Ecommerce Sales Tax: The Complete Guide for US Businesses (2026)

Does your ecommerce business sell to customers across the US? If the answer is yes, then this sales tax guide is for you. 

This guide covers everything you need to know about ecommerce sales tax in 2026, including foundations, best practices, and basic criteria for all 50 states plus Washington, DC.

This is your introduction to establishing and maintaining tax compliance as your online business grows.

What is ecommerce sales tax?

Ecommerce sales tax is the tax you charge and collect from your online customers. Similar to the tax you’d charge customers in a physical store, it’s a percentage of the price of the items you sell. It’s also called “online sales tax” or “internet sales tax,” but it’s not a special tax reserved for sales that take place online. We call it ecommerce sales tax because tax laws have been updated to include online shopping scenarios.

Before 2018, online stores didn’t have to collect sales tax if they didn’t have a physical location in a state. This gave them a bit of an edge over local shops since their prices often looked lower at checkout. Everything shifted with the Supreme Court’s South Dakota v. Wayfair, Inc.ruling, which ruled that a state can now require online sellers to collect sales tax from buyers in that state, even if the seller is based in a different state.

That’s where the concepts of nexus and economic nexus come in.

Nexus is a connection or presence in a state that requires you to track and pay sales tax. Nexus can be established by having a physical presence in the state (e.g., a store or a warehouse) or having employees there. This can be different from state to state.

Economic nexus means if you make a certain amount of sales in a state, you may be required to collect and remit sales tax, even without a physical presence. Depending on the state, economic nexus may be determined by the number of sales, the amount of revenue from sales, or a combination.

💡Find the list of economic nexus laws for each of the 50 states later in this guide.

Understanding sales tax vs. use tax

Use tax is the partner to sales tax. It applies when you buy something to use, store, or consume, but don't pay sales tax at the time of purchase.

What is use tax?

While retailers usually collect sales tax when you buy something, use tax is a bit different—it’s a tax you calculate and pay to the state yourself. Its main purpose is to make sure the state still gets revenue on out-of-state or online purchases, which also helps keep things fair for local shops that have to charge sales tax.

Who owes use tax? 

Generally, both people and businesses are responsible for paying use tax:

• Individuals: You usually owe it on personal items bought from out-of-state sellers (like through a catalog, online, or while traveling) that didn't charge you sales tax.
• Businesses: Companies often owe it on supplies, furniture, or equipment bought from out-of-state vendors for their business operations.

Importance of ecommerce sales tax

Taxes are stressful, but staying on top of them is a must for your business and your peace of mind. A major reason to stay informed is that, as of 2025, every state (and DC) now requires marketplace platforms to handle ecommerce sales tax for third-party sellers. Keeping track of these obligations helps you avoid surprises and keeps your business running smoothly.

Here are a few other reasons why it’s important to stay informed and compliant with ecommerce sales tax: 

Missing ecommerce sales tax requirements can have serious consequences

As your business grows, you need to have a sales tax permit for every state with customers you’re selling to. You’ll also have to file sales tax returns and pay any sales tax you are determined to owe.

Miss these steps, and you’ll have to pay past-due sales tax as well as possible penalties and interest that can range from hundreds up to tens of thousands of dollars. In some states, failure to file or pay sales tax can have criminal penalties.

Correct ecommerce sales tax is good for customer relationships

When you have all your sales taxes organized, you can charge the correct sales tax amount instantly at checkout. If not, you may have to ask your customers for additional payments, which can frustrate them and put their trust in you at risk. This makes it harder to retain customers and build up your brand’s reputation. Up-front transparency and clear tax information are key.

Ecommerce sales tax is essential for economic growth

States, counties, and local municipalities use sales tax to raise revenue. The funds are used to develop communities, build roads, improve schools, parks, and libraries, and fund protective services like fire departments.

Sales tax plays an important role in society throughout the United States, and ecommerce businesses like yours make significant contributions to it.

Six ecommerce sales tax best practices

States with economic nexus can be a risk for fast-growing companies. As your online store grows more popular, you’re more likely to get audited, so if you haven’t yet, prioritize sales tax compliance.

Here are some tips and best practices to help you do it well:

1. Determine where you have sales tax nexus and how it works

Sales tax nexus—your obligation to collect sales tax—can be triggered in multiple states based on your business activities. 

