Amazon Seller Sales Tax: What Brands Need to Know in 2026

The Supreme Court's 2018 South Dakota v. Wayfair decision changed online sales tax forever. Eight years later, the dust has settled. All 45 sales-tax states plus DC now have marketplace facilitator laws in place. Amazon calculates, collects, and remits sales tax on your behalf in 49 of 50 states.

Sellers assume that means their tax obligations disappeared. They didn't.

Amazon handles collection and remittance on marketplace orders. But sellers still own registration, filing, and nexus management. Sellers who also run Shopify stores, DTC sites, or wholesale channels remain fully responsible for non-marketplace sales. And sellers using FBA often have physical nexus in 40+ states they didn't choose.

Here's what actually matters in 2026.

How Marketplace Facilitator Laws Changed Everything

Before marketplace facilitator laws, sellers were responsible for calculating, collecting, and remitting sales tax in every state where they had nexus. That was a mess. Third-party Amazon sellers faced 12,000+ local tax jurisdictions, each with different rates, rules, and filing schedules.

Marketplace facilitator laws flipped the model. Now the platform (Amazon, eBay, Walmart Marketplace) collects and remits tax on behalf of sellers. The platform owns the calculation, the collection, the remittance, and the refund processing for marketplace transactions.

By 2026, all 45 sales-tax states plus DC have marketplace facilitator laws on the books. The five NOMAD states (New Hampshire, Oregon, Montana, Alaska, Delaware) don't impose a statewide sales tax, so they're the only holdouts. Alaska has local-level taxes and an economic nexus threshold of $100,000, but no statewide mandate.

Amazon collects tax in 49 of 50 states. Missouri is the lone exception: it doesn't require marketplace collection.

What this means: If you sell only on Amazon and nowhere else, Amazon calculates and collects sales tax on your orders. You don't touch the money. Amazon remits it directly to the state.

What this does NOT mean: Your tax obligations disappeared. You still have nexus. You still have registration requirements. You still have filing obligations. The marketplace facilitator law shifted collection responsibility. It didn't erase compliance responsibility.

What Amazon Handles vs. What You Still Own

Here's the split.

Amazon handles:

• Calculating the correct sales tax rate for each order based on destination
• Collecting tax from the customer at checkout
• Remitting collected tax to the appropriate state and local jurisdictions
• Processing refunds when orders are returned
• Providing the Marketplace Tax Collection Report (what Amazon collected on your behalf)

You still own:

• Registering for sales tax permits in states where you have nexus
• Filing sales tax returns (even if they're zero-dollar returns because Amazon already collected)
• Tracking where you have nexus (physical presence, economic thresholds, FBA inventory placement)
• Collecting and remitting tax on non-marketplace sales (Shopify, DTC, wholesale)
• Managing exemption certificates if you sell tax-exempt products or to resellers
• Reporting business income to the IRS (including marketplace sales, even though Amazon collected the tax)

The confusion happens because sellers see "Amazon collects tax" and stop there. States still expect you to register if you have nexus. States still expect you to file returns, even if the return shows $0 owed because Amazon already sent the money. States still track where your inventory is stored. And if you sell through any channel besides Amazon, you're responsible for every piece of that transaction.

Sales Tax Nexus for Amazon Sellers

Nexus is the connection between your business and a state that triggers a tax obligation. There are two types that matter for Amazon sellers: physical nexus and economic nexus.

Physical Nexus (FBA Warehouse Implications)

Physical presence in a state creates nexus. That includes offices, employees, warehouses, and inventory.

For FBA sellers, that last one is the problem.

Amazon operates fulfillment centers in 40+ states. When you enroll in FBA, Amazon decides where to store your inventory. You don't control it. Amazon might place your products in California, New Jersey, Texas, Arizona, and Pennsylvania all at the same time.

Each state where Amazon stores your inventory is a state where you have physical nexus.

Most states (California, Texas, New York, Florida, and others) treat FBA inventory as physical presence. The fact that Amazon owns the warehouse and controls the placement doesn't matter. Your inventory is physically in the state. That triggers nexus.

