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Add a sales tax category to products and services in QuickBooks Online

by Intuit117 Updated 2 months ago

Learn how to add a sales tax category to your products and services in QuickBooks Online.

Instead of manually calculating sales tax, let QuickBooks do the work for you. Add a sales tax category to your products and services to accurately calculate how much to tax your customers. Here’s how.

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Step 1: Set up your sales tax

The rules on how to tax a product or service can change depending on what you sell and where you sell it. QuickBooks keeps track of those tax rules, so you don’t have to.

Here’s how to set up your sales tax so QuickBooks can determine the rules that apply to you.

Step 2: Find out what products or services need a sales tax category

The taxability of a product or service can vary from state to state, and in some cases, city to city. Some specific products and services have special or reduced rates and fees.

If you’re not sure which category to use, check out what items need tax categories and why.

Important: If you’re still not sure which tax category to assign, ask your accountant for help. They have the best insights into what tax categories your items need. If you don’t have an accountant, we can help find a ProAdvisor near you.

Step 3: Assign a sales tax category to a product or service

When you’re ready, here’s how to assign your items to different sales tax categories.

  1. Go to Sales, then select Products & services (Take me there).
  2. Look for the item you want to assign a tax category to, then select Edit.
    Note: If you want to assign a tax category to a new product or service, here's how to add a new inventory item.
  3. Select Edit sales tax.
  4. Find the Other options section.
  5. Select either Taxable - based on location only or Nontaxable.
  6. Select Done, then Save and close.

Assign a special sales tax category to a product or service

  1. Go to Sales, then select Products & services (Take me there).
  2. Look for the item you want to assign a tax category to, then select Edit.
    Note: If you want to assign a tax category to a new product or service, here's how to add a new inventory item.
  3. Select Edit sales tax.
  4. Look for the sales tax category you want to use. You can use the search bar or browse the list of categories.
  5. Select the closest category for the item.
  6. Select Done, then Save and close.
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