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Set up your sales tax in QuickBooks Online

by Intuit •

459 •

Updated 8/5/2026 04:03

In the Sales Tax Center in QuickBooks Online, you can add and edit tax agencies, rates, and settings. This guide covers how to use the manual sales tax feature.

Note: This feature is limited for QuickBooks Online Free and QuickBooks Online Lite. Upgrade your plan to get more features. Go to Settings , then Subscriptions and billing. Then select Upgrade your plan.

This video will go over how to set up sales tax in QuickBooks Online.

Get the tools you need to streamline your business and the insights to drive it forward. All in QuickBooks Online Advanced.

Video transcript

[0:00] If you sell taxable products or services, QuickBooks helps you track how much sales tax to charge. If you use this feature, you should know how much you need to pay when you file your state and local sales tax. Let's go over how to set up sales tax. Navigate to All Apps and then Sales Tax settings in the Sales Tax section. Navigate to Turn on sales tax.

[0:22] Make sure you have the following necessary info before turning on sales tax, and click Next. Enter your business' address. This address sets up your sales tax rates. If this is already in your company settings, just confirm that it's correct and select Next. There are different rules in different states for when to collect and remit sales tax, and on this step what agencies to configure.

[0:46] The three concepts to consider for when to set up an agency are Physical nexus (do you have a business presence in a state - could be location or employee), economic nexus (do you sell over a certain threshold, either as transactions, total sales value, or combination), and state-administered and/or local-administered, one agency for the state that includes any local jurisdictions or local agencies in addition to the state agency.

[1:15] Every state has different requirements for how often you need to make sales tax payments. In this example, the frequency for filing taxes depends on the average amount of sales tax you collect on a yearly or monthly basis.

[1:29] Remember, your state or local laws might be different from each other, So check with the state website or your accountant if unsure which frequency is applicable for your company. Now, select the Filing Frequency drop down menu, and choose how often you file sales tax. If the filing frequency is different for other rates and agencies, don't worry.

[1:51] You can assign separate filing frequencies to each of them. Select Next. If you have more than one agency to add, choose Yes. If not, choose No and Next. Finally, click Finish and turn on sales tax. This is where QuickBooks keeps track of the money you've collected from customers on sales where you charged sales tax.

[2:12] The top section always shows how much you owe in the current filing period and how much has been collected so far for the next upcoming filing period. If you forgot to add an agency you collect sales tax for, or if you just need to change something, select Sales Tax Settings. From this screen, you can add tax agencies or edit the tax agencies QuickBooks set up for you earlier.

[2:37] Use this window to update your filing frequency or choose a different Start Date. The Start Date is the date you want QuickBooks to start tracking your sales tax for you. If you've made any changes, Select Save. You can also add a custom sales tax rate if something you collect wasn't automatically set up.

[2:57] Just choose whether it's a single or combined rate, the name of the sales tax, and what agency you collect it for.

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.

What you’ll need

Access to your QuickBooks Online account.
The names of your tax agencies and their specific tax percentages.
Knowledge of whether you pay a single rate or multiple rates to different jurisdictions.

Turn on and configure sales tax settings

You can turn sales tax on or off by editing sales tax settings. 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.

Go to All apps , then Sales Tax, then Sales tax settings (Take me there).
Select Yes, if you charge sales tax. If you don't charge sales tax, select No.
(Optional) Set a default tax rate to automatically apply to new sales forms.
(Optional) Select Mark all new customers are taxable if your new customers are typically not tax-exempt.
(Optional) Select Mark all new products and services are taxable to automatically select the tax column for items on forms.
Select Save.

Note: You can change any of these settings for individual customers or forms.

Add sales tax rates and agencies

Note: Tax agencies are the cities and county jurisdictions that you pay for. QuickBooks Online provides the calculated amount that you owe to each agency and the due date.

Add a single tax rate and agency

Use a single rate if you pay just one rate to a single agency.

Go to All apps , then Sales Tax, then Overview (Take me there).
If this is your first time, select Get Started and follow the guided workflow for your state.
If you need to add more rates, select Sales Tax Settings, then New, and choose a single tax rate.
Enter the name for the tax, the agency you pay, and the percentage rate.
Select Save.

Add a combined tax rate

If you report sales tax to multiple agencies, such as a city, county, and state, you can create a combined rate. We track each agency’s amount separately, but your customers will only see the combined total on their forms.

You can add up to 7 components to a combined tax rate.
Classic sales tax offers 5 maximum combined rates.
Automated sales tax offers 7 maximum combined rates.

Go to All apps , then Sales Tax, then Overview (Take me there).
Select Add Custom Rate from the Add Agency dropdown menu.
Select Combined tax rate.
Enter a name for the combined rate and the individual sales tax requirements.
Select Add Another Rate if you need to add more than 2 components.
Select Save.

Rename a tax agency

To edit an agency's name:

Go to All apps , then Sales Tax, then Sales tax settings (Take me there).
Under the agency name that you want to edit, select rename.
Enter the new name, then select Save.

Note: 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.

Deactivate a tax rate

If you no longer use a specific tax rate, you can make it inactive.

Go to All apps , then Sales Tax, then Sales tax settings (Take me there).
Choose a tax rate name and select Edit.
Select Make Inactive.

Change the sales tax center

You can adjust the specific methods and accounting basis within your tax center settings.

Go to All apps , then Sales Tax, then Sales tax settings (Take me there).
Within each sales tax agency specific method, you can change the sales tax center.

For more information regarding the Accounting Basis, see the difference between cash and accrual accounting methods.

Results

Once you have saved your settings, your new tax rates will appear in the Sales Tax Rate and Agencies list. You can now select these rates when creating invoices or other sales forms. You can also track what you owe in the Sales Tax Owed list or through a Sales Tax Liability report.