Can I Apply Sales Taxes by Item?

Yes.

Go to Admin -> Billing -> Sales Taxes. Click on General Sales Tax Info.

Click the option Select Which Taxes Apply To Each Item for the setting How to Apply Taxes on Invoice Order Items.

This setting will allow you to apply only certain sales taxes to individual line items. The default behavior is to apply all taxes on the invoice to items that are taxable, so this setting provides additional flexibility for cases when a tax may not apply to a particular line item.

If you need to apply additional taxes that may only be relevant for certain items like an additional tax for lumber items, go to Admin -> Inventory -> Product Type Taxes.

When adding the product type tax, you can select which states the tax applies to. If no state is selected, the tax will apply to all states.

You can assign product taxes to items by going to the item edit page (Inventory -> Items), clicking the Additional link under the Additional Info section and selecting Product Type Taxes that apply to the item.

When an item with a product type tax is then added to a fulfillment or POS order, the product type tax will automatically be added to the sale.