Reference · 35 states · verified

The one tax rule in each state that most often trips up a small business’s books.

Hawaii’s 4.712% pass-on ceiling. Ohio’s 20-day rule. Louisiana’s 63 parish systems. St. Louis’s payroll expense tax that no payslip ever shows. Milwaukee’s city-limit rate line. One entry per state, drawn from the state pillar that verified it against the revenue authority, with what the rule does to a QuickBooks file and who to confirm it with. Thirty-five states so far; the other fifteen are named, not padded. Independent firm — we keep the books, your CPA files.

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By the Certified QuickBooks ProAdvisor team

Each entry sourced from the state’s own pillar page, verified against the state revenue authority · reviewed periodically

TL;DR

Every state has at least one rule a business arriving from elsewhere gets wrong by default. Eight states tax the seller on gross receipts rather than the customer on a sale (Hawaii’s GET, Washington’s B&O, Delaware, New Mexico, Nevada, Arizona, plus Virginia’s and West Virginia’s local versions) — owed in a loss year and reaching services. Nine have a local income tax generic payroll never configures (Indiana’s 92 counties, Ohio’s 649 municipalities, Pennsylvania’s PSD codes, Michigan’s 24 cities, Kentucky, Maryland, Missouri, New York City, Alabama). Six draw the sales-tax rate at a parish, city or county line (Louisiana, Colorado, Georgia, Minnesota, Wisconsin, Alabama). Six owe something even at a loss (California’s $800, Illinois’ Replacement Tax, Texas’s margin tax, Tennessee, Massachusetts, North Carolina). Each entry below names the rule, what it changes in QuickBooks, and the authority that sets it.

Maintained by the Certified QuickBooks ProAdvisor team at TechBrot Inc., an independent U.S. bookkeeping and advisory firm — not affiliated with Intuit Inc. or any state agency. General information verified as of the review date, not tax advice; TechBrot keeps the books and coordinates with your CPA, who files.

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State tax quirks, in five questions.

What is a “state tax quirk” for a small business?

A rule in one state that a business arriving from another state, or from a generic checklist, will get wrong by default: a tax owed by the seller rather than collected from the customer (Hawaii, Delaware, New Mexico, Washington), a local income tax withheld by residence or work location (Indiana, Ohio, Pennsylvania, Maryland), a rate line drawn at a city limit (Milwaukee, Philadelphia), or a tax owed in a loss year (Texas margin, Kentucky LLET, California’s $800). This page lists one such rule per state, verified against that state’s revenue authority on the state’s own pillar page.

Which states tax the seller on gross receipts instead of charging a sales tax?

Delaware (gross receipts tax, 0.0945%–1.9914% by activity), Hawaii (General Excise Tax, 4.0% retail and services, 0.5% wholesale), New Mexico (gross receipts tax, rate by location), Washington (Business & Occupation tax, 0.471%–1.75%+ by classification, no deductions), Nevada (Commerce Tax on gross revenue in place of corporate income tax), and Arizona’s Transaction Privilege Tax on the seller by classification. Virginia’s BPOL and West Virginia’s municipal B&O are local gross-receipts taxes. In all of them the tax is the seller’s own cost, owed whether or not it was passed on.

Which states have local income taxes that payroll has to withhold?

Indiana (all 92 counties, by county of residence on January 1), Kentucky (city and county occupational taxes by work location), Maryland (23 counties and Baltimore City, by residence), Michigan (24 cities, by work location; Detroit 2.4%/1.2%), Missouri (Kansas City and St. Louis 1% earnings taxes, plus St. Louis’s 0.5% employer payroll expense tax), New York City (the 4% UBT on unincorporated businesses), Ohio (649 municipalities by work location and 199 school districts by residence, with a 20-day occasional-entrant rule), and Pennsylvania (Act 32 earned income tax by PSD code under the higher-of rule, plus the Local Services Tax). Alabama and Oregon (Portland area) have locally set taxes too.

What does a state quirk change in a QuickBooks file?

Usually one of four things: the sales-tax items (per parish, per home-rule city, per delivery address, or a partial-taxability item for SaaS); the payroll build (a county, city or PSD code per employee, an employer-side accrual nobody sees on a payslip); the chart of accounts (revenue split by activity or classification so a gross-receipts figure exists); or a tracked figure the return needs that a P&L does not produce (net worth, margin, California-source income, a fixed-asset schedule). Each entry on this page names which.

Does TechBrot file these state taxes?

No. TechBrot is an independent U.S. bookkeeping and advisory firm and a Certified QuickBooks ProAdvisor practice: we keep the books so every figure a state return needs exists and reconciles, and your CPA or EA files the return. This page is general information verified against each state’s revenue authority as of the review date, not tax advice; confirm any figure with the authority named before relying on it.

§How to read this

One rule per state, and where it came from.

Each state below gets one entry: the rule, what it does to a QuickBooks file, and the authority that sets it. The rule is the one that, in our files, most often separates a business that set up in that state from one that arrived with a checklist written somewhere else. It is not the only rule in the state — the linked pillar carries the full stack — but it is the one to check first.

Every figure is lifted from that state’s pillar page, which was verified against the state revenue authority when it shipped and is reviewed periodically. Where a pillar prints no number on purpose — New Mexico’s gross receipts rate, Alabama’s municipal occupational taxes, West Virginia’s municipal B&O — this page prints none either and says why: a rate we cannot verify does not go on the site, even when leaving it out costs specificity.

