How to integrate Taxjar MCP with Pydantic AI

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Introduction

This guide walks you through connecting Taxjar to Pydantic AI using the Composio tool router. By the end, you'll have a working Taxjar agent that can calculate sales tax for a new order, list all order transactions this month, show my current nexus regions, create a refund transaction for order 123 through natural language commands.

This guide will help you understand how to give your Pydantic AI agent real control over a Taxjar account through Composio's Taxjar MCP server.

Before we dive in, let's take a quick look at the key ideas and tools involved.

TL;DR

Here's what you'll learn:
  • How to set up your Composio API key and User ID
  • How to create a Composio Tool Router session for Taxjar
  • How to attach an MCP Server to a Pydantic AI agent
  • How to stream responses and maintain chat history
  • How to build a simple REPL-style chat interface to test your Taxjar workflows

What is Pydantic AI?

Pydantic AI is a Python framework for building AI agents with strong typing and validation. It leverages Pydantic's data validation capabilities to create robust, type-safe AI applications.

Key features include:

  • Type Safety: Built on Pydantic for automatic data validation
  • MCP Support: Native support for Model Context Protocol servers
  • Streaming: Built-in support for streaming responses
  • Async First: Designed for async/await patterns

What is the Taxjar MCP server, and what's possible with it?

The Taxjar MCP server is an implementation of the Model Context Protocol that connects your AI agent and assistants like Claude, Cursor, etc directly to your Taxjar account. It provides structured and secure access to your sales tax data, so your agent can perform actions like calculating sales tax, managing transactions, listing customers, and monitoring nexus regions on your behalf.

  • Real-time tax calculation for orders: Instantly calculate accurate sales tax for new orders, factoring in nexus addresses, line items, shipping, and exemptions.
  • Order and refund transaction management: Let your agent create, list, or delete order and refund transactions to streamline your sales and returns workflow.
  • Customer database access: Effortlessly retrieve, list, or delete customer records for tax reporting and compliance purposes.
  • Nexus region insights: Quickly identify and list all nexus regions where your business has sales tax obligations.
  • Automated transaction reporting: Access up-to-date lists of transactions and refunds for reconciliation, filing, and audit readiness.

Supported Tools & Triggers

Tools
Calculate Sales Tax For An OrderTool to calculate sales tax for an order.
Create Order TransactionTool to create a new order transaction.
Create Refund TransactionTool to create a new refund transaction.
Delete CustomerTool to delete an existing customer.
Delete Order TransactionTool to delete an existing order transaction.
Delete Refund TransactionTool to delete an existing refund transaction.
List CustomersTool to list existing customers.
List Nexus RegionsTool to list existing nexus regions for an account.
List Order TransactionsTool to list existing order transactions.
List refund transactionsTool to list refund transactions.
List Tax CategoriesTool to list all product tax categories and their codes.
Show CustomerTool to show an existing customer.
Show Order TransactionTool to show an existing order transaction by id.
Show Refund TransactionTool to show a refund transaction.
Show Tax Rates for a LocationTool to show sales tax rates for a location.
Summarize Tax Rates for All RegionsTool to retrieve minimum and average sales tax rates by region.
Update Order TransactionTool to update an existing order transaction.
Validate VAT NumberTool to validate a vat number for tax-exempt status.

What is the Composio tool router, and how does it fit here?

What is Tool Router?

Composio's Tool Router helps agents find the right tools for a task at runtime. You can plug in multiple toolkits (like Gmail, HubSpot, and GitHub), and the agent will identify the relevant app and action to complete multi-step workflows. This can reduce token usage and improve the reliability of tool calls. Read more here: Getting started with Tool Router

The tool router generates a secure MCP URL that your agents can access to perform actions.

How the Tool Router works

The Tool Router follows a three-phase workflow:

  1. Discovery: Searches for tools matching your task and returns relevant toolkits with their details.
  2. Authentication: Checks for active connections. If missing, creates an auth config and returns a connection URL via Auth Link.
  3. Execution: Executes the action using the authenticated connection.

Step-by-step Guide

Prerequisites

Before starting, make sure you have:
  • Python 3.9 or higher
  • A Composio account with an active API key
  • Basic familiarity with Python and async programming

Getting API Keys for OpenAI and Composio

OpenAI API Key
  • Go to the OpenAI dashboard and create an API key. You'll need credits to use the models, or you can connect to another model provider.
  • Keep the API key safe.
Composio API Key
  • Log in to the Composio dashboard.
  • Navigate to your API settings and generate a new API key.
  • Store this key securely as you'll need it for authentication.

