How to set up sales tax calculations in Shopify using Shopify Tax

Before you begin collecting taxes, make sure you have first registered your business with the states in which you have nexus. You can read more about nexus here.

What is Shopify Tax?

Shopify Tax is the system that Shopify has developed to make US-based sales tax calculations easier. It will allow merchants to turn on tax calculations in US states based on where they have nexus. If you configure Shopify Tax properly, it will make sure to collect tax when you ship to your nexus locations. It will also consider what type of product you are shipping just in case the items you are selling is an exempt item.

How do I use it?

Shopify Tax is available for all Shopify Merchants for free, up to $100,000 in revenue. After that it will cost 0.35% per taxable order when you reach $100,000 in US sales each calendar year (capped at $0.99 per order and $5,000 per year).

All you need to do is go to Settings -> Taxes and Duties -> Manage Tax Service and enable ShopifyTax.

Once you have Shopify Tax activated, click on the left arrow in the top left of your screen and go back to the settings page for Taxes and Duties.

From there, click on “Collect in a new region” and add the states in which you have nexus.

Before you add states.

After you add states.

Once that is done, you will now begin collecting sales tax any time you ship to the selected regions. It’s as easy as that!

You can read about how to view your Shopify sales tax reports here so you can file your sales tax returns.