Some online platforms used to list and sell products are considered marketplace facilitators. A marketplace facilitator is responsible for calculating, collecting, remitting, and filing sales tax on sales made through its platform. This shifts the sales tax responsibility away from individual sellers using the marketplace.

Understanding whether Shopify qualifies as a marketplace facilitator—and when—plays a major role in determining who is responsible for sales tax compliance.

Is Shopify a Marketplace Facilitator?

The core Shopify ecommerce platform is not considered a marketplace facilitator.

When sellers use Shopify to build and operate their own online stores, they remain the seller of record. While Shopify provides the technology, checkout tools, and tax calculation features, it does not assume legal responsibility for sales tax collection or remittance on storefront sales.

This means that if you are selling through your own Shopify website and meet a state’s economic nexus requirements, you are responsible for collecting and remitting sales tax.

Shopify Shop App

Shopify integrates with many apps and sales channels. One channel that changes the marketplace facilitator dynamic is the Shop App.

As of January 1, 2025, the Shop App is considered a marketplace facilitator for U.S. sales tax collection and remittance. For orders placed through the Shop app, Shopify handles sales tax compliance by calculating, collecting, remitting, and filing sales tax on behalf of the sellers.

Shopify Storefront Sales

For sales made through a seller’s own Shopify storefront (not the Shop App), the seller is responsible for:

• Determing where they have sales tax nexus
• Registering for sales tax permits in applicable states
• Setting up the correct tax rates
• Filing and remitting sales tax returns on time

Shopify does not assume liability for these obligations. If you sell through your own Shopify website, sales tax compliance remains your responsibility.

Shop App Sales

For orders placed through the Shop App, Shopify assumes responsibility for:

• Sales tax caculation
• Collection at checkout
• Remittance to state and local jurisdictions
• Filing required sales tax returns

Sales tax collected through the Shop App is not remitted by the seller. However, it’s important to note that some states require marketplace sales to be reported as gross receipts on the seller’s return, even when the marketplace remits the tax.

All states that impose sales tax have economic nexus thresholds. These thresholds are based on sales volume or transaction count and determine when an out-of-state seller must register to collect sales tax.

While each state’s rules differ, most follow common thresholds such as:

• $100,000 or more in gross sales into the state in the previous 12 months, or
• 200 or more separate transactions into the state in the previous 12 months

Sellers who use their own Shopify storefront count these sales toward economic nexus thresholds. If thresholds are exceeded, the seller must register and begin collecting sales tax.

Some states include marketplace facilitator sales (such as Shop App sales) when determining nexus. If you sell through both your Shopify storefront and the Shop App, it’s critical to understand how each state treats marketplace sales for nexus purposes.

Tip: Visit our state-by-state sales tax guides to understand economic nexus rules where you sell.

Shopify Storefront Settings

Sales tax collection on Shopify depends on several factors, including:

• Whether your products are taxable
• The customer’s shipping address
• Your sales tax nexus footprint

If you’ve determined that you have nexus in a state, the first step is to register for a sales tax permit. You should never collect sales tax without an active permit.

Once registered, add your state tax registrations in your Shopify admin under Settings > Taxes and duties.

You can then choose to calculate tax using Shopify Tax or Manual Tax settings.

Shopify Tax

Shopify Tax is the easiest option for most sellers. It offers:

• Automatic tax calculations based on customer address
• Product category-specific tax rules
• State-specific regulatory insights
• Enhanced sales tax reporting

Shopify Tax calculates and collects tax, but it does not file or remit tax for storefront sales unless you qualify for automated filing.

Find more information on Shopify Tax here.

Manual Tax

With Manual Tax, sellers configure tax rates themselves.

This option may be useful for businesses with more complex tax situations, such as:

• Nonprofits
• Resellers
• Digital product sellers
• Businesses with unique exemption or sourcing rules

Find instructions on how to set up Manual Tax settings here.

Shop App Settings

The Shop App calcualtes sales tax based on:

• Product categorization
• Customer shipping address

If you haven’t defined a product category, Shopify assigns one automatically. Shopify also notes that:

“Tax overrides applied to products and tax exemptions applied ot customers don’t apply to transactions in the Shop sales channel.”