Thirty-five states are covered. The fifteen that are not are named at the end, and will be added as their pillars are researched and published — not before.

§The 35 states

Jump to a state.

Alphabetical. Each link lands on the state’s entry below; each entry links to the full pillar.

Alabama — Local government charges more sales tax than the state does
Alaska — No state sales tax — which is not the same as no sales tax
Arizona — The Transaction Privilege Tax is on the seller, by classification — and contractors are taxed on 65% of receipts
California — $800 a year even at a loss — plus an LLC fee on gross receipts above $250,000
Colorado — Seventy-plus home-rule cities collect their own sales tax — and a per-delivery fee on retail
Connecticut — One sales-tax rate everywhere — and a corporate rate that makes the close matter
Delaware — No sales tax — a gross receipts tax on the seller stands in its place
Florida — Sales tax reaches services most states exempt — and the commercial-rent tax is gone since October 2025
Georgia — A stack of 1% local-option taxes that changes quarterly — and a net-worth tax on top of income tax
Hawaii — The GET is owed by the seller on gross income — and the visible pass-on ceiling is 4.712%, not 4.5%
Illinois — Pass-throughs owe an entity-level Replacement Tax — and Chicago taxes SaaS at 15% when the state does not
Indiana — Every county levies its own income tax, fixed by where the employee lived on January 1
Kentucky — An entity tax owed in a loss year, and city and county occupational taxes generic payroll misses
Louisiana — Sixty-three parish sales-tax systems, and the highest combined rate in the country
Maryland — A county “piggyback” income tax withheld by residence — and a 3% sales tax on business-use SaaS since July 2025
Massachusetts — A 4% surtax above an indexed threshold, and a corporate excise with two measures and a floor
Michigan — Twenty-four cities levy their own income tax, withheld by work location
Minnesota — 6.875%, not 6.88% — and a full extra point across the seven-county metro since October 2023
Missouri — St. Louis levies an earnings tax on the employee and a payroll expense tax on the employer — and the city sits in no county
Nevada — No corporate income tax — a Commerce Tax on gross revenue, by business category, instead
New Hampshire — No sales tax and no individual income tax — business profit is taxed at 7.50% instead
New Jersey — Two different wage bases on one payroll — and a half-rate sales tax in enterprise zones
New Mexico — A gross receipts tax on the seller that reaches services — and no rate printed, on purpose
New York — New York City taxes unincorporated businesses at 4% on net income — on top of everything else
North Carolina — The corporate income tax is being phased out to zero by 2030 — the franchise tax is not
Ohio — 649 municipal income taxes withheld by work location, a 20-day rule, and a gross-receipts tax instead of corporate income tax
Oregon — No sales tax — but two entity-level taxes on two different measures, and local income taxes around Portland
Pennsylvania — Local earned-income tax by six-digit PSD code under a “higher-of” rule — plus a flat Local Services Tax
South Dakota — The state that wrote the economic-nexus rule — and then repealed its own transaction count
Tennessee — No income tax on wages — but a franchise-and-excise tax on entities and a gross-receipts business tax once you pass $100,000 in a jurisdiction
Texas — A margin tax that is not an income tax, SaaS taxed at 80%, and origin-based sourcing
Virginia — A local license tax on gross receipts, one per jurisdiction — and a sales-tax rate that varies by region
Washington — No income tax at all — a Business & Occupation tax on gross receipts with no deductions, plus city B&O on top
West Virginia — Municipal B&O on gross receipts, by activity, with no single figure to quote — and a city cannot simply have that and a sales tax too
Wisconsin — 7.9% inside the City of Milwaukee, 5.9% in the rest of the county — a line drawn at the city limits

§State by state

The quirk, the QuickBooks consequence, the authority.

Alabama

Local government charges more sales tax than the state does

Alabama’s state sales-tax rate is 4.00% — among the lowest in the country — and local jurisdictions add an average of 5.46% on top, for a combined average of 9.46%. The jurisdiction is more than half the liability, so an approximated rate is not a rounding error. Some municipalities also levy an occupational tax on wages that follows where the employee physically works; which ones, and at what rate, is set locally and changes, so the pillar prints no figure.

In QuickBooks: Sales-tax items per jurisdiction actually sold into, not one blended rate; and a payroll build that checks each employee’s work location for a municipal occupational tax rather than stopping at state withholding.

Authority: Alabama Department of Revenue; each municipality for occupational tax · Alabama pillar → · Sales-tax compliance →

Alaska

No state sales tax — which is not the same as no sales tax

Alaska is the only state where sales tax is entirely a local matter: municipalities and boroughs set their own rates, draw their own boundaries and write their own exemptions, averaging 1.82% statewide. Because there is no state authority to collect for them, the local governments created one — the Alaska Remote Sellers Sales Tax Commission (ARSSTC, 2019) gives remote sellers a single place to register and remit.

In QuickBooks: A business that reads “Alaska has no sales tax” and configures nothing is wrong in every jurisdiction that levies one. Build the items per borough or city sold into; remote sellers reconcile to the ARSSTC return.

