Etsy Sales Tax Guide for Sellers
Complete guide to understanding sales tax when selling on Etsy. Learn when Etsy collects for you and when you're responsible.
When Etsy Collects Sales Tax for You
As of July 1, 2019, Etsy automatically collects and remits sales tax on behalf of sellers in states where they have nexus obligations. This is part of marketplace facilitator laws.
✓ Etsy Collects In:
All 50 U.S. states plus Washington D.C., Puerto Rico, and participating U.S. territories where marketplace facilitator laws apply.
What this means for you: You don't need to collect, report, or remit sales tax on orders shipped to these locations. Etsy handles it automatically.
When You're Still Responsible
⚠ You Must Handle:
- Local pickup orders - If customer picks up in person
- Off-platform sales - Direct sales outside Etsy
- International orders - VAT and import taxes vary by country
- Wholesale orders - B2B transactions may require different handling
State-by-State Breakdown
While Etsy collects in all marketplace facilitator states, understanding your nexus obligations is still important for off-platform sales.
| State | Etsy Collects? | Economic Nexus Threshold | Notes |
|---|---|---|---|
| California | Yes | $500,000 | High threshold, district taxes |
| Texas | Yes | $500,000 | Origin-based for in-state |
| New York | Yes | $500,000 + 100 transactions | Both thresholds required |
| Florida | Yes | $100,000 | Lower threshold |
| Pennsylvania | Yes | $100,000 | Clothing generally exempt |
How to Verify Etsy is Collecting Tax
- Log in to your Etsy Shop Manager
Navigate to your seller dashboard
- Go to Settings → Taxes
Find the tax configuration section
- Review "Sales Tax Collection by Etsy"
You should see all U.S. states listed where Etsy collects automatically
- Check individual orders
Look for "Sales tax collected by Etsy" on order receipts
- Download sales reports
Shop Manager → Marketing & SEO → Sales Reports to verify tax collection
Common Mistakes Etsy Sellers Make
❌ Double Collecting Tax
Don't manually add sales tax if Etsy is already collecting. Check your tax settings to avoid overcharging customers.
❌ Ignoring Off-Platform Sales
If you sell directly to customers or at craft fairs, you still need to collect and remit tax yourself.
❌ Not Tracking Local Pickup Orders
Etsy doesn't collect tax on local pickup orders. You must handle these manually if you offer this option.
❌ Forgetting About International VAT
Etsy's automatic collection only applies to U.S. sales tax. International buyers may owe VAT or import duties.
Tools for Etsy Sellers
Disclaimer: This guide is provided for informational purposes only and does not constitute tax, legal, or accounting advice. Etsy's tax collection policies may change. Always verify current information with Etsy and consult a tax professional for your specific situation.
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