Online sales can be taxed in two different ways, known as sourcing:

• Origin-sourced sales are taxed where the seller is located.
• Destination-sourced sales are taxed where the buyer takes possession of the item sold.

While origin-based sourcing is simpler since it only involves tax rates where your business is based, most states use destination-based sourcing. This makes ecommerce sales tax more complex to track. 

Fortunately, tools like Shopify Tax can help by automatically monitoring your nexus status and alerting you when you're approaching sales tax obligations in new states. This automated tracking helps ensure you stay compliant as your business grows across state lines.

Click-through nexus vs. economic nexus

Economic nexus is the most common trigger today because it usually requires you to collect sales tax after hitting certain revenue figures or transaction counts. But the click-through nexus is a much more sensitive threshold. It applies when you have agreements with in-state residents, like influencers or bloggers, who refer customers to your site via digital links for a commission. 

The key difference is the cost of entry: many states set click-through thresholds as low as $10,000 in referral sales, and some have no minimum at all—meaning even a single affiliate sale could trigger a tax obligation.

This rule falls under a wider net called affiliate nexus, which can also be triggered by having local ties, like having a sister company in that state or using a local business to handle your repairs or installations. These laws exist because states want to tax businesses that are clearly profiting from their local residents. 

Because of this, these obligations often pop up long before you’ve hit the major sales milestones you might be watching for. It’s a good idea to keep a close eye on where your partners and influencers are based, as their location can create a tax responsibility for you before you even realize it.

2. Register for a sales tax permit

Once you know what states you have sales tax nexus in, the next step is to register with each state’s tax authority and obtain a sales tax permit or a seller’s permit. Costs of applying for these permits vary from free to $100.

Almost all states allow you to register for your permit online.

Sales tax and seller’s permits have varying expiration dates. For example, a permit in Arkansas must be renewed annually to keep it active, while you have to renew your permit in Colorado every two years.

3. Know your ecommerce sales tax exemptions

There are items, scenarios, and periods that are exempt from sales tax. As you learn the states where you meet nexus criteria, check each of them for exemptions. 

Here’s a list of common exemptions to get you started:

• Nonprofit exemptions: Some states allow nonprofit organizations to purchase items free of sales tax if they meet certain criteria and have relevant certificates (see example for Virginia).
• Wholesale and reseller exemptions: Some states provide an exemption when the purchaser isn’t the final consumer, such as with distributors (see example for Colorado).
• Sales tax holidays: Some states have periods when state sales tax is suspended on certain items, like school supplies and clothing during a back-to-school season (see example for New Mexico).
• Product exemptions: Many states don’t collect sales tax, or collect lower taxes, on essential product categories like groceries (see example for New York).

Managing exemption certificates at scale

Dealing with thousands of tax-exempt sales across different states can quickly become a manual nightmare. To handle this efficiently, many businesses use two major universal certificate programs to simplify the paperwork:

• SST (streamlined sales tax) certificate: This single form is accepted by 24 member states to cover a variety of exemptions, including resale, government, and nonprofit.
• MTC (multistate tax commission) certificate: This uniform resale certificate is accepted by 38 states but is strictly for resale purposes.

To really scale, you’ll want an exemption certificate management (ECM) system that integrates directly with your store. These tools offer real-time point of sale (POS) validation, which automatically checks if a customer’s certificate is valid and complete during the checkout process. 

Instead of manually chasing down forms, these systems store everything in a secure repository, track expiration dates, and automatically trigger renewal requests, keeping you audit-ready without the constant administrative headache.

4. Collect, report, and file your sales tax returns

With your permits and an online store set up to collect sales tax for each required state, you’ll need to report and file your sales tax returns. Reporting requirements vary widely according to which state you’re remitting it to. Frequency of reporting depends on your sales volume.

For example, in the state of North Carolina you’d file quarterly if your monthly tax liability was consistently below $100, and you’d file monthly if your monthly liability was between $100 and $20,000. Enterprise-sized merchants can expect to report and file taxes at least quarterly, and often monthly.

Important: You must file returns even with $0 tax collected—failure to file zero-dollar returns results in late filing penalties.

Shopify Tax now offers automated filing to handle your returns and payments directly from your admin dashboard. It also offers:

• Flat-fee pricing ($50 per return for merchants on the Plus plan, $75 for others)
• No annual fees or contracts
• Support for all 46 US states that issue sales tax
• Automatic calculations using rooftop-accurate rates
• Flexible filing schedules (monthly, quarterly, or annually)

Want simpler sales tax handling? Explore Shopify Tax to learn about automated calculations and filing.