Exception: Pennsylvania. The Commonwealth Court ruled in Online Merchants Guild v. Hassell that FBA inventory alone does not create physical nexus in Pennsylvania because sellers lack "purposeful availment" when Amazon unilaterally decides where to store goods. This ruling is specific to Pennsylvania. Other states have not adopted this interpretation.

What to do: Pull Amazon's inventory placement reports from Seller Central. Identify every state where Amazon has stored your inventory in the past 12 months. Assume you have physical nexus in those states.

Economic Nexus Thresholds

Even if you have no physical presence in a state, you can still have nexus based on sales volume. This is called economic nexus.

Post-Wayfair, all sales-tax states enforce economic nexus laws. The most common threshold is $100,000 in gross sales. A handful of states use higher thresholds:

Many states used to include a transaction-count requirement (200 transactions, for example). That's disappearing. Alaska repealed its 200-transaction threshold in January 2025. Utah repealed in July 2025. Illinois repealed in January 2026. The trend is threshold-only, no transaction count.

The marketplace sales question: Some states include marketplace sales when calculating whether you hit the threshold. Some exclude them. It varies by state.

Example: You sell $120,000 on Amazon and $30,000 on Shopify in a calendar year. In a state that includes marketplace sales, you're over the $100,000 threshold and have economic nexus. In a state that excludes marketplace sales, only the $30,000 counts (you're under the threshold and have no economic nexus).

You need to check each state's rules individually. There is no universal answer.

State Registration and Zero-Dollar Returns

If you have nexus in a state (physical or economic), most states require you to register for a sales tax permit. This is true even when Amazon collects all the tax on your behalf.

Why? Because the state wants a record of who has nexus. The permit ties your business to the state's tax system. Without it, the state has no way to track your activity, verify compliance, or process any future filings.

Registration is usually free or low-cost ($5-50 depending on the state). The annoying part is that each state has its own process. Some are online and instant. Others require mailed forms, EIN verification, and 2-4 week processing times.

Once you're registered, you're required to file sales tax returns. The filing frequency depends on your sales volume and the state's rules. Common schedules: monthly, quarterly, or annually.

Here's where it gets weird: Even if Amazon collected 100% of the tax on your marketplace sales, you still need to file a return showing $0 owed. This is called a zero-dollar return or an informational return.

Why? Because the state's system expects a filing from every registered business. If you don't file, the state flags you as delinquent. Penalties and interest can accrue even though no tax was owed.

What to do:

• Register in every state where you have nexus.
• Determine your filing frequency (monthly, quarterly, or annual) based on the state's rules and your sales volume.
• File returns on time, even if the return shows $0 because Amazon collected everything.
• Pull Amazon's Marketplace Tax Collection Report from Seller Central to confirm what Amazon collected and remitted on your behalf.

Some states allow "marketplace seller" or "non-reporting" status for sellers whose sales are 100% marketplace-facilitated. This simplifies filing. Not all states offer it. Check with each state's Department of Revenue.

State-by-State Sales Tax Thresholds

Here are the economic nexus thresholds for the 45 sales-tax states plus DC. Missouri is excluded because it doesn't require marketplace collection.

Standard threshold states ($100,000): Alaska, Arizona, Arkansas, Colorado, Connecticut, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, Nevada, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming, District of Columbia

Note: Some states previously included transaction-count requirements (e.g., 200 transactions). Most have repealed those. The trend is threshold-only.

Marketplace sales included? Varies by state. Roughly half include marketplace-facilitated sales when calculating the threshold; half exclude them. You need to check each state individually.

Product Taxability and Exemptions

Not all products are taxable in all states. Groceries, clothing, medical supplies, and certain other categories may be exempt or taxed at reduced rates depending on the state.

Examples:

• Groceries: Exempt in most states. Taxable in Alabama, Hawaii, Idaho, Kansas, Mississippi, Oklahoma, South Dakota.
• Clothing: Exempt in Massachusetts, Minnesota, New Jersey, New York (under $110), Pennsylvania, Rhode Island (under $250), Vermont (under $110). Taxable everywhere else.
• Medical supplies: Often exempt or reduced-rate. Requires correct tax codes.

