Shopify US Taxes: Your Ultimate Guide to Sales Tax Compliance

You’re finally making sales on Shopify, but now the tax emails are piling up, and you’re not even sure which state wants your money. 

One customer is in California, another in Texas, and suddenly you’re googling terms like “economic nexus” and “sales tax thresholds” at 1 a.m. 

But here’s the good news: you’re not alone, and you’re not expected to become a tax expert overnight. 

If you’re looking for a done-for-you solution to simplify it all, doola’s sales tax compliance services have your back, so you can focus on selling, not spreadsheets.

We make Shopify US taxes easy for the sellers by handling registrations, automated filings, tracking deadlines, and providing expert support built right into our dashboard.

We’ve also created this guide, a Shopify-specific, e-commerce-focused breakdown of how US sales tax works, what it means for your store, and what steps you need to take to stay compliant without sacrificing growth.

So, let’s dive right in.

Why US Sales Tax Matters for Shopify Sellers

There are over 11,000 tax jurisdictions in the United States. That means sales tax rules can vary not just by state, but also by county, city, and even district. 

It’s one of the most decentralized and complex tax systems, which makes it nearly impossible to apply a one-size-fits-all approach. You might be compliant in one state but non-compliant in another, and not even know it.

Here’s where it gets even trickier: Shopify sellers can unknowingly trigger tax obligations just by making a handful of sales in the “wrong” state. 

Most states now enforce economic nexus laws, which require sales tax collection and remittance if a business surpasses a certain revenue or transaction threshold, sometimes as low as $100,000 or just 200 orders per year in a single state.

The result? You might hit an invisible tax threshold in a state you’ve never even visited, simply because your store is doing well. 

For example, if your product gains traction with customers in New York, Texas, or California, you could suddenly find yourself with tax responsibilities there, even if you’re not based there.

That’s why understanding US sales tax is critical for Shopify sellers scaling nationally or internationally. 

Knowing where you owe tax (and when) can make the difference between sustainable scaling and an administrative nightmare.

🔖 Related Must-Read: From Snowboards to $160 Billion: The Shopify Origin Story

Understanding Nexus for Shopify US Taxes: Physical vs. Economic Presence

Nexus simply means a connection or presence that creates a legal obligation for you to collect and remit sales tax in a specific state. 

There are 2 main types of nexus: physical and economic, and many sellers don’t realize how easily one or both can be triggered.

Key Triggers for Physical Nexus

This applies when your business has a tangible connection to a state. Shopify sellers can trigger physical nexus through:

• Inventory storage: Using a 3PL or warehouse (e.g., Amazon FBA or a fulfillment partner in New Jersey).

• Employees or contractors: Having remote staff, customer service reps, or salespeople in another state.

• Trade shows or pop-ups: Even temporarily selling in-person at a market or event can establish a physical nexus.

Example: A Shopify store selling eco-friendly skincare uses a fulfillment center in New Jersey to ship orders faster. Even though the owner is based in the UK, storing inventory there creates a physical nexus and triggers tax obligations in NJ.

Key Triggers for Economic Nexus

This is where most Shopify sellers get caught off guard. Economic nexus is triggered when your sales in a particular state exceed a certain revenue or transaction threshold, usually:

• $100,000 in annual sales, or

• 200 separate transactions in a calendar year (Thresholds vary by state; some are higher, others don’t count transactions.)

Example: A California-based Shopify store goes viral on TikTok, generating $120,000 in sales from customers in Texas. Without ever having a physical presence there, they’ve triggered an economic nexus in Texas and now need to register and collect sales tax.

These thresholds are often invisible to sellers. There is no warning email or Shopify pop-up when you cross the line. That’s why so many entrepreneurs are caught off guard, especially when their store suddenly scales.

With our sales tax guide, you’ve taken the first step toward staying compliant and avoiding penalties. 

🔖 Related Must-Read: Sales Tax Nexus Made Easy: A Comprehensive Guide

How Shopify Handles Sales Tax Settings

Shopify does a great job of making things easy for sellers, but ease can be misleading when it comes to sales tax. 

While Shopify can help you collect sales tax, it won’t manage your compliance, register you in states, or file returns.

In reality, Shopify’s tax tools are just the starting point. Understanding what’s automated and what’s not is key to staying compliant.