5. Create a visible schedule for sales tax returns

Each state defines the frequency at which you need to report and file your sales tax returns, and the day of the month you need to file by. For example, in the state of Missouri, monthly returns are due on the last day of the month, quarterly returns on the last day of the month after the end of the quarter, and annual returns are due on January 31.

Keep an updated tax year calendar for all states where you need to collect, report, and file taxes to ensure you never miss a due date.

6. Consider automating sales tax bookkeeping and payments

Many companies start by complying with sales tax laws manually, using Department of Revenue notices for one or two states where they know they are required to file.

However, this method doesn’t scale. What took just a few hours a month with one state could take dozens of hours once your business grows and establishes a presence across the country, where there are more than12,000 tax jurisdictions.

Whether or not you’re ready for it, growth will trigger tax responsibilities, liability, and risks. You can prepare for this by usingdedicated software to automate the process of tracking, collecting, reporting, and filing your taxes across the United States.

Financial organization and cash flow management

One of the best things you can do for your business's financial health is to open a separate bank account just for the sales tax you collect. By keeping those funds tucked away from your everyday spending money, you won't have to worry about accidentally dipping into tax dollars before they’re due to the state. Plus, having a dedicated account makes your actual available cash much easier to track and keeps you prepared for an audit with a clear, organized paper trail.

Shopify merchants can use Shopify Tax to automatically handle their sales tax obligations—from determining economic nexus to registering in required jurisdictions and filing returns. With Shopify Tax, you can streamline tax compliance and confidently focus on growing your business, knowing tax responsibilities are being managed efficiently.

State-by-state economic nexus laws

Here you’ll find the economic nexus thresholds for each of the 50 states plus Washington, DC.

If you don’t have a physical presence in these states but sell to customers based there, and want to know what triggers sales tax responsibilities, this is the information you need.

States typically refer to ecommerce businesses as remote sellers, out-of-state sellers, out-of-state businesses, or companies doing remote sales.

Note there are types of products and services exempt from sales tax which differ from state to state, so be sure to check if these exemptions apply to your business.

There might be additional legislation in place on top of the economic nexus, so check the links for each state’s tax and revenue resources to make sure you’re aware of all relevant regulations.

Alabama

Alabama’s economic nexus threshold is $250,000 in sales in the previous calendar year. It’s a destination-sourced state.

Alabama doesn’t tax shipping if you use a common carrier, and if shipping is broken out as a separate line item on the invoice.

For more details and information, view Alabama's economic nexus guidance and Alabama's tax resources.

Alaska

Alaska doesn’t have a statewide sales tax, but it’s a home rule state, meaning local jurisdictions like cities or counties can define separate tax terms and audit businesses.

This means each of the 165 local jurisdictions may charge its own destination-based rate that applies when a merchant has nexus in the state. It’s best to contact local governments directly to determine your sales tax obligations.

Alaska’s economic nexus threshold is $100,000 in sales or 200 transactions in the current or previous calendar year.

Alaska doesn’t tax shipping if shipping is broken out as a separate line item on the invoice.

For more details and information, view Alaska’s economic nexus guidance and Alaska's tax resources.

Arizona

Arizona’s economic nexus threshold is:

• $100,000 in sales in the current or previous calendar
• $150,000 for 2020
• $200,000 for 2019

It is an origin-sourced state and considers a remote seller to be any person or business selling or shipping products into Arizona without a physical presence in the state.

Arizona generally doesn’t tax shipping if shipping is broken out as a separate line item on the invoice.

For more details and information, view Arizona’s economic nexus guidance and Arizona’s tax resources.

Arkansas

Remote sellers have an economic nexus threshold of $100,000 in sales or 200 transactions to Arkansas customers in the current or previous calendar year. It’s a destination-sourced state and taxes shipping.

Arkansas considers a remote seller to be any out-of-state seller that has no physical presence in the state.

For more details and information, view Arkansas’s economic nexus guidance and Arkansas’s tax resources.

California

California is a mixed-source state because city, county, and state sales taxes are origin-based, and district sales taxes are destination-based.

The economic nexus threshold is $500,000 in sales in the current or previous calendar year.

