How do I make a customer tax exempt in the website?

Login to your admin account and go to Tax & Shipment Mgmt >> Tax Setup. At the top of the page next to the Locations dropdown you will see a link called Superseded Tax. 

On this page, all customer accounts setup in the website will be listed. You will see a column for Default Tax showing the tax rate the customer would get charged based upon their State and the state tax rates you have setup. You can click Edit Here for any customer and do one of the following in the Customer column which becomes editable: 

1) Enter a different tax rate other than the Default (state) Tax rate 

2) Enter 0 to make the customer account tax exempt 

3) Leave the field blank to set the customer back to the Default (state) Tax rate 

Click the Update link to save and apply your changes. (Or click Cancel to cancel any changes.)