# Tax rates and sales categories

> Create the tax rates you charge, choose a default, and group items into sales categories with a default tax rate and an accounting code.

Both live under [**Settings → Tax & categories**](https://app.quoterium.com/settings/tax), which only admins can change. Every team member can pick from them on quotes and library items.

## Tax rates

Tax rates are named rates applied to each line, such as "VAT 20%" or "Zero rated". Tax is worked out per line, rounded to 2 decimals, then added up.

1. Choose **New tax rate**.
2. Enter a **Name** and the **Rate %** (up to four decimals).
3. Tick **Default for new items** if new items should use it.
4. Choose **Create tax rate**.

To change a rate, choose **Edit** and then **Save changes** (but see below for rates already used). Use **Set as default** to change the default later.

### Why you can't change a rate that's been used

Quotes keep a snapshot of the rate they were written with. Changing a rate's percentage once a quote item or a library item uses it would silently rewrite history, so it isn't allowed. When a rate changes, **Archive** the old one and create a new one. Archived rates are no longer offered on new items, and existing quotes are unaffected. Tick **Show archived** to see them and use **Restore** if needed. A rate that has never been used is deleted rather than archived.

## Sales categories

Sales categories group your items, for example "Design", "Development" and "Hosting". Each can have:

- a **Description**;
- a **Default tax rate**, applied when you choose the category on a library item;
- an **Accounting code**, used as the account code on Xero invoice lines (otherwise the default sales account from the Xero settings is used);
- **Default for new items**.

Create one with **New category** and **Create category**; change one with **Edit** and **Save changes**. Archiving a category hides it from pickers; items keep their category. As with tax rates, a category that has never been used is deleted instead.

## New organisations

A new organisation starts with one default tax rate: VAT at 20% when the base currency is pounds sterling, otherwise a "No tax" rate at 0%. Edit or add to it before you start quoting.

Source: https://quoterium.com/help/team-and-settings/tax-rates-and-sales-categories