Tax setup in AlgaPSA lets an MSP review where invoice tax comes from and which rate applies to each client region. Open Billing > Tax to manage the tax calculation source, regions, and rates together. The billing tab and sidebar entry are named Tax.

Use this page to define regional rates, review composite components, configure progressive brackets, and declare tax holidays before generating client invoices.

Viewing Tax Regions and Rates

The Tax Calculation Source setting and Tax Regions and Rates table share one page. Choose Internal (AlgaPSA) for AlgaPSA's rate calculation or External (Accounting Package) for the external accounting workflow. See 14.2. Configure Tenant Billing Defaults for Currency, Document Numbering, Tax, and Renewals for the source setting.

The expandable table shows Region, Current rate, Rates, and Actions. Each region includes its name and code, and inactive regions are identified. Search regions to find the jurisdiction you need.

Figure 1: Tax sources, regions, and rates on one page. Expand a region to see its rates and status.

Expand a region to inspect its rates:

Column	What to check
Rate	The configured percentage.
Description	The saved note, with a Composite badge where applicable.
Effective	The start and end dates, or an ongoing rate from its start date.
Status	Current, Scheduled, Expired, or Inactive.

The region summary shows the rate applicable today. No rate and No current rate identify setup gaps. When multiple active rates overlap today, the combined-rate warning flags them for review rather than hiding the overlap. Expand the region and resolve conflicting rates before the billing run.

This view is the operational source of truth for which rates are currently live for a given region. Pair it with 14.5. Client Billing Settings when you need to confirm how a specific client is being taxed.

Adding a Tax Rate

Expand the intended region and select Add rate, or choose Add rate from the region's Actions menu. Complete the Add New Tax Rate dialog:

Confirm the region shown in the dialog. It comes from the region you opened; there is no separate region picker.
Tax Percentage — The flat rate to apply (for example, 8.25 for 8.25%).
Description (optional) — A short note about the rate.
Start Date — The effective date.
End Date (optional) — The expiration date. Leave blank for an open-ended rate.
Active: Turn off to retain the rate while excluding it from invoice tax calculation.

Click Add Tax Rate to commit. Editing uses Update Tax Rate and includes the same percentage, description, date, and Active controls. There is no inline composite toggle on either dialog; see Composite Rates below for how that flag is managed.

Date overlap rule: AlgaPSA rejects new or edited rates whose date range overlaps another rate in the same region, including overlapping open-ended ranges. Adjust the conflicting dates before retrying. Existing overlaps are also flagged in the region summary.

Brackets and holidays are configured in the Advanced Settings panel after the rate is saved.

Tax Rate Row Actions

Each rate inside an expanded region has an Actions menu. The same actions are available for current, scheduled, expired, and inactive rates:

Advanced settings: Opens the Tax Rate Detail Panel covered below.
Edit: Reopens the percentage, description, date, and Active controls. Clicking the rate row also opens this editor.
Delete — Removes the rate. A pre-deletion validation runs and blocks the removal if the rate is referenced by any client, service, or invoice records, listing the dependencies so you can resolve them first.

Advanced Tax Rate Settings

Expand a region and choose Actions > Advanced settings on a rate to open the Tax Rate Detail Panel. The panel always shows four sub-tabs; they do not appear or disappear based on configuration state.

Details Sub-Tab

A read-only summary of the rate showing Region Code, Tax Percentage, Description, Tax Type, Start Date, End Date, Is Composite, and Is Active. Below the summary, a Tax Calculation Precedence info card documents the order Alga uses when picking a rate during invoice generation:

Client tax exempt flag — If the client is marked tax exempt, no tax is applied and the lookup stops here.
Service-specific tax rate — If the service line item has its own assigned rate, that rate wins.
Client default tax rate — If the client record has a default rate assigned, it is used next.
Tax region lookup — Otherwise, Alga resolves the rate from the client's region code and the invoice date — these are the rates managed on this page.

This precedence is enforced inside the billing engine itself, so the Details panel reflects the live behavior used at invoice time (see 14.12. Generating Invoices).