California taxes shipping if you combine shipping and handling in a line item, or if you mark up the cost of shipping. It doesn’t tax shipping if you pass the cost of shipping on to the customer with no markup and charge it as a separate line.

It is important to note that California considers retailers to have a physical presence in the state if they:

• Maintain inventory or office locations in California
• Have representatives in California for purposes of taking orders, making sales or deliveries, or installing or assembling personal property
• Lease equipment, including a computer server, in California

For more details and information, view California’s economic nexus guidance and California’s tax resources.

Colorado

Colorado’s economic nexus threshold is $100,000 in sales in the current or previous calendar year. It’s a destination-sourced state.

Colorado generally taxes shipping. The exception is when shipping is a separate line item on the invoice and the customer has the option to pick up the item on their own or arrange shipping. When the transaction is exempt from sales tax, so is shipping.

For more details and information, view Colorado’s economic nexus guidance and Colorado’s tax resources.

Connecticut

Connecticut’s economic nexus threshold is $100,000 in sales and 200 transactions in the previous12-month period ending on September 30. It’s a destination-sourced state.

Connecticut taxes shipping as long as the items you are shipping are also taxable.

For more details and information, view Connecticut’s economic nexus guidance and Connecticut’s tax resources.

Delaware

Delaware does not have sales tax.

Florida

Florida’s economic nexus threshold is $100,000 in sales in the current or previous calendar year. It’s a destination-sourced state.

Even if you don’t meet the economic nexus, Florida considers a seller to have sales tax obligations if they own, rent, or lease tangible personal property in the state.

Florida generally taxes shipping, whether separately stated on the invoice or included in the item price. The exception is when shipping is a separate line item and the customer has the option to pick up the item on their own or arrange shipping on their own.

For more details and information, view Florida’s economic nexus guidance and Florida’s tax resources.

Georgia

For remote sellers, Georgia’s economic nexus threshold is $100,000 in sales or 200 transactions in the current or previous year. It’s a destination-sourced state.

Georgia generally taxes shipping, except when the sale is exempt from sales tax.

For more details and information, view Georgia’s economic nexus guidance and Georgia’s tax resources.

Hawaii

Hawaii doesn’t have sales tax, but a general excise tax (GET) applies to all business activities.

Hawaii’s economic nexus threshold is $100,000 in sales or 200 transactions in the current or previous year. It’s a destination-sourced state.

Hawaii taxes shipping, as it applies GET on all business.

For more details and information, view Hawaii’s economic nexus guidance and Hawaii’s tax resources.

Idaho

Idaho is a destination-sourced state with an economic nexus threshold of $100,000 in sales in the current or previous calendar year for remote sellers.

Idaho taxes shipping.

For more details and information, view Idaho’s economic nexus guidance and Idaho’s tax resources.

Illinois

For remote sellers, Illinois’s economic nexus threshold is $100,000 in sales or 200 transactions in the preceding 12-month period. It’s an origin-sourced state if you’re an in-state seller, but a destination-sourced state if you don’t have an Illinois location (e.g., warehouse, fulfillment center) to send your orders from.

Illinois generally taxes shipping. The exception is when shipping is a separate line item on the invoice and the customer has the option to pick up the item on their own or arrange shipping. When all products in a shipment are exempt from sales tax, so is shipping of that order.

For more details and information, view Illinois’s economic nexus guidance and Illinois’s tax resources.

Indiana

Indiana’s economic nexus threshold is $100,000 in sales or 200 transactions in the current or previous calendar year. It’s a destination-sourced state.

Indiana taxes shipping if the company uses private, third-party delivery services. Indiana doesn’t tax shipping when using the United States Postal Service because postage charges through USPS aren’t subject to tax.

For more details and information, view Indiana’s economic nexus guidance and Indiana’s tax resources.

Iowa

Iowa is a destination-sourced state with an economic nexus threshold of $100,000 in sales in the current or previous calendar year for remote sellers.

Iowa doesn’t tax shipping if shipping is broken out as a separate line item on the invoice.

For more details and information, view Iowa’s economic nexus guidance and Iowa’s tax resources.

Kansas

Kansas’s economic nexus threshold is $100,000 in sales in the current or previous calendar year. It’s a destination-sourced state and taxes shipping.

Kansas considers a seller to have sales tax nexus if they are based in the state, but also if they sell at a craft show, trade show, or special event there.

For more details and information, view Kansas’s economic nexus guidance and Kansas’s tax resources.

