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Calculate sales tax

We keep track of thousands of tax laws so you don’t have to.

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Overview Features

Sales tax calculations made easy

Automatic sales tax calculation

When you add sales tax to an invoice in QuickBooks, the calculations are automatically taken care of. We calculate the sales tax rate based on date, location, type of product or service, and customer.

Product categorization

Rules for how to tax a product can change from state to state. Once your products are categorized, QuickBooks will make sure the correct rate is applied to your transactions based on the product category and the location of sale you indicate.

Know how much you owe

You can view your sales tax information any time with the Sales Tax Liability Report. This on-demand report will keep you up-to-date on your taxable and nontaxable sales, all broken down by tax agency.

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Frequently asked questions

What is sales tax?

Where does your sales tax go?

Why is sales tax different based on your location?

The sales tax rate can change based on your location because each state in the US has the authority to impose a sales tax. There is no federal law that tells states the rate to charge. Each state and local government can set the rate at a percentage within their state guidelines. For example, the rate on a sale in Massachusetts is 6.25% across the state, but if you shop in Texas, the rate can range from 6.25% to 8.25%

Do you have to pay sales tax?

Sales tax is generally required in all states that impose it. As a buyer, if a seller fails to charge you a sales tax, you’re not required to pay the sales tax. As a seller, if you fail to collect and/or pay a sales tax, and the tax authority determines it’s due, the authority will assess penalties and interest. They can ultimately take assets or put liens on them, which can have negative effects on your credit.

What is use tax?

Do I need to collect sales tax?

What is Nexus?

When it comes to sales tax, there are several types of nexus, but the most common are:

Physical nexus – To have a physical nexus with a state is to have a sufficient physical presence in that state. The physical nexus obligation exists in all states. Physical nexus can be created by:

An office
An employee or sales people
Providing services
An independent contractor that provides services to your customers
A warehouse

Economic nexus – To have economic nexus in a state is to have made a certain amount of sales or a certain number of transactions into that state. Economic nexus obligations already exist in multiple states with additional states enacting economic nexus rules in light of the 2018 Supreme Court decision in South Dakota v. Wayfair.

Bottom line is that if you have nexus in a state (physical or economic nexus) you have an obligation to collect and remit sales tax for taxable sales within the state

I’m an online seller, how do I collect sales tax for customers that I ship to out of state?

In the past, online sellers typically would not need to collect sales tax for out of state sales if they did not have a physical presence in the state. Recent tax laws have changed this and now sellers are responsible for collecting sales tax on shipped items if they have an economic nexus with a state. Online sales tax varies from state to state and is dependent upon if you have nexus with that state.

Keeping track of sales tax can get messy, but we’ve got your back. QuickBooks sales tax automatically applies applicable sales tax rates to your invoices. We take into account all the variables and apply the correct rates every time.

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