January 6, 2026

Does Shopify Collect Sales Tax? Let’s Clear That Up

Sales tax is one of those topics that tends to sneak up on new Shopify store owners. You’re focused on launching products, setting up your storefront, maybe even tweaking your theme, and suddenly you’re hit with questions like: “Do I need to collect sales tax?” or “Does Shopify handle this for me?”

The short answer? Sometimes. The full answer depends on where you’re selling, how your store is set up, and which tools you're using inside Shopify. Let’s break it down without the jargon, so you know exactly what Shopify takes care of, and what still lands on your plate.

The Short Answer: Sometimes Yes, Often No

Shopify isn’t a marketplace like Amazon or eBay. Those platforms are required by law to collect and remit sales tax on your behalf. Shopify, by contrast, is an ecommerce platform. It gives you the tools to run your store, but you're the one responsible for setting up tax collection, unless you're using a very specific feature.

Here’s how it breaks down:

For your main Shopify store: You are responsible for tax setup, collection, and remittance.
For the Shop App (starting Jan 1, 2025): Shopify will automatically collect, file, and remit sales tax in all applicable U.S. states.
If you enable Shopify Tax + automated filing: Shopify helps automate calculations in participating states.

So no, Shopify doesn’t just collect taxes on all your sales by default. But yes, there are built-in features that can help if you turn them on.

Why Sales Tax on Shopify Works Differently

The root of the confusion is that Shopify sits in a different legal category. It’s a platform, not a marketplace facilitator (except in the case of the Shop App). That means it doesn’t have an automatic legal obligation to collect tax unless you tell it to.

So when you create a Shopify store, you start with a clean slate – no tax settings, no automatic collections. You need to:

Figure out where you have a tax obligation (nexus).
Register in those states.
Set up a collection in your Shopify admin.
Report and remit taxes to those states.

Unless you’ve set this up yourself, taxes aren’t being collected at checkout. That’s a big deal.

What Is Nexus and Why Does It Matter?

Nexus is the legal term for having a "significant presence" in a state. Once you cross a certain threshold, the state expects you to collect and remit sales tax.

There are two types:

Physical Nexus

This applies if you:

Operate an office, warehouse, or storefront in the state.
Have employees, contractors, or affiliates there.
Store inventory or fulfill orders from a location in that state.

Economic Nexus

This kicks in based on sales volume. For example:

In Illinois, it's $100,000 in gross sales or 200 transactions per year (from January 1, 2026 onward, the 200-transaction rule will no longer apply, leaving $100,000 in sales as the sole threshold).
In Texas, the threshold is $500,000 in gross revenue (no transaction count).

If you hit the threshold in a state and don’t collect tax, you could owe back taxes, and possibly penalties, even if it wasn’t intentional.

Shopify’s Tax Liability Insights tool can track where you’re close to hitting nexus, which is a big help. But again, it won’t collect tax until you set it up to do so.

How to Set Up Sales Tax Collection in Shopify

If you’re selling in the U.S. and want to stay compliant, here’s the path forward.

1. Register for a Sales Tax Permit

Before you collect anything, you need to be registered in each state where you have nexus. It’s illegal to collect tax without a permit, even if you plan to remit it. Every state has its own process and fee, but many let you register online.

2. Set Up Tax Collection in Your Shopify Admin

Once you’re registered:

Go to Settings > Taxes and duties > United States.
Select the states where you’re registered.
Enter your sales tax ID for each one.
Enable tax collection for those states.

Shopify will now begin collecting tax from customers in those states based on their shipping address.

3. Categorize Your Products

Sales tax isn’t just about location. Some products are exempt or taxed differently. For example:

Clothing is tax-exempt under $110 in New York.
Grocery items and supplements are taxed differently in different states.
Digital goods might be taxable in one state, but not another.

Shopify lets you assign categories to your products, which improves the accuracy of the tax rates applied.

If you skip this step, Shopify tries to guess based on your product title and description, which isn’t ideal.

4. Handle Shipping Tax

In many states, shipping charges are taxable if they’re part of the order. Shopify can automatically calculate this, but if you need special rules, you can override shipping tax behavior manually.

5. Exempt Certain Customers

If you sell to resellers, nonprofits, or government entities, you may not need to collect sales tax. You can mark these customers as tax-exempt in Shopify (under their customer profile), but you’ll need to keep a valid exemption or resale certificate on file in case of an audit.

When Shopify Does Collect and Remit Tax for You

The one major exception is the Shop App.

Starting January 1, 2025, any orders placed via the Shop App (not your regular store) will have sales tax automatically:

Calculated.
Collected.
Filed.
Remitted to the right tax authorities.

This includes:

All U.S. states with a statewide sales tax.
The District of Columbia.
Local jurisdictions in Alaska.

The tax is collected under SC Commerce Services Inc., not under your business name.

Consider, this doesn’t apply to Shop Pay on your website, just orders placed directly through the Shop App. Product tax overrides and customer exemptions don’t apply here. Taxes are calculated based on Shopify’s product categorization.

What About Automated Filing?