Install dependencies

bash
pip install composio pydantic-ai python-dotenv

Install the required libraries.

What's happening:

  • composio connects your agent to external SaaS tools like Taxjar
  • pydantic-ai lets you create structured AI agents with tool support
  • python-dotenv loads your environment variables securely from a .env file

Set up environment variables

bash
COMPOSIO_API_KEY=your_composio_api_key_here
USER_ID=your_user_id_here
OPENAI_API_KEY=your_openai_api_key

Create a .env file in your project root.

What's happening:

  • COMPOSIO_API_KEY authenticates your agent to Composio's API
  • USER_ID associates your session with your account for secure tool access
  • OPENAI_API_KEY to access OpenAI LLMs

Import dependencies

python
import asyncio
import os
from dotenv import load_dotenv
from composio import Composio
from pydantic_ai import Agent
from pydantic_ai.mcp import MCPServerStreamableHTTP

load_dotenv()
What's happening:
  • We load environment variables and import required modules
  • Composio manages connections to Taxjar
  • MCPServerStreamableHTTP connects to the Taxjar MCP server endpoint
  • Agent from Pydantic AI lets you define and run the AI assistant

Create a Tool Router Session

python
async def main():
    api_key = os.getenv("COMPOSIO_API_KEY")
    user_id = os.getenv("USER_ID")
    if not api_key or not user_id:
        raise RuntimeError("Set COMPOSIO_API_KEY and USER_ID in your environment")

    # Create a Composio Tool Router session for Taxjar
    composio = Composio(api_key=api_key)
    session = composio.create(
        user_id=user_id,
        toolkits=["taxjar"],
    )
    url = session.mcp.url
    if not url:
        raise ValueError("Composio session did not return an MCP URL")
What's happening:
  • We're creating a Tool Router session that gives your agent access to Taxjar tools
  • The create method takes the user ID and specifies which toolkits should be available
  • The returned session.mcp.url is the MCP server URL that your agent will use

Initialize the Pydantic AI Agent

python
# Attach the MCP server to a Pydantic AI Agent
taxjar_mcp = MCPServerStreamableHTTP(url, headers={"x-api-key": COMPOSIO_API_KEY})
agent = Agent(
    "openai:gpt-5",
    toolsets=[taxjar_mcp],
    instructions=(
        "You are a Taxjar assistant. Use Taxjar tools to help users "
        "with their requests. Ask clarifying questions when needed."
    ),
)
What's happening:
  • The MCP client connects to the Taxjar endpoint
  • The agent uses GPT-5 to interpret user commands and perform Taxjar operations
  • The instructions field defines the agent's role and behavior

Build the chat interface

python
# Simple REPL with message history
history = []
print("Chat started! Type 'exit' or 'quit' to end.\n")
print("Try asking the agent to help you with Taxjar.\n")

while True:
    user_input = input("You: ").strip()
    if user_input.lower() in {"exit", "quit", "bye"}:
        print("\nGoodbye!")
        break
    if not user_input:
        continue

    print("\nAgent is thinking...\n", flush=True)

    async with agent.run_stream(user_input, message_history=history) as stream_result:
        collected_text = ""
        async for chunk in stream_result.stream_output():
            text_piece = None
            if isinstance(chunk, str):
                text_piece = chunk
            elif hasattr(chunk, "delta") and isinstance(chunk.delta, str):
                text_piece = chunk.delta
            elif hasattr(chunk, "text"):
                text_piece = chunk.text
            if text_piece:
                collected_text += text_piece
        result = stream_result

    print(f"Agent: {collected_text}\n")
    history = result.all_messages()
What's happening:
  • The agent reads input from the terminal and streams its response
  • Taxjar API calls happen automatically under the hood
  • The model keeps conversation history to maintain context across turns

Run the application

python
if __name__ == "__main__":
    asyncio.run(main())
What's happening:
  • The asyncio loop launches the agent and keeps it running until you exit

Complete Code

Here's the complete code to get you started with Taxjar and Pydantic AI:

python
import asyncio
import os
from dotenv import load_dotenv
from composio import Composio
from pydantic_ai import Agent
from pydantic_ai.mcp import MCPServerStreamableHTTP

load_dotenv()

async def main():
    api_key = os.getenv("COMPOSIO_API_KEY")
    user_id = os.getenv("USER_ID")
    if not api_key or not user_id:
        raise RuntimeError("Set COMPOSIO_API_KEY and USER_ID in your environment")