Kentucky

Kentucky is a destination-sourced state that has an economic nexus threshold of $100,000 in sales or 200 transactions in the current or previous calendar year.

Kentucky taxes shipping, except when the product or service is exempt from sales tax.

For more details and information, view Kentucky’s economic nexus guidance and Kentucky’s tax resources.

Louisiana

Louisiana’s economic nexus threshold is $100,000 in sales in the current or previous calendar year. Louisiana removed the 200 transactions criterion on August 1, 2023. It’s a destination-sourced state that taxes shipping. 

Exceptions may apply to separately contracted shipping (for example, customers pick up their order themselves or arrange a third-party delivery). Louisiana is a home rule state, so additional rules may apply depending on the regional taxes applied.

Louisiana has also become the latest state to impose sales tax on software-as-a-service (SaaS) and information services effective January 1, 2025, with specific exemptions for commercial-use software.

For more details and information, view Louisiana’s economic nexus guidance and Louisiana’s tax resources.

Maine

Maine’s economic nexus threshold is $100,000 in sales in the current or previous calendar year. It’s a destination-sourced state.

Maine generally doesn’t tax shipping when shipping is broken out into a separate line item on the invoice and made by a common or contract carrier or the US mail.

For more details and information, view Maine’s economic nexus guidance and Maine’s tax resources.

Maryland

Maryland’s economic nexus threshold is set at $100,000 in sales or 200 transactions in the current or previous calendar year. It’s a destination-sourced state and doesn’t tax shipping if it is broken out as a separate line item on the invoice.

For more details and information, view Maryland’s economic nexus guidance and Maryland’s tax resources.

Massachusetts

Massachusetts is also a destination-sourced state with an economic nexus threshold of $100,000 in sales in the current or previous calendar year. Massachusetts generally doesn’t tax shipping if it is broken out as a separate line item on the invoice, the cost is reasonable, and the delivery occurs after the purchase takes place.

For more details and information, view Massachusetts’s economic nexus guidance and Massachusetts’s tax resources.

Michigan

The economic nexus threshold for Michigan is $100,000 in sales or 200 transactions made by a remote seller in the previous calendar year. It’s a destination-sourced state.

It’s also a member state of the Streamlined Sales Tax Registration System, which allows businesses to register for a sales tax permit with multiple states at once.

Michigan doesn’t tax shipping if shipping is broken out as a separate line item on the invoice, and the seller keeps records that show how the tax was calculated for those transactions. This rule went into effect on April 26, 2023.

For more details and information, view Michigan’s economic nexus guidance and Michigan’s tax resources.

Minnesota

Minnesota’s economic nexus threshold is $100,000 in sales or 200 transactions in the preceding 12-month period. This doesn’t include sales in which the customer is buying an item for resale.

Minnesota is a destination-sourced state that taxes shipping, except when the sale is exempt from sales tax.

For more details and information, view Minnesota’s economic nexus guidance and Minnesota’s tax resources.

Mississippi

The threshold for economic nexus is significantly higher in Mississippi than most other states. Remote sellers are required to remit sales tax when they have $250,000 in sales in the preceding 12-month period. It’s an origin-sourced state.

Mississippi taxes shipping, except when the sale is exempt from sales tax.

For more details and information, view Mississippi’s economic nexus guidance and Mississippi’s tax resources.

Missouri

Missouri’s economic nexus threshold is $100,000 in sales in the preceding 12-month period, but is determined at the end of each quarter. It’s an origin-sourced state.

Missouri doesn’t tax shipping if shipping is broken out as a separate line item on the invoice.

For more details and information, view Missouri’s economic nexus guidance and Missouri’s tax resources.

Montana

Montana does not have sales tax.

Nebraska

Nebraska is a destination-sourced state with an economic nexus threshold of $100,000 in sales or 200 transactions in the current or previous calendar year. The state taxes shipping whenever the item purchased is taxable and the charges are paid to the retailer. Exceptions are separately stated charges for US postage on direct mail.

For more details and information, view Nebraska’s economic nexus guidance and Nebraska's tax resources.

Nevada

Nevada’s economic nexus threshold is $100,000 in sales or 200 transactions in the current or previous calendar year. It’s a destination-sourced state.

Nevada doesn’t tax shipping if it is broken out as a separate line item on an invoice and it only includes transportation, shipping, or postage. It taxes shipping when shipping charges include handling, crating, preparing for mailing or delivery, and packaging.

