The system will automatically calculate a total sales tax that includes state, county, and city taxes. The tax rate is determined based on the event's location and your default warehouse location. That rate is multiplied by the taxable amount for that order. Sometimes, the taxable amount is different than the subtotal depending on whether all the rental items, staffing, and distance charges are set to taxable or not. You can configure which rental items are taxable, by modifying the price category that is attached to that item. In Settings --> Delivery Methods, you can set whether distance charges are taxable, too.
If you go to Settings --> Tax Preferences --> States, you can choose to override or back up the tax amount. You would want to select back up versus override. Once saved, the software will automatically populate sales tax based on your customer's location instead of your location.