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The tracking categories are added as an array in the API meaning it isn't limited to just two, they just need to pass the larger array through the infrastructure. It really isn't a big deal, they're just making excuses because they had to focus on the coloured swooshes in the login page, that's all.

I suppose the difficulty for Xero developers would be to maintain integrity within reporting while allowing more than two tracking categories to be active. Having tags would also help, although that would be a separate system. Not sure about now, but QuickBooks did have tags, which I used for temporary tracking.

Even if they stuck to just two and allowed nested tracking categories with parent / child relationships it would provide more flexibility.

@Derek While I agree with the frustration over the 2-category limit, a free-form tagging system would create a data integrity nightmare. Proper ERPs like Oracle NetSuite, Microsoft Dynamics 365, and SAP rely on structured dimensional accounting for a reason. Free-text tags invite typos and missing data, destroying accurate reporting. They also lack the structure needed for complex hierarchies and automated defaulting. Plus, mixing temporary workflow statuses like "Needs Receipt" with permanent financial data breaks referential integrity. The problem isn't the tracking category concept itself, it's just Xero's arbitrary limit of two. The solution is adding more dimensions to match enterprise standards, not devolving into a messy, unreportable tagging free-for-all.

This is still the most popular non-rejected idea across all categories.

Reposting my idea that was attached to this one for visibility:

Transaction Tagging System.

Instead of the simplistic Tracking Categories which only allows a two categories to be applied to a transaction, Xero should have a tagging system, where custom tags can be applied to any transaction in any quantity.

This system could replace Tracking Categories by using a format like "Location:HQ", "Location:Branch", and have custom tags like
"SDE" (Shareholder Discretionary Earnings)
"PST:Reimburse" (for taxes that can be refunded from the government at the end of the year)
"Review Needed"
"Approval Needed"
"Accountant Review"
"Needs Receipt"
"Re-categorize"
"Submit to X Grant Program"
"Expense to Client Y"

Bonus points if the tags can be applied to any object in Xero - Invoices, Transactions, Customers, Files, etc.

This system could also be used to kick-off automation in other systems through the API connection.

Apply a tag of "print in HQ", and a receipt for the transaction gets printed in an office.

"Invoice Client", and the transaction is added as an expense to the next invoice that gets sent to the client.

"Needs Approval" and an email fires to the approver with a link to the transaction

@thomas absolutely, couldnt agree more, and the API already handles tracking categories as an array so expanding beyond 4 wouldnt be unreachable task:
"Tracking": [
{
"TrackingCategoryID": "e2f2f732-e92a-4f3a9c4d-ee4da0182a13",
"Name": "Activity/Workstream",
"Option": "Onsite consultancy"
}
],

"While we can't commit to developments at this stage..." — Claiming this requires "development" is frankly insulting to your users' intelligence. The system already supports four Tracking Categories; limiting us to only two active ones is an arbitrary software lock, not a complex technical hurdle. We aren't asking for a new feature to be built from scratch, just for you to lift an artificial restriction that actively limits our reporting. What exactly needs to be "explored" or "developed" here?

We really need our employees to track their time to the relevant jobs they are working on, through the timesheets. We have various jobs running all the time, so only being able to track to one current job will not work for our company.

I would imagine this is the same for many others, so I would hope this is an area that will be developed soon.

If you cant increase the number of categories you should at least allow nested tracking categories. Another LIMITATION of software thats supposed toe be better than the others!

Are there defined timeframes for responses? I see we have moved to "in discovery".

Continue to believe this would be beneficial for many businesses.

How much clearer do you need? It is Critical that this feature is developed sooner rather than later, as Companies will be looking for alternatives to Xero based on the lack of categories. I cannot believe your Companies' inertia

It seems pointless asking for feedback on additional categories if Xero can not commit to any further developments at this stage, its been over a year now - what is Xero waiting for to progress this?

I can't understand why we can use the 2 archived categories. they are already there.

I work for a non-profit company in Cape Town, South Africa and we are reworking our budgets into cost centres for 2027 and even just a 3rd tracking category in Xero would be so helpful for this as already use our other tracking categories for donations and our properties.

It has now been almost a year since Xero's response on 22 October 2025, with no meaningful follow-up, no explanation of what is holding this up, and no indication that anything is actually progressing.
At this point, there seem to be only two possibilities: either Xero does not take customer feedback seriously, or a relatively basic enhancement has somehow defeated its programmers for nearly a year.
We are not asking Xero to rebuild its accounting engine. We are asking for additional tracking dimensions — functionality that proper ERP systems such as JD Edwards have supported for decades. If Xero's legacy code really makes this so difficult, perhaps someone should feed the relevant C#/ASP.NET code into an AI coding assistant and see whether it can make more progress than Xero has managed in the past year.
As a Xero shareholder as well as a customer, that is what concerns me most. If Xero genuinely wants to move upmarket and compete with proper ERP platforms, it cannot keep treating basic dimensional reporting as an advanced feature request.
Either the product architecture cannot keep up, or the product team does not care enough to fix it. Neither is particularly reassuring for customers or shareholders.

We have entities in the whole of AMEA and APAC region all using Xero. We need additional tracking categories added. We might need to explore other accounting systems. This is clearly a big need with your clients. Can we get an update on where this is sitting at the moment? thank you

Xero Support - can someone please respond with an update on where this idea sits in your production list?
It is clear the need for additional tracking categories is critical to many of your customers across many different industries. As reported numerous times from our business, as at 31 Dec this year, the lack of tracking categories will result in our business having to seek a different accounting solution to Xero.
Compared to many of your other updates, this doesn't seem to be a major ask as the ground work has already been completed with the functionality already created and available.
Please advise update.
Thank you.

This is now the most popular non-rejected idea across all categories.

Reposting my idea that was attached to this one for visibility:

Transaction Tagging System.

Instead of the simplistic Tracking Categories which only allows a two categories to be applied to a transaction, Xero should have a tagging system, where custom tags can be applied to any transaction in any quantity.

This system could replace Tracking Categories by using a format like "Location:HQ", "Location:Branch", and have custom tags like
"SDE" (Shareholder Discretionary Earnings)
"PST:Reimburse" (for taxes that can be refunded from the government at the end of the year)
"Review Needed"
"Approval Needed"
"Accountant Review"
"Needs Receipt"
"Re-categorize"
"Submit to X Grant Program"
"Expense to Client Y"

Bonus points ff the tags can be applied to any object in Xero - Invoices, Transactions, Customers, Files, etc.

This system could also be used to kick-off automation in other systems through the API connection.

Apply a tag of "print in HQ", and a receipt for the transaction gets printed in an office.

"Invoice Client", and the transaction is added as an expense to the next invoice that gets sent to the client.

"Needs Approval" and an email fires to the approver with a link to the transaction

And should be able to assign ALL tracking categories to payroll entries.

I agree that more tracking categories are needed for a variety of different businesses and industries. Would love to see more than 2 categories.