Basic Tax service in the US

If you're already using Shopify to sell in the United States, then you can update your US sales tax settings to reflect your tax registrations. This change doesn't affect how sales tax is charged on your store.

When you update your tax settings, you're asked to provide a tax registration number. After it's been added, Shopify automatically sets the tax rates that apply in the areas you've registered for. If you aren't registered to collect sales tax in any states listed in your tax settings, then you can remove them.

Tax registration requirements

In general, you're obligated to collect tax in any US state where you both have economic nexus and sell taxable goods or services.

For more information, refer to US taxes reference. If you're unsure whether you need to register for a tax account, then reach out to US state tax authorities or a local tax professional.

Sales tax ID requirements

A sales tax ID is a number provided to you by your state tax authority after you register with them to collect taxes. This number is issued by states to allow you to charge taxes there.

You need a sales tax ID number only if you determine that you need to charge taxes in a particular state.

Determine if you need to register

Typically, you need to register if you have economic nexus in a state. What constitutes nexus in each state can differ. Some states require you to register and collect taxes only if your business is physically located within that state, while others might require you to register based on distribution centers or advertising within those states.

If you have any significant presence in a state, then you should contact its tax authority to confirm whether you need to register to collect taxes. For more details, see US taxes reference.

Register to charge taxes

If you need to register to charge state taxes, then you can do so on that state's website. For direct links to each state's tax authority, refer to the state tax reference.

After you complete your registration, add your sales tax ID number on the Taxes and duties page.

Add a new tax registration

1. From your Shopify admin, go to Settings > Taxes and duties.

2. In the Manage sales tax collection section, click United States.

3. In the Regions you're collecting in section, click Collect sales tax.

4. Select a state or region in which you are registered.

5. In Sales tax ID, enter your sales tax ID. If you have applied for a sales tax ID but don't yet have one, then leave this field blank. You can update it when you receive your sales tax ID.

6. Optional: If your business is located in a state where tax laws regarding shipping vary, then you can choose whether you want to charge tax on shipping.

   1. Click Advanced options.
   2. Under Shipping tax, choose whether you want to apply shipping tax.

7. Click Collect sales tax.

8. Optional: Add more regions and account numbers by clicking Collect sales tax.

Edit or remove a tax registration

You can update your sales tax ID or remove a registration at any time.

Steps:

1. From your Shopify admin, go to Settings > Taxes and duties.

2. In the Manage sales tax collection section, click United States.

3. In the Regions you're collecting in section, find the state you want to update.

4. Click next to the state name.

5. Select Edit settings to update the sales tax ID or advanced options, or select Stop collecting to remove the registration.

Manage product tax categories

Product categories help ensure accurate tax calculations by identifying which products qualify for exemptions or special tax rates. For example, clothing items might be exempt in certain states when properly categorized.

Add or update product categories

1. From your Shopify admin, go to Products.

2. Select the product you want to categorize.

3. In the Product organization section, find Product category.

4. Click the category field and select the appropriate category from the list.

5. Click Save.

Bulk edit product categories

If you have many products to categorize, then use the bulk editor.

Steps:

1. From your Shopify admin, go to Settings > Taxes and duties.

2. In the Manage sales tax collection section, click United States.

3. In the Tax rates and exemptions section, click the link to Categorize products.

4. Use the bulk editor to update categories for multiple products at once.

For more information, refer to Product categories.

Override tax settings

You can override tax settings. For more information about how US tax overrides are affected when you update, refer to Override taxes.

Troubleshooting tax calculation issues

If taxes aren't being charged as expected on orders, then review the following checklist before contacting Shopify Support.

Additional US tax resources

US tax settings resources

The following resources can help you manage your US tax settings:

• Review your tax settings in Settings > Taxes and duties > United States.
• Check the US taxes reference for state-specific information.
• Review product categories to ensure accurate tax calculations.
• Learn about tax overrides if you need to customize rates.

Tax professional resources

If you need help determining whether you should register with tax agencies and charge taxes to your customers, then consult the following resources:

• State tax authorities: Contact your state's tax authority directly for specific registration requirements and rules.
• Tax professionals: Work with an accountant or tax advisor who specializes in your business type and location.
• Tax compliance services: Consider using automated tax filing services if you have complex multi-state obligations.

Get help from Shopify Support with your tax settings

Contact Shopify Support if you've reviewed the troubleshooting steps and still need help with:

• Making changes to your tax settings
• Understanding unexpected tax calculations after troubleshooting
• Complex tax migrations or configurations

Selling to the United Kingdom

If you sell to customers in the United Kingdom, then VAT requirements differ based on whether the order value is above or below £135 GBP. You might also need a UK EORI number.

For complete details about UK VAT requirements, thresholds, EORI numbers, and how to handle VAT and duties, refer to UK taxes reference.

Selling in the European Union

When merchants outside the European Union ship orders to customers in EU member countries, import and duty rules apply based on order value. Orders equal to or less than €150 EUR are subject to VAT, while orders greater than €150 EUR are subject to import VAT and duties collected upon delivery.

If you want to collect VAT at checkout, then you can register for the Import One-Stop Shop scheme (IOSS). Before you add your IOSS number to your tax registration, make sure that you've set up a shipping profile for the European Union.

For complete details about EU VAT requirements, IOSS registration, thresholds, and step-by-step setup instructions, refer to EU taxes reference.

Tax amount differences after updating settings

In some orders, you might notice a small variance in your total tax amounts after you've updated your tax settings. This variance is due to tax amounts being rounded at the line-item level, rather than at the invoice level. You can learn more about rounding calculations in Setting up US taxes.

Prepare to contact Shopify Support about US sales tax issues

Before reaching out to Shopify Support, gather the following information to help resolve your issue faster:

• A description of what you expect to happen and what's happening instead
• An admin link to an order showing the issue (go to Orders, click the order, and copy the URL from your browser)
• If possible, an admin link to an order where taxes calculated correctly for comparison
• Your sales tax ID(s) for the affected state(s)
• The customer's full shipping address (state, city, and ZIP code)
• Whether the product is physical or digital
• When the issue started occurring
• Steps you've already tried from the troubleshooting section