Set up local taxes in QuickBooks Online Payroll

Learn how to set up local tax withholding for your company and employees.

Local taxes are payroll taxes employees and/or employers must pay in several states. These are in addition to the required State Withholding tax. They can be city, county, municipality, or school district taxes. 

Step 1: Determine which local taxes you need to set up

To make sure you get the most accurate local tax jurisdictions, get the physical address for your employees’ home and work locations. If you aren’t sure what city, municipal, or school district taxes your employee should pay:

• Contact your local tax agency
• Use the local tax resources below 

To set up your employee’s local tax:

1. Go to Payroll, then Employees.
2. Select your employee.
3. From Tax withholding, select Edit.
4. In the Local taxes section, select the applicable local taxes. 
   • If you don’t see the expected local taxes, select Edit location. Enter the city and ZIP code combination for the local tax jurisdiction you need. If you’re in PA, you can enter the specific PSD code. 
5. Select Save.

Step 2: Add your local tax account number and deposit frequency

Once your employees’ local taxes are added, you’ll need to provide your local tax account number and tell us how often you’re required to pay these taxes.  This info is needed to pay and file your taxes in QuickBooks. Contact your local tax agency if you don’t have this info. 

If you’ve already run first payroll and are adding new employees

1. Select Settings ⚙, then Payroll Settings. 
2. In the [State] section, select [State] local taxes.
3. Enter your local tax account number and select your frequency.
4. Select Save. 

If you’re new to QuickBooks Online Payroll and getting set up

1. Go to Payroll, then Overview (Take me there).
2. Select Let’s Go on the Set up your local taxes task. 
3. Select Edit ✎.
4. Enter your local tax account number and select your frequency. 
5. Select Save.