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United States taxes

In the United States, sales tax depends on a concept called nexus. If there is a nexus, or connection, between your business and a state, you might need to charge sales taxes there. Traditionally, a nexus occurs when you have some kind of physical presence in a state, such as a store or warehouse. But some states define nexus to include solicitation, presence of inventory, or fulfillment services. If you're not sure where you have a nexus, then consult with a tax expert.

You also need to figure out whether your product is taxable, and whether you need to charge sales tax based on an origin basis or destination basis. Most states use a destination basis, which means you charge sales tax at the rate in the state where your product is delivered. If you're not sure about these details, then consult with a tax expert.

Set up automatic tax rates

If you are a merchant with a business that needs to charge tax within the United States, then taxes might apply in the county, municipality, and state. To handle this complexity, you can use Shopify's automatic tax settings. These settings include default sales tax and shipping rates, and the rates are updated regularly.

Although the rates are updated regularly, you might need to override some values in some situations.

To set up automatic tax rates:

  1. Make sure your store address is in the United States and that you have a United States shipping zone.

  1. In the Tax rates section, click United States:

    Click usa
  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 an office, warehouse, or other facility:

    1. In the State Name field, select a state:
      Add presence 1
    2. Beside the state, enter the zip code of the facility:
      Add presence 2
    3. Click Add state.

    For each physical presence that you enter, the applicable taxes are displayed. To view the details, including the tax policy on shipping and handling, click the value in the County, Municipal And Other Taxes column.

Remove a physical presence

To remove a physical presence from the County, municipal, and state taxes section:

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

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

Remove presence

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.

To handle clothing exemptions in some states, see New York, Massachusetts, and Rhode Island clothing rules.

To set up manual tax rates:

  1. Make sure your store address is in the United States and that you have a United States shipping zone.

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

    Click usa
  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.

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