A Practical Guide to Sales Tax Nexus
Shopify isn't a marketplace facilitator — unlike Amazon or Etsy, the tax-collection responsibility stays with you. This guide covers physical vs economic nexus, the thresholds that trigger a registration requirement, and how TaxJar, Avalara, or Shopify Tax actually handle it once you know where you owe.
Most Brands Trigger Both.
Nexus means a connection to a state significant enough that it requires you to collect and remit that state's sales tax.
Physical Nexus
Triggered by a tangible presence: an office, an employee, inventory sitting in a warehouse, or stock held at a 3PL like ShipBob. Easy to overlook once inventory is spread across fulfillment centers.
Economic Nexus
Triggered purely by sales volume into a state — most states set the threshold at $100,000 in sales or 200 transactions in a calendar year, regardless of where your business is based.
Every State Sets Its Own Rule.
Most cluster around the same pattern. Confirm current thresholds before registering — states revise these periodically.
| Nexus type | Typical trigger | Action required |
|---|---|---|
| Economic | $100K in sales OR 200 transactions/year into a state | Register for a sales tax permit in that state |
| Physical — inventory | Stock held at a 3PL warehouse in-state (e.g. ShipBob node) | Register regardless of sales volume |
| Physical — presence | Employee, contractor, or office located in-state | Register regardless of sales volume |
| Marketplace sales | Selling via Amazon/Etsy alongside Shopify | Marketplace collects on its own sales — doesn't offset direct-Shopify nexus |
Once You Know Where You Owe
Pull tax liability
Cross-reference against 3PL warehouses and in-state staff.
Map nexus states
Register for a sales tax permit in each.
Configure Shopify Tax
TaxJar, Avalara, or native — auto rate + facilitator handling.
Filing prep
Monthly/quarterly so remittance isn't a scramble.
Re-check quarterly
As sales grow or 3PL inventory shifts locations.
Common Questions
Does Shopify collect and remit sales tax for me?
Do I need to register in every state I ship to?
What if my 3PL moves my inventory to a new warehouse?
Get Your Nexus Reviewed.
We'll check your current Shopify tax configuration against your actual fulfillment footprint and flag any state you're exposed in but not registered.