Authority: ARSSTC and each municipality or borough · Alaska pillar → · Sales-tax compliance →

Arizona

The Transaction Privilege Tax is on the seller, by classification — and contractors are taxed on 65% of receipts

Arizona has no sales tax in the ordinary sense. The TPT is a tax on the seller’s privilege of doing business, levied by business classification, at a 5.6% state rate plus county and city layers. For construction, the prime-contracting classification taxes 65% of gross receipts (the other 35% is a standard materials deduction), and the prime contractor owes it, not the subs.

In QuickBooks: Track TPT by classification, not as one sales-tax item; for contractors, a job structure that separates prime-contracting receipts from MRRA (maintenance, repair, replacement, alteration) work, which is taxed differently.

Authority: Arizona Department of Revenue (ADOR) · Arizona pillar → · Sales-tax compliance →

California

$800 a year even at a loss — plus an LLC fee on gross receipts above $250,000

Every corporation and LLC incorporated, registered, or doing business in California owes the Franchise Tax Board a minimum $800 a year, even while inactive or losing money (newly formed corporations are exempt in their first year). On top of that, once an LLC’s California-source income passes $250,000 a tiered gross-receipts fee applies — measured on receipts, not profit, so a high-revenue, low-margin LLC owes it in a thin year.

In QuickBooks: Accrue the $800 so it never surprises the books, and track California-source income separately so the LLC fee tier is predictable rather than discovered on the return.

Authority: California Franchise Tax Board (FTB); CDTFA for sales and use tax · California pillar → · Monthly bookkeeping →

Colorado

Seventy-plus home-rule cities collect their own sales tax — and a per-delivery fee on retail

Colorado is the most fragmented sales-tax system in the country: about 70+ home-rule cities (Denver, Colorado Springs, Aurora, Boulder, Fort Collins, Lakewood and more) self-collect, with their own rules, returns and registration separate from the state. Separately, a Retail Delivery Fee — $0.28 per delivery for July 2025–June 2026, indexed each July — applies to each retail sale delivered by motor vehicle that includes taxable tangible property; qualified small and new businesses are exempt.

In QuickBooks: Taxable sales tracked by jurisdiction so the state return and each home-rule city return reconcile to the same books; a line for the delivery fee on qualifying deliveries.

Authority: Colorado Department of Revenue and each home-rule city · Colorado pillar → · Sales-tax compliance →

Connecticut

One sales-tax rate everywhere — and a corporate rate that makes the close matter

Connecticut charges 6.35% statewide with no local add-on (the average local rate is 0.00%), so one sales-tax item applies to every customer in the state. What the state does lean on is corporate income at 8.25%, among the higher state rates — which is where the money turns on bookkeeping quality rather than configuration.

In QuickBooks: Rate management is trivial; the work is reconciliation (collected = recorded = remitted) and cut-off and accruals, because at 8.25% a cost in the wrong period is a real number.

Authority: Connecticut Department of Revenue Services · Connecticut pillar → · Monthly bookkeeping →

Delaware

No sales tax — a gross receipts tax on the seller stands in its place

Delaware imposes no state or local sales tax. Instead it levies a gross receipts tax on the seller’s total receipts, not collected from the customer, at 0.0945%–1.9914% by business activity after a monthly or quarterly exclusion, filed monthly or quarterly. Separately, the City of Wilmington levies a 1.25% wage tax on residents and non-residents who work in the city, plus a 1.25% net-profits tax on sole proprietors and partnerships operating there.

In QuickBooks: Receipts tracked by activity so the right rate and exclusion apply; nothing to collect from customers. Payroll and owner-comp set up for the Wilmington wage tax where staff work in the city.

Authority: Delaware Division of Revenue; City of Wilmington · Delaware pillar → · Monthly bookkeeping →

Florida

Sales tax reaches services most states exempt — and the commercial-rent tax is gone since October 2025

Florida taxes a number of services other states leave alone — commercial cleaning, nonresidential pest control, certain repairs to tangible property, detective and security services, commercial laundry — so owners who assume “services are exempt” under-collect. Florida was also the only state to charge sales tax on commercial real-property leases, and repealed it effective October 1, 2025; rent for earlier periods stays taxable and overpayments have to be claimed through the DOR. A county-level Tangible Personal Property return (DR-405) on equipment and fixtures is filed with the county property appraiser, not the DOR, and is the Florida filing most often missed.

In QuickBooks: Taxable versus exempt flagged per service line; lease invoicing and tax items updated to stop charging tax on commercial rent; and a maintained fixed-asset schedule so the DR-405 is a report, not a reconstruction.

Authority: Florida Department of Revenue; county property appraisers for the DR-405 · Florida pillar → · Sales-tax compliance →

Georgia

A stack of 1% local-option taxes that changes quarterly — and a net-worth tax on top of income tax

Georgia charges 4% at state level plus county local-option add-ons — LOST, SPLOST, ELOST/ESPLOST, TSPLOST, and Atlanta’s MOST, each 1% — so the combined rate runs roughly 7–8% by jurisdiction and changes quarterly. Separately from income tax, a corporate net worth tax applies: $0 at net worth of $100,000 or less (you still file), graduated up to a $5,000 maximum above $22 million, filed with the corporate return.

In QuickBooks: The right combined rate by location, re-checked each quarter; equity and the balance sheet kept net-worth-tax-ready rather than rebuilt at filing.