    # Create a Composio Tool Router session for Taxjar
    composio = Composio(api_key=api_key)
    session = composio.create(
        user_id=user_id,
        toolkits=["taxjar"],
    )
    url = session.mcp.url
    if not url:
        raise ValueError("Composio session did not return an MCP URL")

    # Attach the MCP server to a Pydantic AI Agent
    taxjar_mcp = MCPServerStreamableHTTP(url, headers={"x-api-key": COMPOSIO_API_KEY})
    agent = Agent(
        "openai:gpt-5",
        toolsets=[taxjar_mcp],
        instructions=(
            "You are a Taxjar assistant. Use Taxjar tools to help users "
            "with their requests. Ask clarifying questions when needed."
        ),
    )

    # Simple REPL with message history
    history = []
    print("Chat started! Type 'exit' or 'quit' to end.\n")
    print("Try asking the agent to help you with Taxjar.\n")

    while True:
        user_input = input("You: ").strip()
        if user_input.lower() in {"exit", "quit", "bye"}:
            print("\nGoodbye!")
            break
        if not user_input:
            continue

        print("\nAgent is thinking...\n", flush=True)

        async with agent.run_stream(user_input, message_history=history) as stream_result:
            collected_text = ""
            async for chunk in stream_result.stream_output():
                text_piece = None
                if isinstance(chunk, str):
                    text_piece = chunk
                elif hasattr(chunk, "delta") and isinstance(chunk.delta, str):
                    text_piece = chunk.delta
                elif hasattr(chunk, "text"):
                    text_piece = chunk.text
                if text_piece:
                    collected_text += text_piece
            result = stream_result

        print(f"Agent: {collected_text}\n")
        history = result.all_messages()

if __name__ == "__main__":
    asyncio.run(main())

Conclusion

You've built a Pydantic AI agent that can interact with Taxjar through Composio's Tool Router. With this setup, your agent can perform real Taxjar actions through natural language. You can extend this further by:
  • Adding other toolkits like Gmail, HubSpot, or Salesforce
  • Building a web-based chat interface around this agent
  • Using multiple MCP endpoints to enable cross-app workflows (for example, Gmail + Taxjar for workflow automation)
This architecture makes your AI agent "agent-native", able to securely use APIs in a unified, composable way without custom integrations.

How to build Taxjar MCP Agent with another framework

OpenAI Agents SDK

OpenAI Agents SDK

Use Taxjar MCP with OpenAI Agents SDK

Claude Agent SDK

Claude Agent SDK

Use Taxjar MCP with Claude Agent SDK

Google ADK

Google ADK

Use Taxjar MCP with Google ADK

LangChain

LangChain

Use Taxjar MCP with LangChain

Vercel AI SDK

Vercel AI SDK

Use Taxjar MCP with Vercel AI SDK

Mastra AI

Mastra AI

Use Taxjar MCP with Mastra AI

LlamaIndex

LlamaIndex

Use Taxjar MCP with LlamaIndex

CrewAI

CrewAI

Use Taxjar MCP with CrewAI

FAQ

What are the differences in Tool Router MCP and Taxjar MCP?

With a standalone Taxjar MCP server, the agents and LLMs can only access a fixed set of Taxjar tools tied to that server. However, with the Composio Tool Router, agents can dynamically load tools from Taxjar and many other apps based on the task at hand, all through a single MCP endpoint.

Can I use Tool Router MCP with Pydantic AI?

Yes, you can. Pydantic AI fully supports MCP integration. You get structured tool calling, message history handling, and model orchestration while Tool Router takes care of discovering and serving the right Taxjar tools.

Can I manage the permissions and scopes for Taxjar while using Tool Router?

Yes, absolutely. You can configure which Taxjar scopes and actions are allowed when connecting your account to Composio. You can also bring your own OAuth credentials or API configuration so you keep full control over what the agent can do.

How safe is my data with Composio Tool Router?

All sensitive data such as tokens, keys, and configuration is fully encrypted at rest and in transit. Composio is SOC 2 Type 2 compliant and follows strict security practices so your Taxjar data and credentials are handled as safely as possible.

Used by agents from

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Context
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HubSpot
Agent.ai
Altera
DataStax
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Context
ASU
Letta
glean
HubSpot
Agent.ai
Altera
DataStax
Entelligence
Rolai

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