Tax Collection Methods via Shopify

Here’s what Shopify does when it comes to US sales tax:

✔️ Auto-calculates sales tax rates by region: Based on the customer’s location, Shopify calculates the appropriate state, county, and city tax rates (pulled from tax databases).

✔️ Collects tax at checkout (if enabled): If you’ve added tax regions in your admin settings and you’re registered in a state, Shopify will charge customers the correct rate.

✔️ Set tax overrides and exemptions: You can manually adjust rules for specific products or regions (applicable for states with quirks like tax-free clothing or food).

✔️ Integrates with some third-party tax apps: Most (if not all) tax tools can sync with Shopify to enhance tax calculations or filing, but these still require manual setup and management.

However, here’s what Shopify does not do:

❌ It does NOT register you for a sales tax permit. You’ll need to do that separately for each state where you have nexus.

❌ It does NOT file your tax returns. You’re responsible for submitting returns and remitting the collected taxes to each state.

❌ It does NOT track where you’ve triggered Nexus. You’ll need to monitor your sales activity to know when you’re obligated to register in a new state.

doola’s Tip for the Do’ers:

Setting up Shopify tax collection is not the same as being compliant. Remember, you might still face penalties if you collect tax without being properly registered or do not collect when you should be.

Quick Setup Guide for Tax Regions in Shopify Admin

To collect tax properly, here’s what you need to do inside Shopify:

• Go to Settings > Taxes and Duties.

• Add the regions where you’re registered. (Shopify only lets you collect in states where you’ve confirmed you’re registered.)

• Enable automatic tax calculations.

• Set product-specific tax overrides, if applicable.

For International Sellers

If you’re based outside the US but sell to American customers, the same nexus rules apply. 

You may still need to register for US sales tax in certain states, especially if you store inventory there (e.g., via a 3PL) or exceed economic thresholds.

Shopify is a powerful platform, but when it comes to compliance, you need more than toggles and checkboxes. 

That’s where doola can help, with automated tracking, registration, and filing, tailored for Shopify sellers.

State-by-State Breakdown: What Varies and Why It Matters

When it comes to sales tax, no two states play by the same rules. 

In California, for example, once your sales hit $500,000 annually, you’re required to collect and remit sales tax, regardless of transaction count. But that’s just the beginning. 

California’s layered tax structure includes not just state-level rates but also county and district-level taxes, which can vary dramatically even within the same ZIP code. 

New York is equally challenging. Clothing under $110 is tax-exempt at the state level, but some counties can still charge local tax. 

Texas might seem simpler at first. However, that simplicity disappears if you have a physical presence, like storing inventory in a Dallas fulfillment center or hiring a local contractor. 

In Florida, even if you didn’t collect any sales tax in a given month, you’re still expected to submit a return if your business is registered. 

Let’s look at the rules set in each state for online sales, and why they’re uniquely tricky:

State	Threshold	Measurement Date	Includable Sales (Gross, Retail, or Taxable)	When You Need to Register Once You Exceed the Threshold
Alabama	$250,000 + specified activities	Previous calendar year	Retail sales Marketplace sales are excluded from the threshold for individual sellers	January 1 following the year in which the threshold is exceeded
Alaska	$100,000*Alaska removed its 200 transactions threshold effective January 1, 2025.	Per Remote Seller Sales Tax Code & Common Definitions: Previous calendar year	Per Remote Seller Sales Tax Code & Common Definitions: Gross sales Marketplace sales are included towards the threshold for individual sellers.	The first day of the month following 30 days from adoption by the city or borough
Arizona	$200,000 in 2019; $150,000 in 2020; and $100,000 in 2021 and thereafter	Previous or current calendar year	Gross sales Marketplace sales are excluded from the threshold for individual sellers	The seller must obtain a TPT license once the threshold is met and begin remitting the tax on the first day of the month, which starts at least thirty days after the threshold is met, for the remaining current year and the next calendar year.
Arkansas	$100,000 or 200 or more separate transactions	Previous or current calendar year	Taxable sales Marketplace sales are excluded from the threshold for individual sellers	Next Transaction after meeting the threshold
California	$500,000**California removed its transactions threshold and raised its sales threshold on April 25, 2019.	Preceding or current calendar year	Gross sales of tangible personal property Marketplace sales are included towards the threshold for individual sellers	The day you exceed the threshold
Colorado	$100,000**Colorado removed its 200 transactions threshold by permanent rules, effective April 14, 2019.	Previous or current calendar year	Retail sales Marketplace sales are excluded from the threshold for individual sellers	The first day of the month after the ninetieth day, the retailer made retail sales in the current calendar year that exceeded $100,000
Connecticut	$250,000 and 200 transactions $100,000 and 200 transactions – applicable to sales on or after July 1, 2019*	12-month period ending on September 30	Retail sales Marketplace sales are included towards the threshold for individual sellers	October 1 of the year in which you cross the threshold on September 30
Delaware	N/A	N/A	N/A	N/A
District of Columbia	$100,000 or 200 or more separate retail sales	Previous or current calendar year	Retail sales Marketplace sales are included towards the threshold for individual sellers	Next transaction
Florida	$100,000	Previous calendar year	Taxable salesMarketplace sales are excluded from the threshold for individual sellers	First of calendar year after you meet the threshold
Georgia	$250,000 or 200 or more sales (effective January 1, 2019, through January 1, 2020) $100,000 or 200 or more sales**Georgia lowered their sales threshold to $100,000 and kept the 200 transactions threshold unchanged, effective January 1, 2020.	Previous or current calendar year	Retail sales of tangible personal property delivered electronically or physically, whether taxable or exempt. Marketplace sales are excluded from the threshold for individual sellers	Next Transaction after meeting the threshold
Hawaii	$100,000 or more, or 200 or more separate transactions	Current or immediately preceding calendar year	Gross sales Marketplace sales included towards the threshold for individual sellers	The first of the month following when the threshold is met.
Idaho	$100,000	Previous or current calendar year	Gross sales Marketplace sales included towards the threshold for individual sellers	Next transaction (state doesn’t specify)
Illinois	$100,000 or more, or 200 or more separate transactions	Preceding 12-month period	Retail sales Marketplace sales excluded from the threshold for individual sellers	The retailers shall determine on a quarterly basis whether they meet the criteria for the preceding 12-month period
Indiana	$100,000	The calendar year in which the retail transaction is made or for the calendar year preceding the calendar year in which the retail transaction is made.	Gross sales Marketplace sales excluded from the threshold for individual sellers	Next Transaction after meeting the threshold
Iowa	$100,000 – effective July 1, 2019*$100,000 or 200 or more separate transactions prior to July 1, 2019	Current or immediately preceding calendar year	Gross sales Marketplace sales included towards the threshold for individual sellers	The first day of the next calendar month that starts at least 30 days from the day the remote seller first exceeded the threshold
Kansas	$100,000	Current or immediately preceding calendar year**Only for calendar year 2021 sales since January 1, 2021	Gross sales Marketplace sales are included towards the threshold for individual sellers	Next transaction
Kentucky	$100,000 or 200 or more separate transactions	Previous or current calendar year	Gross sales Marketplace sales included towards the threshold for individual sellers	First of the month following 30 days after the threshold is met (60 days eff. 7/1/2021)
Louisiana	$100,000* Louisiana removed its 200 transactions threshold, effective August 1, 2023	Previous or current calendar year	Retailsales Marketplace sales are excluded from the threshold for individual sellers	Within 30 days of exceeding the threshold, the remote seller must submit an application to the Louisiana Remote Seller Commission and must begin collecting state and local sales and use tax based upon actual applicable bases and rates on sales for delivery into Louisiana within 60 days.
Maine	$100,000	Previous or current calendar year	Gross sales Marketplace sales are excluded from the threshold for individual sellers and don’t include marketplace sales on returns if reported by the marketplace	The first day of the first month that begins at least thirty days after the seller has exceeded the threshold.
Maryland	$100,000 or 200 or more separate transactions	Previous or current calendar year	Gross sales Marketplace sales included towards the threshold for individual sellers	The first day of the month following when the threshold is met
Massachusetts	$100,000	Previous or current calendar year	Gross sales Marketplace sales are excluded from the threshold for individual sellers if the marketplace facilitator is collecting	First day of the first month that starts two months after the month in which the remote retailer first exceeded the $100,000 threshold, in the first year that it exceeded the threshold