Authority: Georgia Department of Revenue · Georgia pillar → · Sales-tax compliance →

Hawaii

The GET is owed by the seller on gross income — and the visible pass-on ceiling is 4.712%, not 4.5%

Hawaii levies no sales tax. The General Excise Tax is charged to the seller on gross income from doing business — 4.0% on retailing, services and rentals, 0.5% on wholesaling and manufacturing — plus a county surcharge of up to 0.5% that four of the five counties levy. Because the GET is owed on the entire gross income including any GET visibly passed on, recovering a 4.5% liability requires charging 4.5 ÷ 95.5 = 4.712% (4.166% where no surcharge applies); consumer-protection law forbids visibly collecting more than is owed. Services are in scope, which is the mainland assumption that costs the most.

In QuickBooks: GET is the seller’s own cost of trading, not customer money in a liability account; wholesale at 0.5% has to be provable per customer; the pass-on item is 4.712%, and a service business owes GET on its fees.

Authority: Hawaii Department of Taxation · Hawaii pillar → · Multi-state and GET compliance →

Illinois

Pass-throughs owe an entity-level Replacement Tax — and Chicago taxes SaaS at 15% when the state does not

The Personal Property Replacement Tax is an Illinois entity-level tax on net income: C-corporations pay 2.5%, and S-corporations, partnerships and trusts pay 1.5% even though their income flows to owners. Separately, the City of Chicago’s Lease Transaction Tax on leases of personal property — including SaaS and cloud services used in Chicago — rose to 15% on January 1, 2026; Illinois does not tax SaaS at state level, but Chicago does.

In QuickBooks: Illinois net income tracked cleanly so the PPRT is supportable; for providers with Chicago customers, the lease tax collected and tracked separately from sales tax.

Authority: Illinois Department of Revenue (IDOR); City of Chicago Department of Finance · Illinois pillar → · Monthly bookkeeping →

Indiana

Every county levies its own income tax, fixed by where the employee lived on January 1

All 92 Indiana counties levy a local income tax on top of the flat state rate, each at its own rate, and the rate that applies is set by the employee’s county of residence on January 1 — the same rate for residents and non-residents, certified on Form WH-4. A 30-day safe harbor (IC 6-3-2-27.5, from 2024) exempts a non-resident who works 30 days or fewer in Indiana in the year. Sales tax, by contrast, is a flat 7% with no local add-ons.

In QuickBooks: A county code per employee in payroll, re-checked every January and at every hire; the county return drifts from the withholding the moment a code is guessed.

Authority: Indiana Department of Revenue (county rate list) · Indiana pillar → · Payroll management →

Kentucky

An entity tax owed in a loss year, and city and county occupational taxes generic payroll misses

The Limited Liability Entity Tax applies to every entity with limited liability — corporations, LLCs, S-corporations, limited partnerships — as a gross-receipts-based alternative minimum, owed in a year with no profit, with a $175 minimum. Kentucky is also one of a small number of states taxing income at city and county level through occupational license taxes on wages, each district administering its own, following where the work is physically performed; the same districts commonly levy net profits taxes on business earnings.

In QuickBooks: Gross receipts as a reportable figure the file produces on its own; and a payroll build that maps each employee to the occupational-tax district where they work rather than stopping at state withholding.

Authority: Kentucky Department of Revenue; each occupational-tax district · Kentucky pillar → · Payroll management →

Louisiana

Sixty-three parish sales-tax systems, and the highest combined rate in the country

Louisiana does not run one sales tax. Alongside the 5.00% state levy sit 63 parish-level systems, historically each with its own collector, return and filing requirements; local rates average 5.13%, for a combined average of 10.13% — the highest of any state, and one where local government charges more than the state. From February 2026 state and parish returns can be filed through the centralized Parish E-File portal, and remote sellers above $100,000 in annual sales register with the Louisiana Sales and Use Tax Commission for Remote Sellers for a single return.

In QuickBooks: Sales-tax items built per parish sold into from the outset — retrofitting parish detail onto a year of transactions coded to one blanket rate is a rebuild, not an adjustment.

Authority: Louisiana Department of Revenue; parish collectors; the Remote Sellers Commission · Louisiana pillar → · Sales-tax compliance →

Maryland

A county “piggyback” income tax withheld by residence — and a 3% sales tax on business-use SaaS since July 2025

Every one of Maryland’s 23 counties and Baltimore City levies a local income tax on top of the state tax — currently about 2.25% to 3.20%, some now graduated — collected on the state return and withheld by the employee’s county of residence (Form MW507). Sales tax is 6% with no general local add-on, but effective July 1, 2025 a 3% rate applies to data and IT services and software publishing, including business-use SaaS (consumer SaaS stays at 6%).

In QuickBooks: County of residence per employee in payroll; sales-tax items that distinguish the 3% IT/data rate from the 6% rate.

Authority: Comptroller of Maryland · Maryland pillar → · Payroll management →

Massachusetts

A 4% surtax above an indexed threshold, and a corporate excise with two measures and a floor

On top of the flat 5% income tax, the voter-enacted 4% surtax applies to the portion of taxable income above an inflation-indexed threshold — $1,083,150 for 2025 and $1,107,750 for 2026 — so income above it is taxed at 9%. A C-corporation’s corporate excise is the greater of an 8% net-income measure plus a $2.60-per-$1,000 property-or-net-worth measure, with a $456 minimum. Sales tax is a flat 6.25% with no local add-on.

