Learn how to set up, edit, and deactivate your sales tax rate and settings.
In the Sales Tax Center, you can add and edit tax agencies, rates, and settings.
Check out this quick video to learn about setting up your sales tax:
To watch more how-to videos, visit our video section.
| Note: If you don't see the settings mentioned below, you may be using the Auto Sales Tax feature. Check out Set up and use Automated Sales Tax for more information. |
Add or edit sales tax rates and agencies
Add a tax rate and agency
To add a tax rate and agency:
- Go to Taxes, then select Sales tax (Take me there).
- Under the Related Tasks list on the right, select Add/edit tax rates and agencies.
- Select New and choose either a single or a combined tax rate.
- Enter a name for the tax, the agency you pay, and the percentage for the rate. Use a single rate if you pay just one rate to a single agency.
- Select Save.
| Note: Tax agencies are the cities and county jurisdictions that you pay. QuickBooks Online provides the calculated amount that you owe to each agency and the due date. |
Add a combined rate
If you're required to track sales tax for more than one tax agency, consider setting up a combined tax rate. For example, you might need to report and payout sales tax to your city, to your county, and to your state.
Things to know
- With a combined tax rate, your customer sees only one tax rate on their sales form. However, the sales Tax Center keeps track and splits out the appropriate amounts for each agency.
- You can add up to 7 components in a combined tax rate.
- Classic sales tax offers 5 maximum combined rates
- Automated sales tax offers 7 maximum combined rates
To add a combined tax rate:
- Go to Taxes, then select Sales tax (Take me there).
- Under the Related Tasks list on the right, select Add/edit tax rates and agencies.
- Select New.
- Select Combined tax rate.
- Enter a name for the combined rate and the different sales tax requirements.
- If necessary, select Add Another Component to add more than two rates.
- Select Save.
Once you're done, a few things will happen:
- The new rate appears in the Sales Tax Rate and Agencies list.
- You can now select the new combined rate in forms like invoices.
- You can view the amounts owed to each agency in the Sales Tax Owed list in the Sales Tax Center.
- You can view the Sales Tax Liability report.
Edit a tax rate
Things to know:
- You can edit a sales tax rate if you need to make changes to it.
- You can only edit component rates.
- To edit a combined rate, make changes to its component rates.
To edit a tax rate:
- Go to Taxes, then select Sales tax (Take me there).
- Under the Related Tasks list on the right, select Add/edit tax rates and agencies.
- Choose the rate that you want to change, then select Edit.
- Enter the new rate. You can also change the agency name.
- Select Save.
Once you're done, a few things will happen:
- The new rate is available for new transactions only.
- If you create a new transaction but use dates in the past, the transaction uses the new rate.
- Once you edit a rate, the earlier rate can no longer be used.
- Existing transactions that used the earlier rate remain unchanged. Unless you edit the transaction and specifically select a different sales tax rate.
- For recurring templates that use the changed component, new transactions created with the template use the new rate. Existing transactions created with the template and the earlier rate remain unchanged.
- Reports show the data for both rates (before and after).
Edit a tax agency's name
Things to know:
- You can't make changes to the Tax Rate field.
- If the rate needs to change, deactivate the existing tax name and rate.
- Then create a new tax with the rate you want.
To edit an agency's name:
- Go to Taxes, then select Sales tax (Take me there).
- Under the agency name that you want to edit, select rename.
- Enter the new name, then select Save.
Configure sales tax settings
Change the sales tax center filter
- Go to Taxes, then select Sales tax (Take me there).
- From the Start of Year and Accounting Basis drop-down, choose your preferred filter.
For more information regarding the Accounting Basis, see the difference between cash and accrual accounting methods.
Edit sales tax settings
You can turn sales tax on or off by editing sales tax settings.
- Go to Taxes, then select Sales tax (Take me there).
- Under the Related Tasks list on the right, select Edit sales tax settings.
- Select Yes, if you charge sales tax.
- (Optional) Set the following options:
- Set a default tax rate. The default rate is automatically selected in new sales forms. You can choose a different rate if needed. If you choose a different rate for a particular customer, QuickBooks Online remembers the rate for that customer and overrides the default rate.
- Select Mark all new customers are taxable. This means new customers you add aren't tax-exempt. You can change this setting for individual customers in the Tax Info section of each customer record.
- Select Mark all new products and services are taxable. This means items you add to a form have the Tax column already selected. You can clear individual items in a form if you don't need to charge sales tax.
- Select No if you don't charge sales tax. If you already charged sales tax on earlier transactions, you won't be able to disable sales tax without first removing sales tax from those earlier transactions.
- Select Save.
Deactivate a tax rate
- Go to Taxes, then select Sales tax (Take me there).
- Under the Related Tasks list on the right, select Add/edit tax rates and agencies.
- Choose a tax rate name and select Deactivate.
- Select Continue.
For additional information:
To know how to apply these tax rates to specific transactions, refer to Applying sales tax rates to transactions and sales forms.
For more details regarding Sales tax in QuickBooks Online, refer to Sales tax in QuickBooks Online.