Setting Up and Troubleshooting: Sales Tax

If you are trying to create an invoice but sales tax is not being added to any invoice in QuickBooks, here are the steps you'll want to take to correct the issue:

QBO will always be the one to actually apply the Sales Tax. As of July 31st, 2025, sales tax will be determined by the QuickBooks Item each Scope of Work and Rate Mod is set to.

Go to Company > Other > Quoting and Scopes > Scopes of Work or Rate Mod tabs. Once inside the rate mod or scope of work, verify that the QuickBooks Item is the correct product/service from your QuickBooks account (see below).

In your QuickBooks account, you will also want to verify that these products/services have the appropriate tax setting. Go to Sales > Product and Services > Edit > Sales Tax Category and make sure the item is either set to taxed or not taxed.

Just Getting Started Setting Up Sales Tax?

Check out the video below for an overview of the Sales Tax setup!

In QuickBooks, Navigate to Taxes > Sales Tax > Sales tax settings .

" Default sales tax " needs to be set, and both "Mark all new customers taxable" and "Mark all new products and services taxable" needs to be checked.

Checking Who is Taxed

Once that is done, you can run the Taxable Customer Report in QuickBooks from the Taxes > Sales Tax page see below.

Any customer that is not marked taxable with a sales tax rate needs to be edited to reflect the correct sales tax setting.