In QuickBooks: Clean owner-comp, distribution and timing records near the surtax threshold; books that support both excise measures so the computation is a report, not an argument.

Authority: Massachusetts Department of Revenue · Massachusetts pillar → · Monthly bookkeeping →

Michigan

Twenty-four cities levy their own income tax, withheld by work location

Under the City Income Tax Act, 24 Michigan cities levy an income tax generally withheld by the employer for the city where the work is performed. Detroit is the largest at 2.4% for residents and 1.2% for non-residents, administered by the Michigan Department of Treasury; a non-resident is subject to Detroit withholding when Detroit is the predominant place of employment (25% or more of compensation). Grand Rapids and Saginaw levy 1.5%/0.75%. Sales tax is a flat 6% that no city or county may add to.

In QuickBooks: Work-location city withholding configured per employee, with the predominant-place test applied for non-residents.

Authority: Michigan Department of Treasury and each city · Michigan pillar → · Payroll management →

Minnesota

6.875%, not 6.88% — and a full extra point across the seven-county metro since October 2023

Minnesota’s state sales-tax rate is 6.875%; rate tables routinely round it to 6.88%, and across a year of transactions the liability account stops tying to the return. From October 1, 2023 two metro-wide taxes — 0.75% for transportation and 0.25% for housing — apply to retail sales made into Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington counties, on a destination basis, by county line rather than city.

In QuickBooks: The statutory rate to three decimals; a delivery-address-driven metro overlay that a Duluth or Rochester business selling into Hennepin County still charges.

Authority: Minnesota Department of Revenue · Minnesota pillar → · Sales-tax compliance →

Missouri

St. Louis levies an earnings tax on the employee and a payroll expense tax on the employer — and the city sits in no county

The City of St. Louis levies a 1% earnings tax, withheld from residents and from non-residents who work in the city, and a separate 0.5% payroll expense tax paid by the employer on wages earned in the city — different taxes with different payers, filed together quarterly. Kansas City levies a 1% earnings tax of its own. St. Louis City is an independent city inside no county at all: an address in St. Louis County is not in the city and carries neither tax.

In QuickBooks: The employer-side payroll expense tax has to be accrued, because no payslip line ever prompts it; work-location apportionment for non-residents; city-versus-county address resolution at the customer and employee record.

Authority: City of St. Louis Collector of Revenue; Kansas City; Missouri Department of Revenue · Missouri pillar → · Payroll management →

Nevada

No corporate income tax — a Commerce Tax on gross revenue, by business category, instead

Nevada levies no corporate income tax and no individual income tax. In place of the former sits the Commerce Tax, measured on gross revenue rather than profit, so it can fall due in a year the business makes nothing. The rate depends on the category of business, and the filing threshold changes — the pillar takes both from the Department of Taxation rather than quoting a second-hand figure.

In QuickBooks: Gross revenue as a figure the books produce and defend in its own right; revenue split by activity in the chart of accounts, because a single “Sales” account cannot answer the classification question.

Authority: Nevada Department of Taxation · Nevada pillar → · Monthly bookkeeping →

New Hampshire

No sales tax and no individual income tax — business profit is taxed at 7.50% instead

New Hampshire levies neither a sales tax nor an individual income tax, a combination very few states share: no sales-tax items, no rate table, no state withholding to configure for resident staff. What it does tax is business profit, at 7.50%, and all three neighbours — Massachusetts, Maine, Vermont — do levy an individual income tax, which is the defining payroll fact for the southern-tier Boston commute.

In QuickBooks: An engagement that concentrates on the close — cost in the right period and place — because there is no second state return providing a cross-check; and a payroll that handles staff living across the Massachusetts line.

Authority: New Hampshire Department of Revenue Administration · New Hampshire pillar → · Monthly bookkeeping →

New Jersey

Two different wage bases on one payroll — and a half-rate sales tax in enterprise zones

New Jersey funds unemployment, temporary disability, family leave and workforce programs through a stack of employer and employee contributions on two taxable wage bases for 2026: $44,800 for employer UI, TDI and WF (and employee UI and WF), and $171,100 for employee TDI and FLI. Sales tax is 6.625% with no general local add-on, but qualifying sales in an Urban Enterprise Zone and certain Salem County sales are taxed at half the rate, 3.3125%.

In QuickBooks: Both wage bases carried correctly — the place automated payroll most often slips — and sales-tax items that apply the half-rate by location.

Authority: New Jersey Division of Taxation; Department of Labor · New Jersey pillar → · Payroll management →

New Mexico

A gross receipts tax on the seller that reaches services — and no rate printed, on purpose

New Mexico levies no sales tax. Its gross receipts tax is charged to the seller on the privilege of doing business, owed whether or not it was passed on, owed on receipts rather than profit, and reaching many services a sales tax would never touch. The rate varies by location within the state, and because published sources for the statewide figure disagree with one another, the pillar states the mechanic and sends you to the Department’s own current schedule rather than print a number it cannot verify.

In QuickBooks: Gross receipts tax as the seller’s own cost of trading, not a customer liability; the rate by location from the Department’s schedule; and every service line in scope.

