# Sales tax: rates and the tax report

**Category:** [Accounting](https://help.totalctrl.app/hc/totalctrl/totalctrl-help-center/en-US/categories/accounting)
**Updated:** 2026-08-19

Define the tax rates you charge and TotalCtrl tracks exactly what you owe each jurisdiction.
## Create tax rates

- Go to *Accounting → Tax Rates*.
- Add a rate with a name (e.g. "CA Sales Tax"), a percentage, an optional region, and the liability account it posts to (defaults to Sales Tax Payable).
- Mark one as the default if you like.

## Apply tax

On an invoice or bill, pick a **Tax rate** from the dropdown — it applies that percentage to all line items. Collected tax credits the rate's liability account; reclaimable tax on bills debits it.
## The tax report

Open *Reports → Tax Report* and choose a filing period. It shows, per tax account: **collected** (on sales), **reclaimed** (on purchases), and the **net owed** to the jurisdiction.

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## Related Articles

- [Accounting overview](https://help.totalctrl.app/en-US/articles/accounting-overview-2)
- [Payroll: connect Gusto or record runs manually](https://help.totalctrl.app/en-US/articles/payroll)
- [Accounting overview](https://help.totalctrl.app/en-US/articles/accounting-overview-1)
- [Create and send an invoice](https://help.totalctrl.app/en-US/articles/create-an-invoice)
- [Creating and Sending Invoices](https://help.totalctrl.app/en-US/articles/creating-and-sending-invoices)

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