Example: For state-specific tax exemptions, how does the system apply these rules in the invoice?
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Fiscal Positions - see Accounting (or Invoicing) -> Configuration -> Fiscal Positions.
When you need state-specific definitions, set the field Federal States.
The mapping of taxes (which tax to use instead of the product's default tax) up to Odoo 18 has been handled directly within this view as well (Tax on Product and Tax to Apply [instead]). Since Odoo 19 this is done directly on the Tax (Accounting (or Invoicing) -> Configuration -> Taxes) itself by specifying the Fiscal Position that Tax is supposed to be applied to and, if not the "main" one, which one it Replaces.
You can see https://demo.odoo.com for an example configuration of Fiscal Positions and Tax replacements.
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