Authority: New Mexico Taxation and Revenue Department · New Mexico pillar → · Gross-receipts compliance →

New York

New York City taxes unincorporated businesses at 4% on net income — on top of everything else

The NYC Unincorporated Business Tax is a 4% city-level tax on the net income of sole proprietorships and partnerships doing business in the five boroughs, on top of state and federal taxes, and one of the highest-impact compliance items for freelancers, agencies and professional-services partnerships. Sales tax in the Metropolitan Commuter Transportation District carries an additional 0.375% MTA surcharge across NYC and Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk and Westchester counties.

In QuickBooks: NYC-sourced revenue tracked separately from non-NYC revenue for the UBT allocation; the correct rate by customer location — a flat NYC rate applied to Westchester customers is a common misconfiguration.

Authority: New York State Department of Taxation and Finance; NYC Department of Finance · New York pillar → · Monthly bookkeeping →

North Carolina

The corporate income tax is being phased out to zero by 2030 — the franchise tax is not

North Carolina is the only state eliminating its corporate income tax entirely: 2.00% for 2026, on a legislated path to zero by 2030. What survives is the franchise tax, a net-worth-style annual tax of $1.50 per $1,000 of the tax base with a $200 minimum and a $500 cap on the first $1,000,000 (holding companies capped at $150,000). Sales tax is 4.75% state plus a county rate of 2.00% or 2.25% and a 0.50% transit rate in four counties, so the combined rate runs 6.75% to 7.50%.

In QuickBooks: Equity and the balance sheet kept franchise-tax-ready; the right county-variable rate by location.

Authority: North Carolina Department of Revenue (NCDOR) · North Carolina pillar → · Monthly bookkeeping →

Ohio

649 municipal income taxes withheld by work location, a 20-day rule, and a gross-receipts tax instead of corporate income tax

Ohio cities and villages — 649 of them — levy an income tax generally withheld by the employer for the municipality where the work is performed, collected by RITA, CCA or the city itself; 199 school districts levy a separate, residence-based income tax. The occasional-entrant rule means no withholding for a city where an employee works 20 or fewer days in the year, and withholding after that — and RITA and CCA interpret it differently. There is no corporate income tax: the Commercial Activity Tax, a gross-receipts tax, applies above a $6 million exclusion for 2026 at 0.26%.

In QuickBooks: Work-location withholding per employee with a day-count that tracks the 20-day rule; residence-based school-district withholding as a distinct layer; gross receipts kept clean even below the CAT exclusion.

Authority: Ohio Department of Taxation; RITA; CCA; each municipality · Ohio pillar → · Payroll management →

Oregon

No sales tax — but two entity-level taxes on two different measures, and local income taxes around Portland

Oregon levies no state sales tax, so there are no sales-tax items to build. What makes it unusual is two entity-level taxes at once: corporate income tax at 7.60% measures profit, and the Corporate Activity Tax measures commercial activity, so it can fall due in a year with no profit in it. Locally administered income taxes apply in and around Portland, following where the work is physically performed, and rates and applicability are set locally and change.

In QuickBooks: A file that supports a profit figure and a commercial-activity figure at the same time; a payroll build checked per employee for the Portland-area local taxes at setup and on any change of work location.

Authority: Oregon Department of Revenue; Metro and Multnomah County for the local taxes · Oregon pillar → · Monthly bookkeeping →

Pennsylvania

Local earned-income tax by six-digit PSD code under a “higher-of” rule — plus a flat Local Services Tax

Act 32 consolidated local Earned Income Tax collection into county Tax Collection Districts; each employee’s resident and work-location municipalities are identified by six-digit PSD codes certified on a Residency Certification Form, and for a Pennsylvania resident the employer withholds at the higher of the resident rate or the non-resident rate where they work. A flat Local Services Tax of up to $52 a year applies where a municipality levies it, withheld pro-rata per pay period at the worksite. Sales tax is 6% statewide, 7% in Allegheny County and 8% in Philadelphia.

In QuickBooks: The right PSD code per employee, the higher-of comparison built in, the LST withheld and remitted with the EIT, and the sales-tax rate by where the sale is sourced.

Authority: Pennsylvania Department of Revenue; the Act 32 Tax Collection Districts · Pennsylvania pillar → · Payroll management →

South Dakota

The state that wrote the economic-nexus rule — and then repealed its own transaction count

South Dakota v. Wayfair (2018) is the case that established economic nexus nationally: a state may require a seller with no physical presence to collect its sales tax on sales volume alone. South Dakota’s own threshold is $100,000 in gross revenue in the previous or current calendar year; the 200-transaction count was repealed effective July 1, 2023, so a seller with 500 orders totalling $40,000 is now below the line. With no individual or corporate income tax at either level, sales tax is the state tax for most South Dakota businesses.

In QuickBooks: Sales by state tracked against each state’s own threshold — other states still count transactions — and a sales-tax build that treats the state and municipal layer (4.20% plus an average 1.91% local) as the whole state position.

Authority: South Dakota Department of Revenue · South Dakota pillar → · Sales-tax compliance →

Tennessee

No income tax on wages — but a franchise-and-excise tax on entities and a gross-receipts business tax once you pass $100,000 in a jurisdiction

Tennessee levies no individual income tax (the Hall tax on investment income was fully repealed in 2021). Entities pay the Franchise & Excise tax on one return: a 6.5% excise on net earnings plus a 0.25% franchise tax on net worth ($0.25 per $100, $100 minimum, net-worth-only since the 2024 property-measure repeal). Separately, a state and a city business tax on gross receipts applies once a business grosses $100,000 in a county or municipality. Sales tax is 7% state plus a local option of up to 2.75%.

