Change Sales Tax Rate in QuickBooks Online 

Knowing how to change the sales tax rate in QuickBooks Online is essential for your business growth and tax compliance. This would help you prevent calculation errors and keep your business out of penalties. The QuickBooks sales tax calculator relies on correct tax settings, so even a small mistake can affect your totals.

Understanding how to change the sales tax rate ensures your sales tax stays accurate across all transactions. 

What happens when you edit a tax rate in QuickBooks Online?

Before you update a tax rate, keep these points in mind:

• Any changes you make will apply going forward. Past transactions will not be updated.
• If you create a new transaction with an older date, QuickBooks will still apply the new tax rate. Once a rate is edited, the old rate can’t be used again.
• For recurring templates, any new transactions created after the change will use the updated rate. Transactions that were already created with the old rate will stay the same. You may need to manually update recurring templates if required.
• If you have transactions using both the old and new rates within the same time period, your reports will show data for both rates.

How to edit a tax rate in QuickBooks Online

Follow these steps to update a tax rate:

1. Use the provided link to open tax settings in QuickBooks Online.
2. Next to Tax, select the ▼ dropdown and choose the tax agency you want to edit.
3. Select Edit [agency name], then choose Edit rates.
4. In the tax rate table, find the rate you want to change and select Edit from the Action column.

Note: QuickBooks Online default tax rates cannot be edited.

5. In the Edit tax rate window, update the rate. You can also rename the tax rate if needed.
6. Choose an Effective date if required. This date determines when the new rate takes effect, then select Save.
7. Use the On/Off toggle to activate or deactivate the tax rate.

Common error when editing tax rates

You may see this error message when editing a tax rate that’s being used in a recurring transaction set to auto-charge:

“Error: To process this credit card transaction, please enter a credit card number. (code: INDIRECTTAX-15811)”

To fix this issue:

1. Create a new tax rate.
2. Edit all affected recurring transactions and switch them to the new tax rate.
3. Once all recurring transactions are updated, go back to Sales Tax settings and make the old tax rate inactive.

How to edit a tax agency name

You can change a tax agency’s name from the Edit tax settings page when using manual tax. However, sales forms will continue to show the original name. If you want a different name to appear on sales forms, you will need to create a new tax agency.

To edit a tax agency name, follow these steps:

1. Use the provided link to open tax settings in QuickBooks Online.
2. Next to Tax, select the ▼ dropdown and choose the tax agency you want to edit.

Note: Only custom tax agencies you created can be edited.

3. Select Edit [agency name], then choose Edit settings.
4. Update the Tax agency name and select Save.

Conclusion

Knowing how to change the sales tax rate in QuickBooks Online helps you stay in control of your tax records. While updating tax rates does not affect past transactions, it plays an important role in future sales and reporting accuracy. Whether you change the sales tax rate in QuickBooks Online or update settings, taking the time to review your tax setup helps the QuickBooks sales tax calculator work correctly. 

For more information, reach out to our QuickBooks Support Net team at (866)500-0076. 

Frequently Asked Questions

Why do I need to update tax rates in QuickBooks Online?

Tax rates change over time, and using an outdated rate can cause incorrect tax calculations. Updating tax rates ensures you are collecting the right amount and staying compliant with tax agencies.

How do I change the tax rate in QuickBooks Online?

To change the sales tax rate in QuickBooks Online, you need to go to Sales Tax settings, select the tax agency, and edit the rate from the tax rate table. Default tax rates provided by QuickBooks cannot be edited, but you can update custom sales tax rates if needed. 

Will editing a tax rate change my past transactions?

When you edit a tax rate, QuickBooks Online applies the change only to future transactions. Any past transactions will keep the original tax rate.

What happens if I create a transaction with an older date after editing a tax rate?

QuickBooks Online will still use the new tax rate, even if the transaction date is in the past. Once a tax rate is edited, the earlier rate can’t be used again.

How do tax rate changes affect recurring transactions?

New transactions created from a recurring template will use the updated tax rate. However, transactions that were already created with the old rate will not change. You may need to edit the recurring template to apply the new rate.

Can I edit QuickBooks Online default tax rates?

Default tax rates provided by QuickBooks Online cannot be edited. If you need a different rate, you’ll need to create a custom tax rate.

Why do my reports show two different tax rates for the same period?

If transactions exist with both the old and new tax rates within the same reporting period, QuickBooks will show both rates in your reports. This is normal behavior.

What does the INDIRECTTAX-15811 error mean when editing a tax rate?

This error usually appears when the tax rate is linked to a recurring transaction set up for auto-charge. QuickBooks doesn’t allow edits in this situation.

How do I fix the error when a tax rate is used in an auto-charge recurring transaction?

Create a new tax rate, update all recurring transactions to use the new rate, and then make the old tax rate inactive from sales tax settings.

Can I turn a tax rate on or off instead of deleting it?

QuickBooks Online allows you to make a tax rate active or inactive. This is useful if the rate is no longer needed but was used on past transactions.

Can I edit the name of a tax agency in QuickBooks Online?

You can edit the name of a custom tax agency using manual tax settings. However, your sales forms will still display the original name. To show a different name on sales forms, you’ll need to create a new tax agency.