }
   ): Promise<{
@@ -469,7 +473,7 @@ export default class NewTotalsService extends TransactionBaseService {
       )
     }
 
-    if (giftCardTransactions) {
+    if (giftCardTransactions?.length) {
       return this.getGiftCardTransactionsTotals({
         giftCardTransactions,
         region,
@@ -485,13 +489,27 @@ export default class NewTotalsService extends TransactionBaseService {
       return result
     }
 
-    const giftAmount = giftCards.reduce((acc, next) => acc + next.balance, 0)
-    result.total = Math.min(giftCardableAmount, giftAmount)
+    // If a gift card is not taxable, the tax_rate for the giftcard will be null
+    const { totalGiftCardBalance, totalTaxFromGiftCards } = giftCards.reduce((acc, giftCard) => {
+      let taxableAmount = 0
 
-    if (region?.gift_cards_taxable) {
-      result.tax_total = Math.round(result.total * (region.tax_rate / 100))
-      return result
-    }
+      acc.totalGiftCardBalance += giftCard.balance
+
+      taxableAmount = Math.min(acc.giftCardableBalance, giftCard.balance)
+      // skip tax, if the taxable amount is not a positive number or tax rate is not set
+      if (taxableAmount <= 0 || !giftCard.tax_rate) return acc
+
+      let taxAmountFromGiftCard = Math.round(taxableAmount * (giftCard.tax_rate / 100))
+
+      acc.totalTaxFromGiftCards += taxAmountFromGiftCard
+      // Update the balance, pass it over to the next gift card (if any) for calculating tax on balance.
+      acc.giftCardableBalance -= taxableAmount
+
+      return acc
+    }, { totalGiftCardBalance: 0, totalTaxFromGiftCards: 0, giftCardableBalance: giftCardableAmount })
+
+    result.tax_total = Math.round(totalTaxFromGiftCards)
+    result.total = Math.min(giftCardableAmount, totalGiftCardBalance)
 
     return result
   }
@@ -505,11 +523,7 @@ export default class NewTotalsService extends TransactionBaseService {
     giftCardTransactions,
     region,
   }: {
-    giftCardTransactions: {
-      tax_rate: number | null
-      is_taxable: boolean | null
-      amount: number
-    }[]
+    giftCardTransactions: GiftCardTransaction[]
     region: { gift_cards_taxable: boolean; tax_rate: number }
   }): { total: number; tax_total: number } {
     return giftCardTransactions.reduce(
@@ -522,13 +536,18 @@ export default class NewTotalsService extends TransactionBaseService {
         //
         // This is a backwards compatability fix for orders that were created
         // before we added the gift card tax rate.
-        if (next.is_taxable === null && region?.gift_cards_taxable) {
-          taxMultiplier = region.tax_rate / 100
+        // We prioritize the giftCard.tax_rate as we create a snapshot of the tax
+        // on order creation to create gift cards on the gift card itself.
+        // If its created outside of the order, we refer to the region tax
+        if (next.is_taxable === null) {
+          if (region?.gift_cards_taxable || next.gift_card?.tax_rate) {
+            taxMultiplier = (next.gift_card?.tax_rate ?? region.tax_rate) / 100
+          }
         }
 
         return {
           total: acc.total + next.amount,
-          tax_total: acc.tax_total + next.amount * taxMultiplier,
+          tax_total: Math.round(acc.tax_total + next.amount * taxMultiplier),
         }
       },
       {
diff --git a/packages/medusa/src/services/order.ts b/packages/medusa/src/services/order.ts
index ff65646fb8..89ad1169d0 100644
--- a/packages/medusa/src/services/order.ts
+++ b/packages/medusa/src/services/order.ts
@@ -17,6 +17,7 @@ import {
   Return,
   Swap,
   TrackingLink,
+  GiftCard,
 } from "../models"
 import { AddressRepository } from "../repositories/address"
 import { OrderRepository } from "../repositories/order"
@@ -302,6 +303,7 @@ class OrderService extends TransactionBaseService {
       relationSet.add("discounts.rule")
       relationSet.add("gift_cards")
       relationSet.add("gift_card_transactions")
+      relationSet.add("gift_card_transactions.gift_card")
       relationSet.add("refunds")
       relationSet.add("shipping_methods")
       relationSet.add("shipping_methods.tax_lines")
@@ -552,7 +554,7 @@ class OrderService extends TransactionBaseService {
 
       const cart = isString(cartOrId)
         ? await cartServiceTx.retrieveWithTotals(cartOrId, {
-            relations: ["region", "payment"],
+            relations: ["region", "payment", "items"],
           })
         : cartOrId
 
@@ -566,10 +568,10 @@ class OrderService extends TransactionBaseService {
       const { payment, region, total } = cart
 
       await Promise.all(
-        cart.items.map(async (item) => {
+        cart.items.map(async (lineItem) => {
           return await inventoryServiceTx.confirmInventory(
-            item.variant_id,
-            item.quantity
+            lineItem.variant_id,
+            lineItem.quantity
           )
         })
       ).catch(async (err) => {
@@ -663,31 +665,32 @@ class OrderService extends TransactionBaseService {
         )
       }
 
