# How to Set Up Sales Tax in QuickBooks Desktop

> Turn on sales tax in QuickBooks Desktop, create tax items and groups, set customer and item tax codes, then review and pay what you owe.

- URL: https://logistify.ai/guides/quickbooks-desktop/set-up-sales-tax/
- Section: QuickBooks Desktop Guides, Sales orders & pricing
- Applies to: QuickBooks Desktop Enterprise, Premier, Pro, Accountant
- Steps checked against: Intuit's QuickBooks Desktop help articles, updated August 2026
- Updated: 2026-10-19

**Short answer:** In QuickBooks Desktop, turn on sales tax at Edit > Preferences > Sales Tax > Company Preferences. Then create a sales tax item for each location, group items where needed, and set tax codes on items and customers. Pay what you owe from Vendors > Sales Tax > Pay Sales Tax. Intuit's help covers Pro, Premier, Enterprise and Accountant, and says to verify rates and requirements with your tax agency first.

## Before you start

- This guide covers the QuickBooks setup only. Which sales are taxable, which rates apply and how often you file are questions for your tax advisor.
- Intuit also says to verify rates and requirements with your tax agency before you set up sales tax items or groups.
- Each tax agency you pay is a vendor in QuickBooks. You can add a missing one while you create the tax item.
- Get your rates, agencies, filing frequency and reporting basis from your tax advisor before you start.
- Collect resale certificate numbers for the customers your advisor says are exempt.
- These steps follow Intuit's setup article, which covers the Windows editions of QuickBooks Desktop.

## Step 1: Turn on sales tax

1. Go to Edit > Preferences and select Sales Tax.
2. Open the Company Preferences tab.
3. Under Do you charge sales tax?, select Yes.
4. Under When do you owe sales tax?, choose As of invoice date (Accrual Basis) or Upon receipt of payment (Cash Basis), as your advisor directs.
5. Choose how often you pay: Monthly, Quarterly or Annually.
6. Select OK.

Turning on sales tax creates two tax codes: TAX for taxable and NON for nontaxable. To change the basis later, Intuit's steps have you sign in as the administrator and switch to single-user mode first.

## Step 2: Create a sales tax item for each location

1. On the same Company Preferences tab, select Add sales tax item. You can also start from Lists > Item List, then Item > New.
2. In Type, choose Sales Tax Item.
3. Enter a Sales Tax Name tied to the location, such as the county or city, and a Description.
4. Enter the rate in Tax Rate (%).
5. In Tax Agency, choose the agency you pay. Select Add New to set one up as a vendor.
6. Select OK. Repeat for each county, district or city you collect for.

Always fill in the Description. Intuit says a sales tax item without one won't print as its own line on invoices. To change a rate later, go to Lists > Item List, right-click the item and select Edit Item.

## Step 3: Combine items into a sales tax group

A sales tax group puts several tax items that apply to one sale on a single line of the form. Each item in the group is still tracked and reported on its own.

1. Start a new item the same way and choose Sales Tax Group in Type.
2. Enter a Group Name/Number and a Description.
3. Add each sales tax item that belongs in the group. Select Add New to create one that's missing.
4. Select OK.

## Step 4: Set tax codes on items

1. Go to Lists > Item List and open the item, or create a new one.
2. In the Tax Code dropdown, choose the code that fits. For items your advisor says aren't taxed, Intuit's examples are Non Taxable Sales and Non Taxable Labor.
3. Select OK.

Need more codes than TAX and NON for reporting? Select Add New from any Tax Code dropdown. Intuit gives the examples below. They are labels for reporting only; whether a sale is exempt is for your tax advisor to say.

| Code | Intuit's example use |
| --- | --- |
| OOS | Out-of-state sales |
| LBR | Labor, such as service items |
| NPO | Nonprofit customers |
| GOV | Sales to government offices |
| WHL | Wholesalers who resell what they buy |
| RSL | Resellers |

*From Intuit's Set up sales tax in QuickBooks Desktop article. Your tax advisor decides which codes you need.*

## Step 5: Set each customer's tax code and tax item

1. Go to Customers > Customer Center.
2. Right-click the customer and select Edit Customer:Job.
3. Open the Sales Tax Settings tab.
4. In Tax Code, choose the customer's code, such as a non-taxable code for a customer your advisor says is exempt.
5. In Tax Item, choose the sales tax item or group to charge this customer.
6. For a reseller, enter their certificate number in Resale No.
7. Select OK.

## Step 6: Check tax on your sales forms

Invoices and other sales forms show three tax settings, all filled in from your setup.

- The Tax column on each line shows the item's tax code.
- The tax item or group, with its rate, comes from the customer.
- Customer Tax Code shows whether the customer is taxable.

QuickBooks adds up the taxable lines and multiplies the total by the rate of the tax item or group. To treat one sale differently, change any of the three on that form. Only that sale changes; the item and customer setup stay as they are.

## Step 7: Review what you owe

- Reports > Vendors & Payables > Sales Tax Liability shows taxable and nontaxable sales, the rate, tax collected and sales tax payable for each agency.
- Reports > Vendors & Payables > Sales Tax Revenue Summary shows sales by tax agency and tax code.