Michigan	$100,000 or 200 or more separate transactions	Previous calendar year	Gross sales Marketplace sales included towards the threshold for individual sellers	January 1 following the year in which the threshold is exceeded
Minnesota	$100,000 or 200 or more  retail sales	12-month period ending on the last day of the most recently completed calendar quarter	Retail sales Marketplace sales included towards the threshold for individual sellers	First day of the calendar month occurring no later than 60 days after meeting or exceeding the threshold
Mississippi	More than $250,000	Prior twelve-month period	Gross sales Marketplace sales excluded from the threshold for individual sellers	Next transaction
Missouri	$100,000	The previous twelve-month period is reviewed quarterly	Taxable sales of tangible personal property, including marketplace sales	No later than 3 months following the close of the quarter when the threshold was exceeded
Montana	N/A	N/A	N/A	N/A
Nebraska	$100,000 or 200 or more separate transactions	Previous or current calendar year	Retail sales Marketplace sales included towards the threshold for individual sellers	The first day of the second calendar month after the threshold was exceeded
Nevada	$100,000 or 200 or more separate transactions	Previous or current calendar year	Retail sales Marketplace sales included towards the threshold for individual sellers	By the first day of the calendar month that begins at least 30 calendar days after they hit the threshold
New Hampshire	N/A	N/A	N/A	N/A
New Jersey	$100,000 or 200 or more separate transactions	Previous or current calendar year	Gross sales Marketplace sales included towards the threshold for individual sellers	Required to collect on the first taxable sale, a 30-day grace period to register
New Mexico	$100,000	Previous calendar year	Taxable sales Marketplace sales excluded from the threshold for individual sellers	January 1 following the year in which the threshold is exceeded
New York	$500,000 in sales of tangible personal property and more than 100 sales	Immediately preceding four sales tax quarters	Gross receipts from sales of tangible personal property Marketplace sales are included towards the threshold for individual sellers	Register within 30 days after meeting the threshold and begin to collect tax 20 days thereafter
North Carolina	$100,000*	Previous or current calendar year	Gross sales and Marketplace sales included towards the threshold for individual sellers	Next transaction
North Dakota	$100,000	Previous or current calendar year	Taxable sales Marketplace sales excluded from the threshold for individual sellers	The following calendar year or 60 days after the threshold is met, whichever is earlier
Ohio	$100,000 or 200 or more separate transactions	Previous or current calendar year	Retail sales Marketplace sales are included towards the threshold for individual sellers	The next day after meeting the threshold
Oklahoma	$100,000 in aggregate sales of TPP	Preceding or current calendar year	Taxable salesMarketplace sales excluded from the threshold for individual sellers	The first calendar month following the month when the threshold is met
Oregon	N/A	N/A	N/A	N/A
Pennsylvania	$10,000 or comply with the notice and reporting requirements	Previous 12-month period	Taxable sales Gross sales on all channels, including taxable, exempt, and marketplace sales	Notice: On or before June 1 of each calendar year Mandatory economic: April 1 following the calendar year in which the threshold was exceeded
Puerto Rico	$100,000 or 200 or more separate transactions	Seller’s accounting/fiscal year	Gross sales Marketplace sales excluded from the threshold for individual sellers	Next transaction
Rhode Island	$100,000 or 200 or more separate transactions	Immediately preceding calendar year	Gross sales Marketplace sales included towards the threshold for individual sellers	January 1 following the year in which the threshold is exceeded
South Carolina	$100,000	Previous or current calendar year	Gross sales Marketplace sales included towards the threshold for individual sellers	The first day of the second calendar month after the economic nexus is established
South Dakota	$100,000	Previous or current calendar year	Gross revenue Marketplace sales included towards the threshold for individual sellers	The first full month that begins at least 30 days after meeting the threshold
Tennessee	$100,000	Previous 12-month period	Retail sales Marketplace sales excluded from the threshold for individual sellers effective October 1, 2020	The first day of the third month following the month in which the dealer met the threshold, but no earlier than July 1, 2017
Texas	$500,000	The preceding twelve calendar months	Gross revenue: including taxable, nontaxable, and tax-exempt sales Marketplace sales are included towards the threshold for individual sellers	The first day of the fourth month after the month in which the seller exceeded the safe harbor threshold
Utah	$100,000 or 200 transactions(Note: The transactions threshold will be removed effective July 1, 2025.	Previous or current calendar year	Gross sales Marketplace sales excluded from the threshold for individual sellers	Next transaction (state doesn’t specify)
Vermont	$100,000 or 200 or more separate transactions	The prior four calendar quarters	Gross sales Marketplace sales included towards the threshold for individual sellers	First of the month, after 30 days from the end of the quarter, when you exceed the threshold
Virginia	$100,000 or 200 or more separate transactions	Previous or current calendar year	Retail sales Marketplace sales excluded from the threshold for individual sellers	Next transaction (state doesn’t specify)
Washington	Gross income of the business exceeds $100,000	Current or preceding calendar year	Gross sales Marketplace sales are included towards the threshold for individual sellers	The first day of the month that starts at least 30 days after you meet the threshold
West Virginia	$100,000 or 200 or more separate transactions	Preceding or current calendar year	Gross sales Marketplace sales are included towards the threshold for individual sellers	Next transaction (state doesn’t specify)
Wisconsin	$100,000*	Previous or current calendar year	Gross sales Marketplace sales are included towards the threshold for individual sellers (Note: If all sales are made through a marketplace that is collecting, the individual seller is not required to register.)	Next transaction
Wyoming	$100,000	Previous or current calendar year	Gross sales Marketplace sales are excluded from the threshold for individual sellers	Next transaction