Components Sub-Tab

Always visible. Behavior depends on whether the rate is composite:

On a simple (non-composite) rate, the tab shows an info message: "This is a simple tax rate, not a composite rate. Tax components are only used for composite taxes." No editor is rendered.
On a composite rate, the tab renders the component editor. Each component carries:
- Name — The component label (e.g., "State", "County", "Special District").
- Rate — The percentage for this component.
- Sequence — The order in which components are applied.
- Is Compound — When enabled, the component is calculated against the subtotal plus all previously applied components rather than the bare subtotal.
- The effective composite rate is the combined result of all components.

Brackets Sub-Tab

Always visible. Configures progressive, threshold-based tax similar to graduated income tax:

Add bracket entries with a Minimum Amount, Maximum Amount, and Rate.
Tax is calculated progressively across the configured brackets.

Important: When brackets are defined, the bracket calculation replaces the flat percentage rate — brackets are not added on top of it. The flat rate from the Details tab is only used when no brackets are configured.

Holidays Sub-Tab

Always visible. Defines date ranges during which this tax rate does not apply, such as government-declared sales tax holidays. Each holiday entry has a start and end date, and Alga skips the rate for invoice dates falling inside any active holiday range.

Composite Rates

A composite rate combines multiple layered components — for example, state plus local plus a special district — into a single effective rate that's then applied as one line on the invoice.

The standard Add New Tax Rate and Edit Tax Rate dialogs do not expose an inline composite toggle. The is_composite flag is established when a composite rate is first created; the standard edit dialog will not flip an existing rate from simple to composite (or vice versa). Plan composite rates accordingly when setting up new jurisdictions.

Once a rate is composite, it is surfaced in two places:

In the expanded rates under Billing > Tax, a Composite badge appears next to the description.
On the Tax Rate Detail Panel, the Details sub-tab shows Is Composite: Yes, and the Components sub-tab renders the component editor instead of the simple-rate info message.

Tax Regions

Tax regions are geographic or jurisdictional identifiers, such as CA, TX, or EU-VAT, that link clients to applicable rates. Manage them on the same Billing > Tax page:

Select Add Tax Region and enter Region Code and Region Name.
Select Save Changes, then expand the new region and add its rate.
Use the region's Edit action to update its name or Active state. The existing region code is read-only because it identifies the region to clients, locations, and rates.
Use Activate or Deactivate in the region's menu when changing its availability.

Before generating invoices, confirm that each billed client's region has the intended current rate and that the rate's own Active switch is on.

Client Tax Settings

Individual clients can override or refine the region-based rate through their billing settings:

Tax Exempt — When enabled, no tax is applied to that client's invoices. An optional exemption certificate reference can be recorded for audit.
Reverse Charge — For B2B transactions where the client self-assesses tax (configured on the client's tax settings).
Region Code — The region used to look up the applicable rate when no client default or service-specific rate is in play.
Default Tax Rate — A specific rate assigned to the client that takes precedence over the region lookup.

Configure these on each client record per 14.5. Client Billing Settings.

How Tax Is Applied at Invoice Time

When 14.12. Generating Invoices runs, Alga evaluates each charge line in this order:

Check whether the client is tax exempt — if so, apply no tax.
Check for a service-specific tax rate — if assigned to the service, use it.
Check for a client default tax rate — if assigned to the client, use it.
Fall back to the tax region lookup by the client's region code and the invoice date.

Tax is calculated individually for each charge line, so different services on the same invoice can resolve to different rates depending on their tax assignments.

AlgaPSA Tax Rates and QuickBooks Automated Sales Tax

AlgaPSA tax regions and rates govern what AlgaPSA calculates on its invoices. When the connected QuickBooks company uses Automated Sales Tax (AST), QuickBooks computes tax on the exported invoice with its own AST engine; the tax-code mapping determines which QuickBooks tax code each exported line lands on.

Keep the AlgaPSA rate configuration accurate for billing inside AlgaPSA, and audit the QuickBooks tax-code mappings for the accounting result after export. See Connect QuickBooks Online for the company connection and mapping setup.

Navigation

14.4. Configure MSP Tax Rates by Region with Composite, Bracket, and Holiday Support