If you sell tax-exempt products, you need to configure the correct product tax codes in Seller Central. Amazon uses these codes to determine whether to collect tax on a given order.

If you sell to resellers (wholesale), you need to collect and manage exemption certificates. A reseller provides a resale certificate showing they will collect tax when they sell the product to the end customer. You don't charge tax on that transaction. But you need to keep the certificate on file in case of an audit.

Amazon does not handle exemption certificates for you. That's your responsibility.

Income Tax Obligations for Amazon Sellers

Sales tax and income tax are separate. Sales tax is collected from customers and remitted to states. Income tax is tax on your business profit, paid to the IRS and (if applicable) your state.

1099-K Reporting Thresholds for 2026

Amazon reports your gross sales to the IRS via Form 1099-K if you meet the reporting threshold.

For the 2026 tax year, the threshold is $20,000 in gross sales and 200 transactions. This is the historical standard. It returned after several years of IRS delays and proposed lower thresholds ($600, $5,000, $2,500) that were all rolled back.

Even if you don't receive a 1099-K, you must report all business income to the IRS. The 1099-K is informational, not the trigger for whether you owe tax.

Deductible Business Expenses

Amazon sellers can deduct ordinary and necessary business expenses when calculating taxable income.

Common deductions:

• FBA fees (fulfillment, storage, long-term storage)
• Shipping costs (if you ship direct)
• Amazon advertising spend (Sponsored Products, Sponsored Brands, DSP)
• Product sourcing and manufacturing costs
• Software and tools (inventory management, repricing, analytics)
• Home office (if you qualify under IRS rules)
• Professional services (accountants, tax advisors, lawyers)

Keep clean records. Separate business and personal expenses. Use accounting software. Consult a CPA familiar with e-commerce.

How to Set Up Tax Collection in Amazon Seller Central

If you need to collect sales tax on non-marketplace transactions (rare for most FBA sellers, more common for MFN or multi-channel sellers), you can configure Amazon's Tax Calculation Services (TCS).

Steps:

1. Log in to Seller Central.
2. Navigate to Settings → Tax Settings → View/Edit Tax Calculation Settings.
3. Select the states where you want Amazon to calculate tax for you.
4. Verify your product tax codes are correct (found under Inventory → Manage Inventory → Edit → Vital Info → Tax Code).
5. Save changes.

For marketplace-facilitated sales, Amazon automatically collects tax in all applicable states. You don't need to configure anything.

Reports to pull:

• Marketplace Tax Collection Report: Shows what Amazon collected and remitted on your behalf. Found under Reports → Tax Document Library → Marketplace Tax Collection.
• Sales Tax Calculation Report: Shows what you collected manually (if applicable). Found under Reports → Payments → Sales Tax Reports.

Pull these reports monthly or quarterly to reconcile with your state filings.

When to Work with an Amazon Agency on Tax Compliance

Most sellers can handle sales tax compliance in-house if they:

• Sell only on Amazon (no other channels)
• Use FBA exclusively
• Don't sell tax-exempt products
• Are comfortable registering, filing, and tracking nexus themselves

Bring in outside help if:

• You sell across multiple channels (Amazon + Shopify + wholesale + DTC). Multi-channel nexus gets messy fast.
• You have FBA inventory in 20+ states and don't have the bandwidth to register and file in all of them.
• You received a nexus inquiry or audit notice from a state and don't know how to respond.
• You're scaling fast and don't want tax compliance to become a bottleneck.
• You're international and dealing with cross-border VAT, customs, and sales tax simultaneously.

SupplyKick operates as a single-seller partner for brands on Amazon. That means we manage the entire P&L, including sales tax compliance, FBA logistics, and multi-state registration. We deal with this daily. If your tax footprint is getting complicated and you'd rather focus on product and growth, we can take it off your plate.

Frequently Asked Questions