Setting up US taxes - classic

You can configure your tax settings on the Taxes page in your Shopify admin to make sure that you're charging the correct amount of tax.

Set up automatic tax rates

If you need to charge tax within the United States, then taxes might apply in your city, county, and state. To handle this complexity, you can use Shopify's automatic tax settings. Shopify's tax settings use standard general sales tax rates, which are updated regularly.

Steps:

  1. In the Tax regions section, find United States and click Set up.

  2. In the Calculating taxes section, check Calculate taxes automatically.

  3. In the County, municipal, and state taxes section, add a physical presence for each region in which you have nexus, such as an office, warehouse, or other facility. For more information about nexus, including economic nexus, refer to US tax nexus.

    1. In the State Name field, select a state:
      Select a state in the State Name field
    2. Beside the state, enter the zip code of the location where you have nexus:
      Enter the zip code
    3. Click Add state.

    For each physical presence that you enter, the applicable taxes are displayed.

View detailed state tax rates

If you want to view the tax details for a state, including the tax policy and rates on shipping and handling, then click the value in the County, municipal and other taxes column.

The County taxes dialog for each state shows a list of the cities, counties, and zip codes. It also shows the default tax rates and indicates whether shipping and handling are taxable:

County taxes window

Remove a physical presence

Although you can remove your business's physical presences, you have to keep at least one physical presence for the state that is specified in your store address on the Settings > General page.

For tax purposes, Shopify assumes that you have a physical presence at your store address. If you remove that physical presence from the Taxes page, then Shopify will add it back.

You can remove a physical presence from the County, municipal, and state taxes section.

Steps:

  1. In the Tax regions section, click United States.

  2. Click the trash can icon beside the presence you want to remove.

    Trash can icon

Set up tax rates manually

If you don't want to use Shopify's automatic tax settings in the United States, then you can manually set tax rates to suit your own needs.

Steps:

  1. In the Tax regions section, find United States and click Set up.

  2. In the Calculating taxes section, uncheck Calculate taxes automatically.

  3. In the Base taxes section, specify the taxes manually for each state and region. You can choose whether a tax in a region is used instead of a federal tax, or is added to or compounded with a federal tax.

  4. Click Save.

Examples of United States taxes

Example 1

For this example, assume that you run your online store in Orlando, Florida. You don’t have a presence, or nexus, in any other state.

  • If you sell to a customer in Miami, Florida, then you charge tax because you have nexus in the state (it’s where you’re located). Florida is a destination-based state, so the specific tax rates are determined by the zip code of the customer’s shipping address in Miami.
  • If you sell to a customer in New York, then you don’t charge any taxes to that customer because you don’t have nexus in New York.

Example 2

For this example, assume that you run your online store in Pittsburgh, Pennsylvania. You don’t have nexus in any other state.

  • If you sell to a customer in Harrisburg, Pennsylvania, then you do charge tax because you have nexus in the state (it’s where you’re located). Pennsylvania is an origin-based state, so the specific tax rates are determined by the zip code of your address in Pittsburgh.
  • If you sell to a customer in New York, then you don’t charge any taxes to that customer because you don’t have nexus in New York.

Example 3

For this example, assume that you run your online store in Morgan Hill, California. You fulfill your orders from a distribution center in Puyallup, Washington.

  • If you sell to a customer in San Jose, California, then you charge tax. You have nexus in the state (it’s where you’re located). The state, county, and city taxes are based on your store’s zip code. But the district taxes are based on the buyer’s zip code in San Jose.
  • If you sell to a customer in Olympia, Washington, then you charge tax, because you have nexus in Washington state (it's where your distribution center is located). The state, county, and city taxes are based on the zip code of the customer’s shipping address in Olympia.

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