qmk_firmware/docs/feature_encoders.md

Encoders

Basic encoders are supported by adding this to your rules.mk:

ENCODER_ENABLE = yes

and this to your config.h:

#define NUMBER_OF_ENCODERS 1
#define ENCODERS_PAD_A { B12 }
#define ENCODERS_PAD_B { B13 }

Each PAD_A/B variable defines an array so multiple encoders can be defined, e.g.:

#define ENCODERS_PAD_A { encoder1a, encoder2a }
#define ENCODERS_PAD_B { encoder1b, encoder2b }

If your encoder's clockwise directions are incorrect, you can swap the A & B pad definitions.

Additionally, the resolution can be specified in the same file (the default & suggested is 4):

#define ENCODER_RESOLUTION 4

Callbacks

The callback functions can be inserted into your <keyboard>.c:

void encoder_update_kb(uint8_t index, bool clockwise) {
    encoder_update_user(index, clockwise);
}

or keymap.c:

void encoder_update_user(uint8_t index, bool clockwise) {
  if (index == 0) { /* First encoder */
    if (clockwise) {
      tap_code(KC_PGDN);
    } else {
      tap_code(KC_PGUP);
    }
  } else if (index == 1) { /* Second encoder */  
    if (clockwise) {
      tap_code(KC_UP);
    } else {
      tap_code(KC_DOWN);
    }
  }
}

Hardware

The A an B lines of the encoders should be wired directly to the MCU, and the C/common lines should be wired to ground.