Local Payroll tax rate wrong, how do I change it?

rmtires · ‎January 18, 2024

I'm new to using QB Payroll. When I did the Onboarding process, my employees had already received a couple of paychecks. It had me enter that information and one of the localities was being deducted as of that time at 0.5% and the paychecks done on QB so far have kept the same rate. I've just found out that it's supposed to be 2% and can't find any way to fix it or change it. I talked to somebody on the phone who told me as long as I have the local EIN entered that the rate will be adjusted automatically. I don't know if that's the case with the local rate especially being that this is a small community with everything being done on paper. I just know now that this tax rate has been wrong for a long time and this employee always owes a significant amount of local taxes at the end of the year as a result. So, I guess my question is, will the local tax rate be automatically updated?

JaeAnnC · ‎January 18, 2024

Thanks for reaching out to us, @rmtires. I'm here to share information about updating the local tax rate in QuickBooks Online (QBO).

Yes, you're right. As long as you've entered your EIN in your QBO payroll settings, rest assured that the system will automatically update the tax rate. Here' show:

Go to the Gear icon and select Payroll Settings.
Go to the [State] Tax section and click the pencil icon.
Enter your EIN in the Withholding field.
Click Save, then Done.

Since the tax amount is deducted incorrectly from your employees' paychecks, you'll need to run the Payroll Summary report to identify the wage and tax discrepancies. Then, reach out to our customer support team to correct the paychecks. Here's an article for the detailed process: Handle overwithheld or underwithheld employee-paid taxes.

Additionally, I'll share this article for your guide in paying and filing your local tax withholding in QBO: Pay and file your local taxes in QuickBooks Online Payroll.

Keep in touch if you have further questions about local taxes. I'm always available in the Community to continue assisting you. Stay safe.

View solution in original post

JaeAnnC · ‎January 18, 2024

Thanks for reaching out to us, @rmtires. I'm here to share information about updating the local tax rate in QuickBooks Online (QBO).

Yes, you're right. As long as you've entered your EIN in your QBO payroll settings, rest assured that the system will automatically update the tax rate. Here' show:

Go to the Gear icon and select Payroll Settings.
Go to the [State] Tax section and click the pencil icon.
Enter your EIN in the Withholding field.
Click Save, then Done.

Since the tax amount is deducted incorrectly from your employees' paychecks, you'll need to run the Payroll Summary report to identify the wage and tax discrepancies. Then, reach out to our customer support team to correct the paychecks. Here's an article for the detailed process: Handle overwithheld or underwithheld employee-paid taxes.

Additionally, I'll share this article for your guide in paying and filing your local tax withholding in QBO: Pay and file your local taxes in QuickBooks Online Payroll.

Keep in touch if you have further questions about local taxes. I'm always available in the Community to continue assisting you. Stay safe.

Frustrated with this program1 · ‎August 14, 2025

I have always had my EIN in the withhoding box. California raise my UI rate from 2.4% to 6.2% in January 2025 but QuickBooks did not automatically update it. I ended up having to pay over $1000 plus interest after the first quarter. The program would not let me manually correct the rate. The helpless desk gave me an email address for payroll support. I notified them of the problem. they said they would fix it. It is now August and it still isn't fixed. Who do I send the bill to at QuickBooks???$$$

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Local Payroll tax rate wrong, how do I change it?