aACE gives you the ability to set up and use multiple tax rates in what are called "tax profiles".
When a category is selected in an order, the corresponding tax rate (based on order's tax profile) is used to calculate the tax amount, and that amount is then posted against the corresponding GL account once the order is invoiced.
The Tax Profile module is located under accounting. From the main menu: Accounting > Tax Profiles.
Each tax profile supports up to four taxing entities. In the example below, the profile has been set up to calculate the proper amount of sales tax for each entity: the state, the city and the county. The rates can be set up to calculate independently based on category type, and you can even set exceptions.
Below is an explanation of each section of the screen.
Tax Profile Info
This is for the tax profile name, code, and start and end dates (optional).
This is where the taxing entities are listed and assigned to General Ledger accounts. When an invoice is opened, the tax amount calculated for each entity is posted to the assigned GL Account.
These are the tax rates that will be used when calculating the tax amount. Each category type can have a different tax rate for each taxing entity. (Generally "Other" type categories are not taxed.)
This is where exceptions to the profile are listed. Individual categories can be set up with their own tax rates in the event they should not inherit the default rates by category type.