# QuickBooks Payroll Not Calculating Taxes? Here’s How to Fix It

QuickBooks Payroll is designed to automatically calculate federal, state, and local payroll taxes. However, many users report issues where QuickBooks payroll is not calculating taxes correctly—or not calculating them at all. This problem can lead to incorrect paychecks, compliance risks, and penalties if not resolved quickly.

In this guide, we’ll explain why [QuickBooks Payroll is not calculating taxes](https://www.accountspro.co/quickbooks/payroll-not-calculating-taxes.html) and provide step-by-step solutions to fix the issue.

## Why Is QuickBooks Payroll Not Calculating Taxes?

QuickBooks payroll tax calculation issues usually occur due to setup errors, outdated software, incorrect employee details, or subscription problems. Below are the most common causes.

**Common Reasons:**

1. Payroll tax setup is incomplete or incorrect
1. Employee tax information is missing or inaccurate
1. Payroll subscription is inactive or expired
1. [QuickBooks Desktop or Payroll is outdated](https://www.accountspro.co/blog/upgrade-older-version-to-quickbooks-2024/)
1. Incorrect pay schedule or payroll item setup
1. Corrupted company file or payroll data
1. Tax rates are disabled or set to zero

## How to Fix QuickBooks Payroll Not Calculating Taxes

Follow the troubleshooting steps below in order to identify and resolve the issue.

### 1. Verify Your Payroll Subscription Status

QuickBooks will not calculate taxes if your payroll subscription is inactive.

**Steps:**

1. Go to Employees > My Payroll Service > Account/Billing Information
1. Sign in to your Intuit account
1. Confirm your payroll service status is Active

If expired, [renew your subscription](https://www.accountspro.co/quickbooks/quickbooks-price-change.html) and restart QuickBooks.

### 2. Update QuickBooks Desktop and Payroll Tax Table

Outdated tax tables are one of the most common reasons for tax calculation errors.

**To update Payroll Tax Table:**

1. Go to Employees > Get Payroll Updates
2. Check Download Entire Update
3. Click Update

**To update QuickBooks Desktop:**

1. Go to Help > Update QuickBooks Desktop
1. Install all available updates and restart the software

### 3. Review Employee Tax Setup

If QuickBooks payroll is not calculating taxes for specific employees, their tax details may be incorrect.

**Check the following:**

1. Employee filing status
1. Federal and state withholding elections
1. Social Security and Medicare settings
1. State worked and lived locations

**Steps:**

1. Go to Employees > Employee Center
1. Open the employee profile
1. Select Payroll Info > Taxes
1. Make corrections and save

### 4. Confirm Payroll Item Setup

Incorrect payroll items can prevent taxes from calculating.

**Verify:**

1. Payroll items are marked as Taxable
1. Correct tax agencies are selected
1. Tax tracking type is accurate

**Steps:**

1. Go to Lists > Payroll Item List
1. Open each wage item
1. Check tax tracking settings

### 5. Check Pay Schedule and Pay Period

1. Taxes may not calculate if the pay schedule is misconfigured.
1. Ensure the correct pay frequency (weekly, biweekly, monthly)
1. Verify the pay period dates are accurate
1. Confirm the paycheck date falls within the correct tax period

### 6. Run the Payroll Setup Review

QuickBooks includes a built-in [payroll setup](https://www.accountspro.co/blog/set-up-payroll-in-quickbooks/) review tool.

**Steps:**

1. Go to Employees > Payroll Setup
1. Review all sections carefully
1. Complete any missing or incorrect information
1. This often resolves hidden setup issues.

### 7. Check Tax Rates and Limits

Sometimes tax rates are set to zero accidentally.

**Steps:**

1. Go to Employees > Payroll Taxes and Liabilities > Adjust Payroll Liabilities
1. Verify federal, state, and local tax rates
1. Correct any zero or incorrect values

### 8. Verify Company File Integrity

Company file damage can interfere with payroll calculations.

**Run Verify and Rebuild Data:**

1. Go to File > Utilities > Verify Data
2. If issues are found, run Rebuild Data
3. Restart QuickBooks and test payroll again

## When Should You Contact QuickBooks Payroll Support?

If QuickBooks Payroll is still not calculating taxes after completing all troubleshooting steps, the issue may be related to:

1. Advanced payroll data corruption
1. State-specific tax compliance rules
1. Account-level payroll service errors

In such cases, contacting [QuickBooks Payroll Support](https://www.accountspro.co/quickbooks/quickbooks-desktop-support.html) is recommended to avoid compliance risks and penalties.

## How to Prevent Payroll Tax Calculation Issues in the Future

1. Keep QuickBooks and payroll tax tables updated
1. Review employee tax details regularly
1. Run payroll setup review after major changes
1. Back up your company file before processing payroll
1. Monitor payroll reports for discrepancies

**Final Thoughts**

When QuickBooks Payroll is not calculating taxes, it can disrupt your entire payroll process. Most issues are caused by outdated updates, incorrect employee setup, or inactive subscriptions—and can be resolved with proper troubleshooting.

Fixing the issue promptly ensures accurate payroll processing, tax compliance, and peace of mind for your business.