-      let gcBalance =
+      const giftCardableAmount =
         (cart.region?.gift_cards_taxable
           ? cart.subtotal! - cart.discount_total!
-          : cart.total! + cart.gift_card_total!) || 0
-      const gcService = this.giftCardService_.withTransaction(manager)
+          : cart.total! + cart.gift_card_total!) || 0 // we re add the gift card total to compensate the fact that the decorate total already removed this amount from the total
 
-      for (const g of cart.gift_cards) {
-        const newBalance = Math.max(0, g.balance - gcBalance)
-        const usage = g.balance - newBalance
-        await gcService.update(g.id, {
-          balance: newBalance,
-          is_disabled: newBalance === 0,
+      let giftCardableAmountBalance = giftCardableAmount
+      const giftCardService = this.giftCardService_.withTransaction(manager)
+
+      for (const giftCard of cart.gift_cards) {
+        const newGiftCardBalance = Math.max(0, giftCard.balance - giftCardableAmountBalance)
+        const giftCardBalanceUsed = giftCard.balance - newGiftCardBalance
+
+        await giftCardService.update(giftCard.id, {
+          balance: newGiftCardBalance,
+          is_disabled: newGiftCardBalance === 0,
         })
 
-        await gcService.createTransaction({
-          gift_card_id: g.id,
+        await giftCardService.createTransaction({
+          gift_card_id: giftCard.id,
           order_id: order.id,
-          amount: usage,
-          is_taxable: cart.region.gift_cards_taxable,
-          tax_rate: cart.region.gift_cards_taxable
-            ? cart.region.tax_rate
-            : null,
+          amount: giftCardBalanceUsed,
+          is_taxable: !!giftCard.tax_rate,
+          tax_rate: giftCard.tax_rate
         })
 
-        gcBalance = gcBalance - usage
+        giftCardableAmountBalance = giftCardableAmountBalance - giftCardBalanceUsed
       }
 
       const shippingOptionServiceTx =
@@ -696,14 +699,20 @@ class OrderService extends TransactionBaseService {
 
       await Promise.all(
         [
-          cart.items.map((item) => {
-            return [
-              lineItemServiceTx.update(item.id, { order_id: order.id }),
+          cart.items.map((lineItem) => {
+            const lineItemPromises: unknown[] = [
+              lineItemServiceTx.update(lineItem.id, { order_id: order.id }),
               inventoryServiceTx.adjustInventory(
-                item.variant_id,
-                -item.quantity
+                lineItem.variant_id,
+                -lineItem.quantity
               ),
             ]
+
+            if (lineItem.is_giftcard) {
+              lineItemPromises.push(this.createGiftCardsFromLineItem_(order, lineItem, manager))
+            }
+
+            return lineItemPromises
           }),
           cart.shipping_methods.map(async (method) => {
             // TODO: Due to cascade insert we have to remove the tax_lines that have been added by the cart decorate totals.
@@ -730,6 +739,46 @@ class OrderService extends TransactionBaseService {
     })
   }
 
+  protected createGiftCardsFromLineItem_(
+    order: Order,
+    lineItem: LineItem,
+    manager: EntityManager
+  ): Promise<GiftCard>[] {
+    const createGiftCardPromises: Promise<GiftCard>[] = []
+
+    // LineItem type doesn't promise either the subtotal or quantity. Adding a check here provides
+    // additional type safety/strictness
+    if (!lineItem.subtotal || !lineItem.quantity) return createGiftCardPromises
+
+    // Subtotal is the pure value of the product/variant excluding tax, discounts, etc.
+    // We divide here by quantity to get the value of the product/variant as a lineItem
+    // contains quantity. The subtotal is multiplicative of pure price per product and quantity
+    const taxExclusivePrice = lineItem.subtotal / lineItem.quantity
+    // The tax_lines contains all the taxes that is applicable on the purchase of the gift card
+    // On utilizing the gift card, the same set of taxRate will apply to gift card
+    // We calculate the summation of all taxes and add that as a snapshot in the giftcard.tax_rate column
+    const giftCardTaxRate = lineItem.tax_lines.reduce(
+      (sum, taxLine) => sum + taxLine.rate, 0
+    )
+
+    const giftCardTxnService = this.giftCardService_.withTransaction(manager)
+
+    for (let qty = 0; qty < lineItem.quantity; qty++) {
+      const createGiftCardPromise = giftCardTxnService.create({
+        region_id: order.region_id,
+        order_id: order.id,
+        value: taxExclusivePrice,
+        balance: taxExclusivePrice,
+        metadata: lineItem.metadata,
+        tax_rate: giftCardTaxRate || null
+      })
+
+      createGiftCardPromises.push(createGiftCardPromise)
+    }
+
+    return createGiftCardPromises
+  }
+
   /**
    * Adds a shipment to the order to indicate that an order has left the
    * warehouse. Will ask the fulfillment provider for any documents that may
diff --git a/packages/medusa/src/services/totals.ts b/packages/medusa/src/services/totals.ts
index 2433404ffd..5b9169b4ad 100644
--- a/packages/medusa/src/services/totals.ts
+++ b/packages/medusa/src/services/totals.ts
@@ -25,7 +25,10 @@ import {
   LineDiscountAmount,
   SubtotalOptions,
 } from "../types/totals"
-import TaxProviderService from "./tax-provider"
+import {
+  TaxProviderService,
+  NewTotalsService,
+} from "./index"
 import { EntityManager } from "typeorm"
 
