The short answer
Most new US online sellers start by collecting sales tax in their home state (if it has one) and only later need to think about other states. When you sell through a marketplace, the marketplace usually collects the tax for you. When you sell on your own store, you're responsible for collecting and filing it.
This guide is general information, not legal or tax advice. Sales tax rules are set state by state and change often, so confirm with your state's tax agency or a tax professional.
Sales tax is a state (and local) tax
There's no national sales tax in the US. According to the Tax Foundation, 45 states collect a statewide sales tax, and five states (Alaska, Delaware, Montana, New Hampshire and Oregon) don't. Alaska still lets localities add their own sales tax, and local taxes apply in 38 states overall (Tax Foundation: State and local sales tax rates, 2025). That's why the rate on the same product can differ from one ZIP code to the next.
What "nexus" means
You only have to collect a state's sales tax if you have nexus there: a connection strong enough for the state to require it. There are two common kinds.
Physical nexus
Your home, an office, a warehouse, employees, or inventory stored in a state usually creates nexus. For most beginners, that means your home state is where sales tax starts.
Economic nexus
In 2018, the U.S. Supreme Court decided South Dakota v. Wayfair, ruling that states can require out-of-state sellers to collect sales tax even without a physical presence (Cornell LII: South Dakota v. Wayfair, Inc.). Since then, states have set economic thresholds: sell more than a certain amount into the state and you must register and collect.
Thresholds vary. Two big examples:
| State | Remote seller threshold | Source |
|---|---|---|
| California | More than $500,000 in sales of tangible goods delivered into California in the current or previous calendar year | CDTFA |
| Texas | $500,000 in total Texas revenue over the previous 12 months | Texas Comptroller |
Many other states use lower thresholds, so check each state you sell a lot into. A brand-new store usually won't hit these numbers in year one, but it's worth tracking from day one.
Marketplace vs your own store
This is the part that confuses most new sellers.
Selling on a marketplace (Etsy, Amazon, eBay)
Most states now have marketplace facilitator laws. The Texas Comptroller, for example, says marketplace providers "must collect and remit state and local sales and use tax on all third-party sales" (Texas Comptroller: Marketplace providers). It also says a remote seller who only sells through a marketplace that certifies it's collecting tax doesn't need a Texas permit, though they must keep records of marketplace sales for at least four years (Texas Comptroller: Remote sellers).
In plain terms: on a marketplace, the platform usually handles sales tax on those orders. You may still need to register in your home state, and you should keep your records.
Selling on your own store
On your own website, you are the seller of record. That means you:
- Register for a sales tax permit in your home state (and any state where you have nexus).
- Charge the right rate at checkout.
- File returns and send the tax to the state on the schedule it gives you (monthly, quarterly or yearly).
The SBA lists registering for state tax IDs and paying state taxes as standard steps for a new business (SBA: Get federal and state tax ID numbers, SBA: Pay taxes).
If you do both
Many sellers sell on Etsy and their own store. Marketplace sales are typically handled by the marketplace, while your own-store sales are yours to collect. Some states count marketplace sales toward your economic threshold and some don't, so read your state's rules.
A simple sales tax setup for beginners
- Check your home state. Does it have a sales tax? Are your products taxable there? (Some states exempt certain items, like groceries or clothing.)
- Register before your first own-store sale. Your state's revenue department website has the form. The IRS state links page is a quick way to find it.
- Turn on tax at checkout for your home state.
- Track sales by state each month so you notice when you get close to another state's threshold.
- Look at free help. The Streamlined Sales Tax program lets you register in its member states at once, and some sellers qualify for free tax calculation services.
- Set filing reminders. Missing a filing can mean penalties, even if you collected $0.
Related guides
- Do you need a business license to sell online?
- How to accept payments on your online store
- How to set up shipping for a small online store
- Shopify alternatives for beginners
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Questions, answered.
Do I have to charge sales tax on my online store?
Usually yes in states where you have nexus, starting with your home state if it has a sales tax and your products are taxable there. Other states apply once you have a physical presence there or cross their economic threshold.
What is economic nexus?
Economic nexus means a state can require you to collect its sales tax because you sell enough into that state, even with no physical presence. The Supreme Court allowed this in South Dakota v. Wayfair (2018). California and Texas use a $500,000 threshold; many states use lower ones.
Does Etsy or Amazon collect sales tax for me?
In most states, yes. Marketplace facilitator laws require marketplaces to collect and remit sales tax on third-party sales. You should still keep records and check whether your home state needs you to register.
Which states have no sales tax?
Alaska, Delaware, Montana, New Hampshire and Oregon have no statewide sales tax, according to the Tax Foundation. Alaska still allows local sales taxes.
When should I register for a sales tax permit?
Before you make your first taxable sale on your own store in a state where you have nexus. Registration is done through each state's revenue or tax department.