Etsy sales tax: what Etsy collects for you, and what’s left to you
For most US orders, Etsy handles sales tax for you: it adds the tax at checkout, collects it from the buyer and pays it to the state. You don’t remit that money yourself. But there are a few cases where your own settings and filings still matter.
What Etsy does automatically
According to Etsy’s help, Etsy calculates, collects and remits US sales tax on behalf of sellers located anywhere in the world when:
- an order ships to a US address, or
- a US buyer buys a digital item,
and the order meets Etsy’s criteria for the state. Two more points from Etsy:
- You can’t opt out of Etsy collecting sales tax.
- Etsy doesn’t charge any extra fee for collecting and remitting it.
“Sales tax paid by buyer” in your payment account
When Etsy collects and remits the tax, you’ll see it in your Payment account’s activity summary as “Sales tax paid by buyer (Remitted)”. That money passed through the order but went to the state — it was never yours, and it isn’t part of your earnings.
When your own tax settings still apply
The sales tax settings in Shop Manager are only used for states or regions where Etsy doesn’t collect tax automatically. If you’re registered to collect tax somewhere Etsy doesn’t cover, set it up there; otherwise you can leave them alone.
What you may still have to file
Etsy remitting the tax doesn’t always end your obligations:
- If you have a physical presence in a state where Etsy collects, Etsy says you may still need to file a state sales tax return there — you just won’t have to remit the tax collected on your Etsy sales, because Etsy already did.
- All your sales channels count. Etsy notes that sales on Etsy, on your own website and at in-person events may all count toward a state’s economic nexus thresholds. Tax on your non-Etsy sales is up to you.
This is a summary of how Etsy handles sales tax, not tax advice. Rules differ by state and change over time — for your own filing obligations, ask a tax professional or your state’s tax agency.
Related
- Income tax is separate from sales tax: see Etsy 1099-K for the form Etsy sends and when.
- To see what Etsy’s fees leave you per order, use the Etsy fee calculator.