 import { calculatePriceTaxAmount } from "../utils"
@@ -74,6 +77,7 @@ type GetLineItemTotalOptions = {
 
 type TotalsServiceProps = {
   taxProviderService: TaxProviderService
+  newTotalsService: NewTotalsService
   taxCalculationStrategy: ITaxCalculationStrategy
   manager: EntityManager
   featureFlagRouter: FlagRouter
@@ -105,12 +109,14 @@ class TotalsService extends TransactionBaseService {
   protected transactionManager_: EntityManager
 
   protected readonly taxProviderService_: TaxProviderService
+  protected readonly newTotalsService_: NewTotalsService
   protected readonly taxCalculationStrategy_: ITaxCalculationStrategy
   protected readonly featureFlagRouter_: FlagRouter
 
   constructor({
     manager,
     taxProviderService,
+    newTotalsService,
     taxCalculationStrategy,
     featureFlagRouter,
   }: TotalsServiceProps) {
@@ -118,6 +124,7 @@ class TotalsService extends TransactionBaseService {
 
     this.manager_ = manager
     this.taxProviderService_ = taxProviderService
+    this.newTotalsService_ = newTotalsService
     this.taxCalculationStrategy_ = taxCalculationStrategy
 
     this.manager_ = manager
@@ -962,73 +969,24 @@ class TotalsService extends TransactionBaseService {
     tax_total: number
   }> {
     let giftCardable: number
+
     if (typeof opts.gift_cardable !== "undefined") {
       giftCardable = opts.gift_cardable
     } else {
       const subtotal = await this.getSubtotal(cartOrOrder)
       const discountTotal = await this.getDiscountTotal(cartOrOrder)
+
       giftCardable = subtotal - discountTotal
     }
 
-    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) => {
-          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 {
-        total: 0,
-        tax_total: 0,
+    return await this.newTotalsService_.getGiftCardTotals(
+      giftCardable,
+      {
+        region: cartOrOrder.region,
+        giftCards: cartOrOrder.gift_cards || [],
+        giftCardTransactions: cartOrOrder['gift_card_transactions'] || []
       }
-    }
-
-    const toReturn = cartOrOrder.gift_cards.reduce(
-      (acc, next) => acc + next.balance,
-      0
     )
-    const orderGiftCardAmount = Math.min(giftCardable, toReturn)
-
-    if (cartOrOrder.region?.gift_cards_taxable) {
-      return {
-        total: orderGiftCardAmount,
-        tax_total: Math.round(
-          (orderGiftCardAmount * cartOrOrder.region.tax_rate) / 100
-        ),
-      }
-    }
-
-    return {
-      total: orderGiftCardAmount,
-      tax_total: 0,
-    }
   }
 
   /**
diff --git a/packages/medusa/src/subscribers/order.js b/packages/medusa/src/subscribers/order.js
index aaf00cccbd..e9b797baf6 100644
--- a/packages/medusa/src/subscribers/order.js
+++ b/packages/medusa/src/subscribers/order.js
@@ -30,27 +30,10 @@ class OrderSubscriber {
   }
 
   handleOrderPlaced = async (data) => {
-    const order = await this.orderService_.retrieve(data.id, {
-      select: ["subtotal"],
-      relations: ["discounts", "discounts.rule", "items", "gift_cards"],
+    const order = await this.orderService_.retrieveWithTotals(data.id, {
+      relations: ["discounts", "discounts.rule"],
     })
 
-    await Promise.all(
-      order.items.map(async (i) => {
-        if (i.is_giftcard) {
-          for (let qty = 0; qty < i.quantity; qty++) {
-            await this.giftCardService_.create({
-              region_id: order.region_id,
-              order_id: order.id,
-              value: i.unit_price,
-              balance: i.unit_price,
-              metadata: i.metadata,
-            })
-          }
-        }
-      })
-    )
-
     await Promise.all(
       order.discounts.map(async (d) => {
         const usageCount = d?.usage_count || 0
diff --git a/packages/medusa/src/types/gift-card.ts b/packages/medusa/src/types/gift-card.ts
index 4b88c56dff..596608f6c5 100644
--- a/packages/medusa/src/types/gift-card.ts
+++ b/packages/medusa/src/types/gift-card.ts
@@ -1,10 +1,12 @@
 export type CreateGiftCardInput = {
+  order_id?: string
   value?: number
   balance?: number
   ends_at?: Date
   is_disabled?: boolean
   region_id: string
   metadata?: Record<string, unknown>
+  tax_rate?: number | null
 }
 
 export type UpdateGiftCardInput = {