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Set up local taxes in payroll

by Intuit•206• Updated about 7 hours ago

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

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

Select the task you need to complete below:

Determine which local taxes you need to set up

To help ensure accurate local tax jurisdictions, you need the home and work addresses for your employees. 

If you aren’t sure what city, municipal, or school district taxes your employee is subject to contact your local tax agency. You can also use the, local tax resources below

StateInfo/Resource
All states with local taxes:
AL, CO, DE, IN, KY, MD, MI, MO, NY, OH, OR, PA, WV		Use the USPS Address and ZIP code locator to determine the best city and ZIP code. We recommend Cities by ZIP code.
IndianaIndiana requires local taxes based on where the employee lived and worked on January 1 of the current year.  

Employees should complete Form WH-4.
MarylandMaryland's local taxes are included when you set up State Withholding. There’s no additional action needed.
OhioOpen Ohio’s local tax finder. Use the ZIP code link, then enter the 4-digit ZIP code extension for the employee’s  home and work addresses. This provides the applicable local taxes.  

If you don’t know the 4-digit extension, use the USPS Address and ZIP code locator.  

Note: School district taxes with 0% rate won't appear on the employee's local tax setup.
OregonEugene Community Safety Tax
Lane Transit District (LTD) tax
Multnomah Preschool For All
Portland Metro Supportive Housing Services
TriMet transit tax
PennsylvaniaLocal Income Tax requirements for employers and link to employee residency certification form
Find your PSD (Political Subdivision) Code by address
Set up PA Local Services Tax (LST)

Set up your employee's local tax jurisdictions

Follow this link to complete the steps in product Open this link in a new window

  1. Select your employee.
  2. From Tax withholding, select Edit.
  3. 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 for the local tax jurisdiction you need. If you’re in PA, you can enter the PSD code. 
    • Pennsylvania employees: You may need to enter the PSD  code. You may also need to add or edit the PSD code for the employee’s work address. See the Add or edit a PSD code for PA work locations section.
  4. Select Save.

In the Employee Profile:

  1. Go to Payroll, then Employees.
  2. Select your employee.
  3. From Employment details, select Start or Edit.
  4. Next to Work location, select Edit ✎.
  5. Select Save and you’ll be prompted to Add a political subdivision (PSD) code.
  6. Select the PSD code available based on the address you provided, or select to enter the 6-digit PSD code.
  7. Select Save.

In Payroll Settings:

  1. Select Settings Settings gear icon., then Payroll Settings. 
  2. In the Work location section, select Edit ✎.
  3. Select Edit on the work location.
  4. Select Save and you’ll be prompted to Add a political subdivision (PSD) code.
  5. Select the PSD code available based on the address you provided. You can also enter the 6-digit PSD code.
  6. Select Save.

Note: If you add or edit the PSD code for a work location, all employees assigned to that work location are impacted. After paychecks are created for PA employees, you can't change the PSD code. To work around this, set up a new work location instead with a new PSD code, then assign employees to it.

Add your local tax account number and deposit frequency

After your employees’ local taxes are added, provide your local tax account number, then tell us how often you’re required to pay these taxes. This information is required to pay and file your taxes in QuickBooks. If you don’t have this information, contact your local tax agency. 

If you’ve already run your first payroll, and you want to add a new employee, follow these steps.

  1. Select Settings Settings gear icon., 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, follow these steps. 

Follow this link to complete the steps in product Open this link in a new window

  1. Select Let’s Go on the Set up your local taxes task. 
  2. Select Edit ✎.
  3. Enter your local tax account number and select your frequency. 
  4. Select Save. 

Note: You can run a payroll report to view your local tax liability amounts if you meet one of the following qualifications.

  • You use QuickBooks Online Payroll Premium without e-services turned on. 
  • You use QuickBooks Online Payroll Elite without e-services turned on. 
  • You use QuickBooks Online Payroll Core.
QuickBooks Online Payroll CoreQuickBooks Online Payroll EliteQuickBooks Online Payroll Premium

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