How I record taxes in Ledger is pretty simple. In my demonstration of how I record salary payments the example entry included tax deductions that show the basic account structure.

2025-12-26 Acme Inc
    Assets:Bank:Checking                    $1000.00
    Expenses:Tax:Federal:FY2025              $200.00
    Expenses:Tax:State:FY2025                 $50.00
    Expenses:Insurance:Medical                $20.00
    Income:Salary

I pay state and federal taxes, so I have two main accounts: Expenses:Tax:Federal and Expenses:Tax:State.

Tax payments (and refunds for overpayments) can occur in years other than the tax years that the payments are related to. This requires some way to query transactions by tax years rather than just the posting date. You could do this by tagging the transactions, but I prefer to use a fourth account level to indicate the fiscal year. Thus my 2025 taxes live in Expenses:Tax:Federal:FY2025 and Expenses:Tax:State:FY2025.

If I pay an accountant to help me file taxes, I will log the payment against the Expenses:Tax:Preparation account, which uses the same fiscal year subaccount.

2026-02-01 The Accountant
    Expenses:Tax:Preparation:FY2025          $100.00
    Assets:Bank:Checking

If I receive a federal refund in March, I will debit it out of the appropriate tax account. I also tag these transactions with refund-tax so I can easily query them later.

2026-03-15 IRS
    ; 2025 Tax Refund
    ; :refund-tax:
    Assets:Bank:Checking                    $1000.00
    Expenses:Tax:Federal:FY2025

If instead I discover that I still owe federal taxes in March, I will credit the payment into the appropriate tax account. I tag these transactions with final-tax so I can easily query them later.

2026-03-15 IRS
    ; 2025 Federal Taxes
    ; :final-tax:
    Expenses:Tax:Federal:FY2025             $1000.00
    Assets:Bank:Checking

Some years I have made quarterly estimated tax payments instead of having taxes withheld from my paycheck. These entries look as you would expect, but I tag them with estimated-tax as well as the quarter number for future queries.

2025-09-02 IRS
    ; 2025 Q3 Estimated Tax
    ; :estimated-tax:q3:
    Expenses:Tax:Federal:FY2025             $1000.00
    Assets:Bank:Checking

The bottom line with all of this is that I can do a simple ledger balance fy2025 and see a complete and easy to understand picture of my 2025 taxes. Or I can run ledger balance expenses:tax:federal to see what I’ve paid in federal taxes over the past 14 years, broken out by year.

As with most things related to Ledger, this seems like pretty basic stuff when you’re doing it but becomes a superpower when you realize how most of the rest of the world lives.

In my previous descriptions of how I perform plain text accounting I did not discuss logging salary income with Ledger. My basic strategy is to create an entry with all the same data that appears on the paystub. The only number that actually matters to me is whatever amount ends up in my bank account, but it is still important to have withholdings documented for later querying.

A simplified entry would look like this:

2025-12-26 Acme Inc
    Assets:Bank:Checking                    $1000.00
    Expenses:Tax:Federal:FY2025              $200.00
    Expenses:Tax:State:FY2025                 $50.00
    Expenses:Insurance:Medical                $20.00
    Income:Salary

At the time of entry, I store a PDF of the paystub just like a receipt. (In Ye Olden Days this came from scanning a piece of paper, but now I just download the PDF from a web site.) This entry will be reconciled and get cleared with the * mark the next time I login to the bank account and verify the amount I received.

If I want to know how much money the employer or a government thinks I made last year, I can just ask Ledger for the balance of the Income:Salary account.

$ ledger balance income:salary --period 2025
        $-1270.00   Income:Salary

However, this number has no real bearing on my reality. What is much more useful to me is the ability to query how much money I actually received last year, e.g. my take-home pay. I can do this by asking Ledger to show the balance of the bank account, limiting it to postings that involved the Income:Salary account.

$ ledger balance assets:bank:checking -l "any(account =~ /Income:Salary/)" --period 2025
        $1000.00    Assets:Bank:Checking

If the only financial relationship you have with your employer is them giving you money in the form of a salary, then you could simplify this by just asking Ledger for the balance of transactions in the bank account from that payee.

$ ledger balance assets:bank:checking and "@Acme Inc" --period 2025

However, my employer sells stuff, and sometimes I buy that stuff, so for me the above query would show me my salary less my employee purchases. Which is mostly worthless.

When I receive a W-2 after the end of the year, I check all of its entries – gross pay, pre- and post-tax deductions, etc – against Ledger with a simple ledger balance "@Acme Inc" --period 2025. Having all this data stored locally in queryable plain text, rather than needing to access some web portal or read through various PDFs like a prehistoric savage, is a key life strategy for me.