For more details and information, view Nevada’s economic nexus guidance and Nevada’s tax resources.

New Hampshire

New Hampshire does not have sales tax.

New Jersey

Like many neighboring states, New Jersey’s economic nexus threshold is $100,000 in sales or 200 transactions in the current or previous calendar year. It’s a destination-sourced state that taxes shipping, except when the transaction is exempt from sales tax.

For more details and information, view New Jersey’s economic nexus guidance and New Jersey’s tax resources.

New Mexico

New Mexico doesn’t have sales tax, but has a gross receipts tax with an economic nexus threshold of $100,000 in sales of products or services in the previous calendar year. It’s an origin-sourced state that doesn’t tax shipping.

For more details and information, view New Mexico’s economic nexus guidance and New Mexico’s tax resources.

New York

New York has one of the highest economic nexus thresholds for remote retailers. It is set at $500,000 in sales and at least 100 transactions delivered to the state in the previous four quarters.

New York taxes shipping, except when the product is exempt from sales tax. It’s a destination-sourced state.

For more details and information, view New York’s economic nexus guidance and New York’s tax resources.

North Carolina

North Carolina is a destination-sourced state, with an economic nexus threshold of $100,000 in sales or 200 transactions in the current or previous calendar year.

North Carolina taxes shipping, except when the item is exempt from sales tax.

For more details and information, view North Carolina’s economic nexus guidance and North Carolina’s tax resources.

North Dakota

Like most states, North Dakota is a destination-sourced state. It has an economic nexus threshold of $100,000 in sales in the current or previous calendar year, with no minimum number of transactions.

North Dakota taxes shipping, except when the product is exempt from sales tax.

For more details and information, view North Dakota’s economic nexus guidance and North Dakota’s tax resources.

Ohio

Ohio is an origin-sourced state with an economic nexus threshold of $100,000 in sales or 200 transactions in the current or previous calendar year.

Like Michigan, it is also part of the Streamlined Sales Tax Registration System, which allows businesses to sign up for sales use and tax permits from multiple states at once.

Ohio charges tax on shipping, except when the product is exempt from sales tax.

For more details and information, view Ohio’s economic nexus guidance and Ohio’s tax resources.

Oklahoma

The economic nexus threshold for Oklahoma is $100,000 in sales in the previous 12-month period. It’s a destination-sourced state, where you won’t be charged sales tax on shipping if it is broken out as a separate line item on the invoice.

For more details and information, view Oklahoma’s economic nexus guidance and Oklahoma’s tax resources.

Oregon

Oregon does not have sales tax.

Pennsylvania

Pennsylvania is an origin-sourced state, with a tax economic nexus threshold of $100,000 in annual sales for remote sellers.

Like many states, it requires taxes on shipping fees, except when the product sold is exempt from sales tax.

For more details and information, view Pennsylvania’s economic nexus guidance and Pennsylvania’s tax resources.

Rhode Island

Remote sellers to Rhode Island will hit the economic nexus threshold at $100,000 in sales or 200 transactions in the previous calendar year. The destination-sourced state taxes shipping on all items, except those that are exempt from sales tax.

Even if you don’t meet the economic nexus threshold, remote sellers should know online referrals can also trigger the sales tax nexus in Rhode Island.

For more details and information, view Rhode Island’s economic nexus guidance and Rhode Island’s tax resources.

South Carolina

South Carolina is a destination-sourced state, where the economic nexus threshold for remote sellers is $100,000 in sales in the previous or current calendar year. South Carolina taxes shipping, except when the item is exempt from sales tax.

For more details and information, view South Carolina’s economic nexus guidance and South Carolina’s tax resources.

South Dakota

South Dakota’s economic nexus threshold is $100,000 in sales in the previous or current calendar year. It’s a destination-sourced state that taxes shipping, except when the sale is exempt from sales tax.

For more details and information, view South Dakota’s economic nexus guidance and South Dakota’s tax resources.

Tennessee

Tennessee’s economic nexus threshold is $100,000 in sales in the preceding 12-month period. It’s an origin-sourced state.

Tennessee generally taxes shipping, except when the sale is exempt from sales tax.

For more details and up-to-date information, view Tennessee’s economic nexus guidance and Tennessee’s tax resources.

