Shopify Tax offers the highest level of sales tax compliance with the least amount of upkeep for US merchants that sell to customers in the United States. The following features are available when using Shopify Tax:
- Sales tax liability insights decode each state's tax regulations to help determine where you might be required to collect taxes.
- Rooftop accuracy uses precise calculation technology to collect tax based on your customer's specific address within 11,000+ US tax jurisdictions. This improvement over zip code-based calculations better captures tax rates that can vary within regions, and helps to prevent additional costs when inaccurate tax calculations occur.
- Product categories automatically suggests categories for each of your products that you can review, approve, or revise, and then applies the most accurate tax rate for that product based on your customer’s local tax rules.
- Enhanced sales tax reporting (coming early 2023) makes filing substantially easier by providing filterable sales data, enabling you to generate reports ready to send in to each jurisdiction.
You can also choose one of Shopify’s two free legacy tax services: Basic Tax or Manual Tax. These services offer a lower level of automated compliance, and require significantly more work on your part to keep tax rates up to date and to monitor regulation changes. This could expose your business to more tax liability in US jurisdictions. Learn more about your US tax service options and how to switch.
Shopify Tax Pricing
All stores in the United States are able to use Shopify Tax without charge for the first 100,000 USD of US online sales each calendar year. As of January 15, 2023, the following fees apply after this threshold.
- A 0.35% calculation fee is charged on orders where tax is calculated in stores on the Shopify Starter, Shopify Lite, Basic Shopify, Shopify, and Advanced Shopify plans.
- A 0.25% calculation fee is charged on orders where tax is calculated in stores on the Shopify Plus plan.
Shopify Tax fee threshold
The fees for tax calculations apply only if your store has made sales equal to or greater than 100,000 USD in one calendar year. If your store's sales are below 100,000 USD, then there is no charge for tax calculations. A calendar year is the period starting on January 1 and ending on December 31.
Sales that count towards the threshold are orders that originate in and are destined for locations in the United States, including the following:
- sales from other channels that you've connected to Shopify (for example, Facebook, Instagram, and more)
- sales of gift cards
- sales made through Shop
- sales that include non-taxable products
- sales made through all payment gateways
- taxes and shipping fees on sales
POS sales and imported orders do not count toward the threshold.
Shopify Tax fees
Fees do not apply to in-person sales or to sales in states where you do not collect tax. In addition, the following fee caps apply:
- 0.99 USD order cap. No matter how large the order total, you are not charged more than 0.99 USD per order.
- 5,000 USD yearly cap. No matter how much you sell during a calendar year, you are not charged more than 5,000 USD per year.
If your store's total sales are equal to or above the fee threshold, then a percentage fee is incurred on transactions in your store that have tax calculated. The fee applies to orders from states where you have tax collection enabled, including orders where no tax is charged due to products or customers that are tax exempt. The fee does not apply to the following:
- orders from states where you don't collect tax
- POS orders
- orders that originate in a country other than the United States and are shipped to a country other than the United States
- imported orders from outside Shopify
- orders or portions of orders that are paid for with a gift card
This fee is charged to you on your subscription invoice for Shopify. It isn't charged to your customers and doesn't appear on their invoice.
Learn more about your US tax service options.
Considerations for using Shopify Tax
Calculations using Shopify Tax are only available for certain transactions. If a tax calculation can't be performed using Shopify Tax, then the tax calculation is performed by using registration-based, non-rooftop accurate calculations. For more information, refer to US taxes or to registration-based tax settings.
Calculations using Shopify Tax are only available for the following orders:
- Orders that originate in and are destined for locations in the United States.
- Orders that use the following payment methods:
- credit cards
- gift cards
- orders that are manually marked as paid
Calculations using Shopify Tax are not available for the following:
- orders that originate in a country other than the United States
- orders that are shipped to a country other than the United States
- orders that are affected by apps that allow for buy now, pay later
- All API-generated orders
- orders with tax inclusive prices
- orders that contain one or more products with an associated product or shipping rate tax override
- orders that contain one or more products that are set as non-taxable
- orders that use the following payment methods:
- bank transfers
- multiple payment methods
- deferred payments