In QuickBooks: Clean net-worth and net-earnings figures for the F&E return; gross receipts tracked by jurisdiction so the business-tax registrations and returns reconcile.

Authority: Tennessee Department of Revenue · Tennessee pillar → · Monthly bookkeeping →

Texas

A margin tax that is not an income tax, SaaS taxed at 80%, and origin-based sourcing

The franchise (margin) tax is a privilege tax on a business entity’s taxable margin — the lowest of 70% of total revenue, revenue minus cost of goods sold, revenue minus compensation (capped at $480,000 per person for 2026), or revenue minus $1,000,000. For 2026, entities at or below $2.65M annualized revenue owe $0 but still file an information report. Software-as-a-Service and data-processing services are taxable at 80% of the sales price. And Texas sources in-state sales by the seller’s location, not the buyer’s — unusual among large states.

In QuickBooks: COGS and compensation tracked cleanly so every margin method can be supported; a partial-taxability item for SaaS; and a sales-tax build that uses the seller’s address for in-state orders and the destination for remote sellers.

Authority: Texas Comptroller of Public Accounts · Texas pillar → · Sales-tax compliance →

Virginia

A local license tax on gross receipts, one per jurisdiction — and a sales-tax rate that varies by region

Virginia has no state business license; instead most cities and counties levy the Business, Professional & Occupational License (BPOL) tax on gross receipts, each setting its own rate by classification, and a business in several jurisdictions needs a separate BPOL in each. There is no local income tax. Sales tax is 5.3% in most of the state, 6.0% in Northern Virginia, Hampton Roads and the Richmond region, and 7.0% in the Historic Triangle, with groceries and essential personal hygiene at 1%.

In QuickBooks: Gross receipts tracked by location for the BPOL returns; the right regional sales-tax rate by delivery location.

Authority: Virginia Department of Taxation; each locality’s commissioner of the revenue for BPOL · Virginia pillar → · Sales-tax compliance →

Washington

No income tax at all — a Business & Occupation tax on gross receipts with no deductions, plus city B&O on top

Washington levies no individual and no corporate income tax. Its business tax is the B&O, a gross-receipts tax by classification with no deduction for labor, materials, rent or any other cost, so even a break-even business owes it: retailing 0.471%, wholesaling and manufacturing 0.484%, and services on a tiered rate starting at 1.5%. Cities such as Seattle, Tacoma, Bellevue and Everett levy their own local B&O on top, administered by the city. Sales tax is 6.5% state plus local, commonly 8.5–10.5% combined.

In QuickBooks: Gross receipts by B&O classification so the Combined Excise Tax Return reconciles; a second gross-receipts split by city where a local B&O applies.

Authority: Washington Department of Revenue; each city for local B&O · Washington pillar → · Sales-tax compliance →

West Virginia

Municipal B&O on gross receipts, by activity, with no single figure to quote — and a city cannot simply have that and a sales tax too

West Virginia municipalities may levy a Business & Occupation tax on businesses operating within city limits, measured on gross receipts with no deduction for the cost of doing business — owed on turnover in a loss-making year — at rates that vary by activity and from city to city, so the pillar prints none. A municipality imposing a B&O must either repeal it or obtain Municipal Home Rule Board permission to impose a municipal sales tax of up to 1%, so the local position can change. The state itself levies no gross receipts tax; sales tax is 6.00% with local rates averaging 0.60%.

In QuickBooks: Receipts split by activity and by municipality; a local tax position that is re-checked rather than assumed.

Authority: West Virginia Tax Division; each municipality · West Virginia pillar → · Sales-tax compliance →

Wisconsin

7.9% inside the City of Milwaukee, 5.9% in the rest of the county — a line drawn at the city limits

Seventy Wisconsin counties levy a 0.5% county sales tax on top of the 5.00% state rate, and that uniformity is what makes Wisconsin easy. Milwaukee County is the exception: from January 1, 2024 its county tax rose to 0.9% and the City of Milwaukee began levying its own 2% city sales tax, so the rate is 7.9% inside the city limits and 5.9% in the rest of the county. A customer in Wauwatosa or West Allis is in Milwaukee County but not in the city.

In QuickBooks: The delivery address captured at the customer record, because a file that resolves rates by county alone gets every Wauwatosa and West Allis sale wrong — and a single statewide rate under-collects two points on every city sale.

Authority: Wisconsin Department of Revenue · Wisconsin pillar → · Sales-tax compliance →

§Six patterns

Thirty-five quirks, six shapes.

Almost every entry above is one of these. Knowing the shape tells you what to look for in a state this page does not cover yet.

The tax is on the seller, not the customer

Arizona (TPT), Delaware, Hawaii (GET), Nevada (Commerce Tax), New Mexico, Virginia (BPOL), Washington (B&O) and West Virginia’s municipalities all measure a tax on the seller’s gross receipts or privilege of doing business. The bookkeeping consequence is the same everywhere: it is your own cost of trading, not customer money held in a liability account, it is owed in a loss year, and it usually reaches services a sales tax never would.