Sales tax payable subtracts payments made in the report's date range, so it won't always match tax collected. Use these reports with your advisor when you prepare each return.

## Step 8: Pay sales tax

1. Go to Vendors > Sales Tax > Pay Sales Tax.
2. In Pay From Account, choose the bank account. Only bank accounts are listed.
3. Check the Show sales tax due through date and the Starting Check No.
4. Select Pay All Tax to pay everything listed, or enter amounts in Amt Paid for a partial payment.
5. Select Adjust if you need to record an adjustment, such as a credit or fine.
6. Select To be printed if you'll print the checks later, then select OK.

Don't pay sales tax with Write Checks or Pay Bills. Intuit says that causes errors in your books and your sales tax reports.

To raise or lower what you owe, go to Vendors > Sales Tax > Adjust Sales Tax Due. Intuit's examples include an agency credit, a fine and rounding differences. Intuit says not to use Sales Tax Payable as the adjustment account. Ask your accountant which account to use.

## Things that trip people up

- An inactive sales tax item stays in its group. Open the group from Lists > Item List and remove the item so the active ones apply correctly.
- QuickBooks won't delete a sales tax item still assigned to a customer. Run Reports > List > Customer Contact List, add the Tax Item column and sort by it to find them.
- Intuit says QuickBooks doesn't track sales tax on bills, checks or purchase orders automatically. Tax on purchases is calculated and entered by hand.
- Some places require each rate to show separately on the invoice. Intuit's method uses a 0% default tax item, a Subtotal item and a separate line for each tax item.
- To check which customers are taxable, run Reports > Customers & Receivables > Customer Phone List. Customize it to add Sales Tax Code and filter for taxable codes.

## Where QuickBooks Desktop leaves the work to you

- You enter every rate yourself. When a rate changes, someone has to edit each sales tax item that uses it.
- Each customer's tax code, tax item and resale number are set by hand on the Sales Tax Settings tab.
- Tax on purchases has to be worked out and entered by hand.
- The Sales Tax Liability report gives you figures for your sales tax forms. Filling out the forms is still up to you.

A sales tax item prints as its own line only if it has a Description, so check your invoice layout too. See how to [customize an invoice template](https://logistify.ai/guides/quickbooks-desktop/customize-invoice-template/).

## Frequently Asked Questions

### What's the difference between a sales tax item and a sales tax group?

A sales tax item holds one rate and the agency you pay it to. A group combines several items so they show as one line, while QuickBooks still tracks each one.

### How do I make a customer tax-exempt in QuickBooks Desktop?

Open the customer, go to the Sales Tax Settings tab, choose a non-taxable Tax Code and enter the Resale No. if they have one. Your tax advisor decides who qualifies.

### Can I pay sales tax with Write Checks?

No. Use Vendors > Sales Tax > Pay Sales Tax, because Intuit says Write Checks or Pay Bills causes errors in your sales tax reports.

### Where do I change a sales tax rate?

Go to Lists > Item List, right-click the sales tax item and select Edit Item. Confirm the new rate with your tax agency or advisor first.

## Sources

- [Intuit: Set up sales tax in QuickBooks Desktop](https://quickbooks.intuit.com/learn-support/en-us/help-article/set-sales-taxes/set-sales-tax-quickbooks-desktop/L4Uh8IMw2_US_en_US)
- [Intuit: Collect sales tax](https://quickbooks.intuit.com/learn-support/en-us/help-article/sales-taxes/collect-sales-tax/L2TqBToTG_US_en_US)
- [Intuit: Review sales tax reports in QuickBooks](https://quickbooks.intuit.com/learn-support/en-us/help-article/run-reports/review-sales-tax-reports/L3sJq330r_US_en_US)
- [Intuit: Pay sales tax in QuickBooks](https://quickbooks.intuit.com/learn-support/en-us/help-article/pay-sales-taxes/pay-sales-tax/L6rrxxRES_US_en_US)
- [Intuit: Process sales tax adjustment in QuickBooks Desktop](https://quickbooks.intuit.com/learn-support/en-us/help-article/sales-taxes/process-sales-tax-adjustment/L46isBM3Z_US_en_US)
- [Intuit: How to resolve common sales tax issues](https://quickbooks.intuit.com/learn-support/en-us/help-article/sales-taxes/resolve-common-sales-tax-issues/L0flOKYhy_US_en_US)
- [Intuit: Show multiple sales tax items on an invoice](https://quickbooks.intuit.com/learn-support/en-us/help-article/sales-taxes/show-multiple-sales-tax-items-invoice/L4Kyh3YLW_US_en_US)
- [Intuit: Track sales tax on purchases from vendors](https://quickbooks.intuit.com/learn-support/en-us/help-article/purchase-orders/track-sales-tax-purchases-vendors/L5juH5Nc5_US_en_US)
- [Intuit: Customize customer, job, and sales reports in QuickBooks Desktop](https://quickbooks.intuit.com/learn-support/en-us/help-article/report-management/customize-customer-job-sales-reports-quickbooks/L21F4L9MM_US_en_US)