Inside SAP Business One to set the tax rates for each state. Here’s how:
1) Navigate to: Modules Tab > Administration > Setup > Financials > Tax > Sales Tax Jurisdictions
2) When the Sales Tax Jurisdictions – Selection Criteria window pops up, make sure the dropdown is set to state and press OK.
Important Note: SAP Business One comes with the state tax rates pre-configured but this should always be double checked since tax rates may have since changed.