Accrued Taxes

Accrued taxes are taxes owed for income earned, property held, payroll run, or taxable transactions already completed, even though the payment has not yet been made.

They are a specific form of accrued liability and are recognized so tax expense appears in the period that generated the obligation.

Typical accounting treatment

1Dr Tax Expense
2  Cr Accrued Taxes / Taxes Payable

When the tax is later paid:

1Dr Accrued Taxes / Taxes Payable
2  Cr Cash

Common examples

• corporate income tax for the current reporting period
• property tax accumulated before remittance date
• payroll-related tax obligations
• sales-tax remittances collected but not yet paid over

Why it matters

Tax timing often does not line up perfectly with payment timing. Accruing taxes keeps liabilities realistic and prevents period-end profit from being overstated.

Related terms

• Accrued Liability
• Deferred Tax
• Taxation