How can I adjust local tax settings on Shopify for my online store?

I believe that what you’ve said here is correct. If you sell to anyone in the state and they pick up in your physical location, then you collect state and local tax based on your location. If you ship to another location however, this may be different. Your state may require that you collect the local tax based on destination shipping. It is very possible though that you only collect for your location. I’d call your state agency and ask them. We don’t have a physical location in your state so I could be wrong. But I would highly recommend that you call or email your state and ask the question. Email is best so that you have a record. In our state, we are required to collect our local taxes for sales outside of the county even if we don’t have a physical nexus there. Be aware that the way that Shopify determines the amount of tax to collect may not match exactly to what the state tells you. In that case, you may need to set up a tax override. Shopify would have to help you do that.