Shopify Tax also offers automated filing. Here’s how it works:

You enroll and connect your payment method.
You select which states to automate.
Shopify tracks deadlines, prepares returns, and remits payments.
You get notified when it’s filed.

This is optional, but it’s a big time-saver, especially if you’re collecting tax in more than a few states. No spreadsheets, no state portals, no missed deadlines.

What If You Sell on Other Platforms Too?

Let’s say you sell on both Shopify and Amazon. In that case:

Amazon (as a marketplace facilitator) collects and remits sales tax for you on Amazon orders.
You’re still responsible for Shopify orders unless you're using the Shop App or enabling Shopify’s tax automation.

So yes, you can have a mix of self-managed and auto-collected tax depending on the sales channel. Keep your records clean, and consider using a tax reporting tool to help organize everything.

How We Help Shopify Sellers Stay Focused on Growth

At Extuitive, we know how much time and energy can go into setting up the back end of your store, especially when sales tax compliance is involved. But staying compliant is just one part of the equation. What really moves the needle is how well your store connects with real buyers.

That’s where we come in. We’ve built a platform that helps Shopify sellers create, test, and launch high-performing ads in minutes. Using AI agents modeled after over 150,000 real consumer personas, we take the guesswork out of messaging and creativity. Whether you’re selling sustainable bedding, supplements, or snacks, we help you find your audience fast and show them the right ad without wasting time or budget on trial and error.

While Shopify Tax makes it easier to manage your obligations, we help you focus on the part that actually grows your revenue. You plug in your store, and we handle ad generation, validation, and performance tracking – all built for Shopify from the ground up. If you're juggling tax setups, inventory tools, and multi-state compliance, you shouldn’t also have to second-guess your marketing. That’s what we're here for.

Common Mistakes to Avoid

Here are a few things that trip up sellers, especially when growing fast:

Collecting tax without registering: This is illegal and can trigger penalties, even if your intentions were good.
Forgetting about economic nexus: Many sellers assume they only need to register in their home state, but remote sales can easily trigger nexus elsewhere.
Applying tax based on your location, not the buyer’s: Most U.S. states use destination-based sourcing. Tax is calculated based on where your customer lives, not where you ship from.
Not filing “zero returns”: Even if you made no sales in a state, you may still be required to file a zero return. Missing it can lead to late fees.
Skipping exemption documentation: If you don't collect a valid resale certificate from an exempt buyer, the state can hold you liable for the tax anyway.

Final Thoughts

Shopify gives you the tools to manage sales tax, but it won’t handle the whole process unless you actively set it up. If staying compliant is something you're serious about, and it should be, don’t wait until a tax notice shows up to get organized. If you're selling in just one state, the manual tax setup inside Shopify is often enough. But once you’re working across state lines, using Shopify Tax is worth considering. It automates calculations and, if you opt in, even handles filing in the states that support it.

Make sure your product categories are accurate, because tax rates can vary based on what you're selling and where it’s going. Also, keep an eye on your nexus thresholds – Shopify helps track them, but the responsibility to act still falls on you. Orders coming through the Shop App are handled a bit differently since Shopify takes care of tax collection and filing there. It’s smart to track those separately, just to avoid confusion.

FAQ

1. Does Shopify automatically collect sales tax for me?

Not by default. Shopify gives you the tools to collect sales tax, but it won’t do it for you unless you’ve set it up. The exception is orders placed through the Shop App – starting January 1, 2025, Shopify automatically handles tax collection and filing for those.

2. What’s the difference between Shopify and a marketplace like Amazon when it comes to tax?

Amazon is legally considered a marketplace facilitator, which means they have to collect and remit tax on your behalf in most states. Shopify is not a marketplace – it’s a platform; so the responsibility lands on you unless you’re using the Shop App or enabling Shopify Tax automation.

3. How do I know if I need to collect tax in a state?

Start by looking at where your business has nexus. That means physical presence (like an office or warehouse) or economic presence (like crossing a state’s sales threshold). Shopify’s built-in Tax Liability Insights can help you monitor where you might owe tax, but the actual collection only kicks in once you register and enable it.

4. Do I need to file sales tax returns even if Shopify is collecting the tax?

If you're using the Shop App, Shopify files those returns for you. But for sales made directly through your store, yes, you’ll need to file with each state where you collect tax. You can do it manually or use Shopify Tax’s automated filing, which takes care of submission and payment.

5. What happens if I collect sales tax without registering in a state?

That’s a big no. It’s actually illegal to collect tax in a state unless you’re registered to do so. If you’re ever audited, collecting without a permit can get you hit with penalties, even if you planned to remit everything.

6. Can Shopify help me track and manage tax exemptions?

Yes, but it’s manual. You can mark certain customers as tax-exempt in their profile (like resellers or nonprofits), but you’re responsible for collecting and storing their exemption certificates. Shopify doesn’t validate them, you do.

7. What if I only sell digital products? Do I still need to deal with all this?

Possibly. Some states tax digital goods, some don’t. It depends on what you're selling and where your customers are. Shopify lets you categorize your products so tax is calculated more accurately, but it’s still worth double-checking with a tax pro if your catalog is mostly digital.