Texas

Like New York, Texas’s economic nexus threshold is set at $500,000 in sales in the preceding 12-month period. It’s an origin-sourced state with local tax regions as well.

With so many local tax regions throughout the state, sellers have the option of using the single local tax rate to help streamline collection and remittance. Texas taxes shipping, except when the product is exempt from sales tax.

For more details and information, view Texas’s economic nexus guidance and Texas’s tax resources.

Utah

Remote sellers will hit the economic nexus threshold in Utah after $100,000 in sales or 200 transactions in the current or previous calendar year.

It’s an origin-sourced state that doesn’t tax shipping as long as it is broken out as a separate line item on the invoice.

For more details and information, view Utah’s economic nexus guidance and Utah’s tax resources.

Vermont

Vermont’s economic nexus threshold is $100,000 in sales or 200 transactions in the preceding 12-month period. It’s a destination-sourced state.

Vermont taxes shipping, except when the sale is exempt from sales tax. If the items sold by your business are exempt from sales tax in Vermont, you don’t need to register a sales tax account with the state no matter how much you sell.

For more details and information, view Vermont’s economic nexus guidance and Vermont’s tax resources.

Virginia

Virginia’s economic nexus threshold is $100,000 in annual sales or 200 transactions. It’s an origin-sourced state.

Virginia generally doesn’t tax shipping if shipping is broken out as a separate line item on the invoice. Handling and shipping charges are taxed if they aren’t separately stated on the invoice, or are combined with other fees.

For more details and information, view Virginia’s economic nexus guidance and Virginia’s tax resources.

Washington

Washington’s economic nexus threshold is $100,000 in sales in the current or previous calendar year. It’s a destination-sourced state, and remote sellers can apply for a business license through the Streamlined Sales Tax Registration System.

Washington taxes shipping, except when the item is exempt from sales tax, like food, food ingredients and prescription drugs.

For more details and information, view Washington’s economic nexus guidance and Washington’s tax resources.

Washington, DC

Washington, DC’s economic nexus threshold is $100,000 in sales or 200 transactions in the current or previous calendar year. That threshold includes sales made on the remote seller’s website and those made through a marketplace.

Washington, DC, generally taxes shipping and handling if included as a single item, but separately stated shipping or delivery charges are generally exempt.

For more details and information, view Washington, DC’s economic nexus guidance and Washington, DC’s tax resources.

West Virginia

West Virginia’s economic nexus threshold is $100,000 in annual sales or 200 transactions. Remote sellers who don’t meet this amount are still required to have a business license in the state. West Virginia is a destination-sourced state, with local sales taxes in many regions.

The state taxes shipping, except when the sale is exempt from sales tax.

For more details and information, view West Virginia’s economic nexus guidance and West Virginia’s tax resources.

Wisconsin

Wisconsin’s economic nexus threshold is $100,000 in annual sales for remote sellers.

There’s no sales tax on shipping items that are exempt, but shipping on all other items is taxable.

For more details and information, view Wisconsin’s economic nexus guidance and Wisconsin’s tax resources.

Wyoming

The economic nexus threshold in Wyoming is $100,000 in sales or 200 transactions in the current or previous calendar year. It’s a destination-sourced state that requires remote sellers to apply for a business license in order to sell to customers there. The license never expires, so you can continue selling as long as you are in business

Wyoming doesn’t tax shipping if it is broken out as a separate line item on the invoice.

For more details and information, view Wyoming’s economic nexus guidance and Wyoming's tax resources.

International sales tax for ecommerce

Value-added tax (VAT) 

Unlike US sales tax, which is only charged at the final sale, value-added tax (VAT) is charged at every stage of production and distribution. Worldwide, around 175 countries use VAT. 

Each business in the supply chain:

• Pays VAT when they buy materials or products
• Charges VAT when they sell their products
• Reports the difference to the government

For example, if you sell a t-shirt in the UK:

• You might buy it from your supplier for £10 + £2 VAT (20%).
• You could sell it to your customer for £20 + £4 VAT (20%).
• You’d keep the £10 profit, send £2 VAT to the government (£4 collected minus £2 paid).

VAT rates vary by region. Each country set its own rate. Here are a few examples:

• European Union (EU): Rates range between 17% to 27%.
• United Kingdom: 20%
• Australia: Flat rate of 10% (called goods and services tax)

You’ll need to register for VAT when you reach a country’s sales threshold or keep inventory in a VAT-charging country. 