With rules this fragmented, a blanket strategy isn’t just risky; it’s costly. Shopify’s built-in features don’t catch all these state-by-state quirks. 

Here’s our state-wise sales tax guide if you want a deeper look into the sales tax compliance requirements of a particular state in the US.

Tips to Stay Compliant: What Shopify Sellers Must Do

Sales tax compliance doesn’t end once you collect the tax. You also need to file it correctly and on time. 

Here’s a checklist to help Shopify sellers stay on top of their responsibilities and avoid costly mistakes.

✅ Know your filing frequency per state: Check your sales thresholds, filing schedules, and tax notices from each state to confirm your deadlines.

✅ Register to file in states where you have nexus; Register for a sales tax permit before collecting and remitting sales tax in a state. 

✅ Set calendar reminders for due dates: Mark each state’s filing deadlines in your calendar with alerts a few days in advance. 

✅ Sync financials with your Shopify store: Use doola’s automated solution that integrates with Shopify to pull in real-time tax data, track what’s owed, and reduce errors at filing time.

✅ Keep organized sales and tax records: Maintain documentation in case of audits. States can look back years and request proof of what you collected, filed, and remitted.

🔖 Related Must-Read: From Novice to Pro: Ultimate Guide to Selling on Shopify

When to File and Where

Sales tax filing frequency varies by state, so check each state’s specific due dates and mark them on your calendar to avoid missing deadlines.

Most states offer online filing portals where you can log in, report collected taxes, and submit payments. 

For multi-state sellers, this process can get overwhelming fast. Luckily, doola’s Sales Tax Compliance services handle multi-state filings for you, ensuring you meet every deadline with accurate, audit-ready data.

How doola Simplifies Sales Tax for Shopify Sellers

With doola as your trusted back-office partner, you can focus on running and growing your Shopify store.

We don’t just give you tools and leave you to figure them out. We take sales tax off your plate. 

doola helps you register for sales tax permits in the states where you have nexus, whether physical or economic. 

Once you’re set up, we monitor your thresholds and send alerts when you approach a new state requirement, so nothing falls through the cracks. 

When it’s time to file, we handle it for you automatically, state by state, using up-to-date compliance rules that reflect real changes in tax laws and filing frequencies.

Ready to make sales tax stress-free? 

Book a demo with doola today!

FAQs

How can I set up my Shopify store to automate sales tax collection?

Go to your Shopify admin, add the states where you have nexus, and enable automatic tax collection to ensure Shopify calculates and collects tax at checkout.

What happens if I fail to file sales tax in a state where I have nexus?

You may face penalties, interest charges, and potential audits from that state’s tax authority.

How often do I need to file sales tax returns for my Shopify store?

Filing frequency depends on the state. Depending on your sales volume and location, it could be monthly, quarterly, or annually.

Can international sellers use Shopify and still be compliant with US tax laws?

Yes, but you must register for sales tax in states where you have nexus and file returns as required, even if you’re based outside the US