Hook vs tax token: the better way to add a tax

7 November 2026

For years, the way to add a buy or sell tax was a "tax token": the fee is written into the token contract, so every transfer pays it. It works, but it causes problems. Uniswap hooks offer another way: keep the token normal and put the tax on the pool.

Problems with tax tokens

• Transfers break. Wallets, bridges and other apps often fail or show wrong amounts when a transfer loses a percentage on the way.
• Swaps fail. Traders have to raise their slippage to get trades through, and aggregators often skip these tokens.
• Red flags. Many tax tokens let the owner raise the tax later, sometimes to 100%. Scanners flag them, and buyers are wary.

How a hook does it

• The token stays a plain ERC-20. Sending it between wallets costs nothing extra.
• The tax only applies to trades in your pool, where it belongs.
• The numbers are fixed at launch and visible to anyone, so nobody can raise them later.
• It's paid in the paired asset, for example ETH or USDC on sells, so your treasury gets something it can use.

When a tax token still makes sense

If you need the tax on every transfer, not just trades, it has to live in the token. For almost every launch, though, taxing the pool is cleaner. See how to add a sell tax with a hook.