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Set up local taxes in QuickBooks Online Payroll

by Intuit•110• Updated 1 week ago

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. 

Select the task you need to complete below:

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 is subject to:

  • Contact your local tax agency
  • 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/ZIP code combo. 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 local taxes are included when you set up State Withholding, so there’s nothing extra you need to do.
OhioOhio local tax finder. Use the ZIP code link and enter the 4-digit ZIP code extension for employee’s residence and work locations to find the specific 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 0.00% rate will not appear on the employee 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 Code by address
Set up PA Local Services Tax (LST)

Set up your employee's local tax jurisdictions

  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. 
    • Pennsylvania employees: You may need to can enter the specific PSD (Political Subdivision) code. You may also need to add or edit the PSD code for the employee’s work address. See Add or edit a PSD code for PA work locations.
  5. 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, or select to enter the 6-digit PSD code.
  6. Select Save.

Note: Adding or editing the PSD code for a work location will affect all employees assigned to that work location. An existing PA work location’s PSD code cannot be edited once paychecks have been created for employees assigned to that work location. Add a work location instead with the new PSD code, then assign employees to it.

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 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 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. 

Note: If you use QuickBooks Online Payroll Premium and Elite without e-services turned on or QuickBooks Online Payroll Core, you can run a payroll report to view your local tax liability amounts.

QuickBooks Online Payroll CoreQuickBooks Online Payroll EliteQuickBooks Online Payroll Premium

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