Cross-border tax considerations

When your products cross borders, they're subject to import duties. These are taxes charged by a country to protect local businesses and generate revenue. 

The amount varies based on:

• Product type and classification
• Country of origin
• Declared value
• Trade agreements between countries

For example, sending a leather handbag from the US to France might trigger different duties than sending the same bag to Japan, even if the sale price is identical.

Every country has a de minimis threshold, a minimum value below which they don't charge import duties. Here are some examples:

• EU: €150
• UK: £135
• Canada: CA$20
• Australia: AU$1,000

Orders below these values often clear customs more quickly and cost less to process.

Understanding these considerations helps you avoid expensive mistakes and keeps your international customers coming back. While it might seem complex at first, the right tools and partners can help automate much of this process. Shopify’s Managed Markets helps here. 

Managed Markets automatically handles the complex math of international selling. It calculates VAT rates, import duties, and currency conversions in real time, showing your customers exactly what they'll pay—with no surprise fees at delivery. 

The tool monitors your sales volumes in different countries and alerts you when you're approaching tax registration thresholds, helping you stay compliant with local laws. For each sale, it generates the right customs forms and tax documentation, saving you hours of paperwork. Plus, it manages currency conversions and displays prices in local currencies, making your store feel local to customers worldwide. 

International marketplace obligations

When you sell internationally through online marketplaces like Amazon, eBay, or Alibaba, you face unique tax obligations. These vary by marketplace and country, but understanding them is important for compliance.

Many countries now require online marketplaces to handle tax collection and remittance for online sellers. 

These marketplace tax laws differ across regions:

European Union

• Marketplaces must collect and remit VAT on sales under €150.
• The marketplace is considered the "deemed supplier" for tax purposes.
• Sellers must track sales for their own VAT obligations.
• Special One Stop Shop (OSS) rules apply for marketplace sales.

United Kingdom

• Marketplaces handle VAT for overseas sellers.
• Different rules apply for goods stored in UK warehouses.
• Sellers need to maintain their own VAT records.
• There are special requirements for goods over £135.

Australia and New Zealand

• Marketplaces must collect goods and services tax (GST) on low-value goods.
• Platform-specific rules exist for different types of products.
• Digital products have separate obligations.
• Marketplace providers handle tax collection.

Tax registration requirements by region

Whatever region you're entering, start the registration process early. These applications can take weeks or even months to process, and you don't want to hit a sales threshold before you're properly registered. 

Here are the requirements by region:

European Union (EU)

• The distance selling threshold is €10,000 across all EU countries.
• Once exceeded, register through the One Stop Shop (OSS) system.

United Kingdom

Businesses selling to UK customers must register for VAT if they meet any of the following conditions:

• Sales exceed £85,000 in any 12-month period
• The business stores inventory in UK warehouses
• The business sells goods worth over £135 directly to UK consumers

Australia 

• Register for GST at the AU$75,000 threshold.
• An Australian Business Number (ABN) is required.

Japan

• Registration is required at the JP¥10 million threshold.
• A local tax representative is often needed.

China

• Registration is required from first sale.
• Requirements vary by province.
• A local representative is mandatory.

Canada

• There is a CA$30,000 threshold for GST and harmonized sales tax (HST).
• There are province-specific requirements for provincial sales tax (PST).
• HST combines federal GST with PST in some provinces.

UAE and Saudi Arabia

• VAT registration at specific thresholds
• Mandatory tax representative
• Special documentation requirements

💡 Tip: International tax requirements change frequently, and it's essential to verify current rules when entering new markets. Consider working with local tax professionals for complex registrations.

Make sales taxes easier with Shopify

Tax registration is just the beginning. Each region requires regular filing schedules, specific record-keeping practices, and maintenance of a clear audit trail. 

For US sellers, Shopify Tax simplifies domestic tax management with automated calculations, liability tracking, and streamlined filing. It helps you:

• Track tax obligations and monitor your thresholds across states.
• Calculate rates with rooftop-level precision for 11,000+ US tax jurisdictions.
• Categorize products correctly to apply the right sales tax rates.
• Automate tax filing and remittance with no annual fees.

While international selling comes with its own tax complexities, starting with solid domestic tax compliance through Shopify Tax creates a strong foundation for global expansion. Combine it with Managed Markets for international selling, and you'll have the tools you need to handle tax compliance confidently, whether you're selling across state lines or across oceans.