Why Are My Sales Tax and Use Tax Rates Different?

If you’re seeing different tax rates on the same invoice, this is usually caused by how your use tax is configured.

Here’s how to check.

Step 1: Check the “Calculate Use Tax by Customer Location” Setting

Go to:

Settings → System Settings → Tax Default Options

Look for:

Calculate Use Tax by Customer Location

If This Setting Is Enabled

• Use tax is calculated based on the job address.

• Sales tax and use tax should match in most cases.

If This Setting Is Disabled

• Use tax uses the static rate from your Location Settings.

• Sales tax still calculates dynamically from the job address.

This can cause rates to differ.

This is expected behavior.

Important Exception: Material Only Invoices

For Material Only invoices:

• Use tax always pulls from Location Settings.

• It does not calculate dynamically.

This is because Material Only represents a store pickup at a fixed location.

What Should I Do?

If you want sales tax and use tax to match:

1. Enable Calculate Use Tax by Customer Location.

2. Save your settings.

3. Recalculate or regenerate the invoice if needed.