A local income tax generic payroll misses

Indiana (county, by January-1 residence), Kentucky (occupational, by work location), Maryland (county piggyback), Michigan (24 cities), Missouri (Kansas City and St. Louis), New York (NYC UBT), Ohio (649 municipalities plus 199 school districts) and Pennsylvania (Act 32 EIT by PSD code). In every one of these, the commonest defect is the same: payroll configured for state withholding and nothing below it, discovered a year later when a notice arrives.

Local government charges as much as, or more than, the state

Alabama, Colorado (70+ self-collecting cities), Georgia (a 1% stack that changes quarterly), Louisiana (63 parishes), Minnesota (the metro overlay), Wisconsin (the Milwaukee city line). The rate is decided by the delivery address, and it has to be captured at the customer record rather than inferred from the ZIP.

Something is owed even at a loss, or on a measure that is not profit

California’s $800 and LLC fee, Illinois’ Replacement Tax on pass-throughs, Massachusetts’ excise floor, North Carolina’s franchise tax that outlives the income tax, Tennessee’s franchise-and-excise and gross-receipts business tax, Texas’s margin tax. Each needs the books to produce a figure — net worth, gross receipts, margin — that a profit-and-loss built for another purpose does not.

No sales tax — and where the exposure moves to

Alaska (entirely local), New Hampshire, Oregon and South Dakota’s income-tax-free position. The absence of a home-state rate table gives no prompt to check the states next door: selling into a state that levies sales tax can create a registration and filing obligation on volume alone, which is the rule South Dakota itself wrote.

Services the owner assumed were exempt

Florida taxes commercial cleaning, pest control, certain repairs, security and commercial laundry; Hawaii and New Mexico reach all services through the GET and gross receipts tax; Maryland taxes business-use SaaS at 3%; Texas taxes SaaS at 80% of the price; Chicago taxes cloud services at 15% when Illinois does not. The correction is the same each time: taxable versus exempt flagged per service line, not per business.

§Not yet covered

Fifteen states this page does not cover yet.

Arkansas, Idaho, Iowa, Kansas, Maine, Mississippi, Montana, Nebraska, North Dakota, Oklahoma, Rhode Island, South Carolina, Utah, Vermont, Wyoming. Each will be added when its pillar has been researched and verified against the state’s revenue authority. We would rather list thirty-five entries we can stand behind than fifty with fifteen guessed. If you operate in one of these states, the nexus checker already carries its economic-nexus threshold, and a discovery call will look at the state’s rules against your file directly.

Questions about this reference.

Where do the facts on this page come from?

From TechBrot’s own state pillar pages — one per state under Find an Accountant — each of which was researched and verified against the state’s revenue authority when it was published, and is reviewed periodically. This page repackages the single most consequential rule from each; it introduces no figure the pillar does not carry. Where a pillar deliberately prints no rate (New Mexico’s gross receipts rate, Alabama’s municipal occupational taxes, West Virginia’s municipal B&O), this page prints none either, because a figure that cannot be verified does not go on the site.

Why are only 35 states listed?

Because only 35 have a published, verified pillar. The other fifteen — Arkansas, Idaho, Iowa, Kansas, Maine, Mississippi, Montana, Nebraska, North Dakota, Oklahoma, Rhode Island, South Carolina, Utah, Vermont and Wyoming — are listed by name at the end of the page and will be added as their pillars ship. We would rather publish 35 verified entries than 50 with 15 guessed.

How current are the figures?

Each entry reflects the state pillar as of this page’s review date, and several are recent by design: Louisiana’s franchise-tax repeal and Parish E-File from 2026, Illinois’ Chicago cloud-tax increase to 15% on January 1, 2026, Florida’s commercial-rent-tax repeal from October 1, 2025, Maryland’s 3% IT-services rate from July 1, 2025, Indiana’s 2.95% state rate for 2026. Rates and thresholds change on the states’ own schedules, so confirm the figure with the authority named in the entry before acting on it.

Which quirk costs arriving businesses the most?

In our files, two classes. The first is a gross-receipts or excise tax the owner did not know was a tax on them — a service business in Hawaii or New Mexico trading for a year in the belief that “there is no sales tax here,” correct about the sales tax and wrong about its liability. The second is a local income tax generic payroll never configured — an Ohio municipality, a Kentucky occupational district, a Pennsylvania PSD code — discovered a year later when a notice arrives and the employee has long since been paid.

Can I use this page to set up sales tax in QuickBooks?

Use it to know which questions to ask, not as the rate table. QuickBooks Online’s automated sales tax resolves rates by address, but it does not know whether you have nexus in a state, whether a service line is taxable there, whether a seller-side tax like the GET belongs in a liability account (it does not), or whether a partial-taxability rule like Texas’s 80% applies. Those are configuration decisions, and they are what the entries on this page point at. The free sales-tax nexus checker covers the threshold question for all fifty states.

Is TechBrot affiliated with Intuit or any state agency?

No. TechBrot Inc. is an independent Certified QuickBooks ProAdvisor firm. We hold active Intuit certifications and work inside QuickBooks, but TechBrot is not owned, employed, or operated by Intuit, and has no relationship with any state revenue authority beyond reading what they publish. QuickBooks and Intuit are registered trademarks of Intuit Inc.

Published: 2026-09-09Updated: 2026-09-09Reviewed: 2026-09-09 · Certified QuickBooks ProAdvisor

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