Etsy collects and remits sales tax on your behalf in most U.S. states

Etsy automatically collects sales tax from buyers in states where Etsy is required to do so. This means the tax is added to the purchase price at checkout, and Etsy sends that money to the state tax authority on your behalf. You do not collect it yourself or send it in separately — Etsy handles the entire process.

However, the states where Etsy collects tax have changed over time as tax laws evolved. Currently, Etsy collects sales tax in most states, but not all. If you sell on Etsy, you should know which states require you to handle tax yourself and which ones Etsy covers.

Key Takeaways

  • Etsy collects and remits sales tax in most U.S. states, meaning the tax is added at checkout and sent to the state by Etsy.
  • A small number of states do not require Etsy to collect sales tax, and you may be responsible for reporting and paying tax on those sales yourself.
  • Etsy provides a sales tax summary in your Shop Manager that shows what was collected and which states it was sent to.
  • If you have nexus in a state where Etsy does not collect tax, you may still owe tax on sales to that state and should consult a tax professional.

Which states Etsy collects sales tax in

Etsy collects sales tax in the vast majority of U.S. states. The list includes all the large states like California, Texas, Florida, New York, and Pennsylvania, as well as most smaller states. Etsy updates its collection practices as state laws change, so the list can shift year to year.

The easiest way to see the current list is to log into your Etsy Shop Manager, go to Settings, then Taxes. Etsy displays which states it is currently collecting tax in. You can also contact Etsy's seller support to ask about a specific state if you are unsure.

States where you may handle sales tax yourself

A handful of states either do not have sales tax at all or have not required Etsy to collect it. These states include Alaska, Delaware, Montana, New Hampshire, and Oregon — all of which have no statewide sales tax. A few other states have specific rules that may affect whether Etsy collects on your sales.

If you sell to buyers in these states, you are responsible for understanding your own tax obligations. Some sellers in these states owe no sales tax. Others may owe tax depending on where they are located or the type of product they sell. This is where a tax professional or your state's revenue department can give you a clear answer for your situation.

How to find your sales tax summary on Etsy

Etsy provides a record of all sales tax it collected on your behalf. To find this information, open your Shop Manager and navigate to Settings, then Taxes. You will see a section called "Sales tax collected" or similar, depending on when Etsy last updated the interface.

This summary shows the total tax collected, which states it was collected in, and the date range. You can usually filter by state or date range to see details for a specific period. Keep this information for your records — you may need it when you file your own income tax return or if a state asks about your sales.

What happens if you have a physical location in a state

If you have a home office, studio, or warehouse in a state, you have what tax authorities call nexus in that state. This means you may owe sales tax on all your sales to that state, even if Etsy is already collecting it. You might also owe other state taxes like income tax or gross receipts tax.

Nexus rules are complex and vary by state. Some states only care about physical presence. Others count employees, inventory storage, or even regular shipping from a location. If you operate from a state, it is worth having a tax professional review your situation to make sure you are meeting all obligations.

Reporting Etsy sales on your tax return

The sales tax Etsy collects is not your income — it belongs to the state. However, your gross sales (before tax is removed) are part of your business income and must be reported on your tax return. Etsy sends you a 1099-K form if you meet the threshold for the year, which shows your total payment volume.

Keep your Etsy sales records and the sales tax summary Etsy provides. When you file your return, you will report your total sales as income. If you owe any additional sales tax beyond what Etsy collected, you will pay that separately to the state. A tax professional or accountant can help you sort out what goes where on your return.

What to do if Etsy stops collecting tax in your state

If Etsy changes its collection practices and stops collecting tax in a state where you sell, Etsy will notify you. When this happens, you become responsible for collecting and remitting tax on sales to that state going forward. Etsy will tell you when the change takes effect so you have time to prepare.

You will need to set up your own tax collection through Etsy's tax settings or through your state's tax authority. Some states have online portals where you can register and file returns. Others require you to mail in forms and payments. Your state's revenue or tax department website will have the steps for your location.

Frequently Asked Questions

Do I have to charge sales tax on Etsy if I ship to another state?

Etsy charges sales tax based on the buyer's location, not where you ship from. If Etsy collects tax in the buyer's state, it will be added at checkout. If not, Etsy does not collect it. You are generally not required to collect sales tax on out-of-state sales unless you have a physical presence in that state.

Will Etsy send me a 1099 form for sales tax it collected?

No. Etsy sends you a 1099-K for your gross sales volume, but sales tax is not included in that amount. The tax Etsy collects is reported separately to the state, not to you. You should keep your own records of what Etsy collected for your files.

What if I disagree with the sales tax Etsy charged a customer?

If you believe Etsy charged the wrong tax rate or collected tax in error, contact Etsy seller support with details. Etsy uses state tax tables to determine the correct rate, but mistakes can happen. Etsy can review the transaction and issue a refund if tax was incorrectly collected.

Do I owe sales tax if I sell digital products on Etsy?

Sales tax rules for digital products vary by state. Some states tax digital downloads, others do not. Etsy follows each state's rules, so if a state taxes digital products, Etsy will collect it. Check your state's tax authority website or ask a tax professional about your specific products.

Can I see how much sales tax was collected per transaction?

Etsy shows the total tax collected by state in your Shop Manager, but the detailed breakdown by individual transaction may not be visible in all views. You can read your sales data and calculate per-transaction tax if you need that level of detail for accounting purposes.