new sales tax effective Jan 2025

Accounting & Taxes

Topic summary

Main Issue:
A merchant is confused about inconsistent sales tax charges across transactions starting January 2025, despite only having nexus in Florida. Sales tax was applied to a Colorado order but not to two California orders.

Key Explanation:
Shopify’s Shop App now operates as a marketplace facilitator, automatically calculating and collecting sales tax on orders placed through the Shop channel—regardless of the merchant’s nexus. This is due to state marketplace facilitator laws that shift tax responsibility from individual merchants to platforms like Shopify, Amazon, and Etsy.

Why the Inconsistency:
Tax is only collected on purchases made through the Shop App, not on all store transactions. This explains why some orders have tax applied while others don’t.

Suggested Solution:
Merchants can deactivate their store’s visibility in the Shop App by:

  • Going to Sales channels > Shop > Settings
  • Deactivating “Discovery” under the Shopping section

This prevents Shop App traffic while maintaining Shop Pay functionality. Contacting Shopify support is recommended for store-specific clarification.

Summarized with AI on November 2. AI used: claude-sonnet-4-5-20250929.
1

Hi,

I received your notice that effective January ?2025 Shopify would be applying sales tax to all transactions. I do not have nexus in any state except Florida and accordingly I should not have to charge sales tax in other states where I do not have nexus. Yet today, you charged sale tax on one transaction in Severance, Colorado, none on a San Francisco, CA transaction and none on an Emeryville, CA transaction. What is going on? According to the IRS if you do not have a nexus in other states you do not charge sales tax. So if you’re going to charge sales tax on every state why not CA? I know DE and MN do not have sales tax but this is very confusing and I need some clarification on this because charging sales tax on one transaction and none on the other two doesn’t make any sense. Thank you.

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Hey, there’s another thread going on about this, but i figured I’d paste my longer form answer in here so you can see. I believe this is referring to Shopify recently announcing that the Shop App will be acting as a marketplace facilitator and collect sales tax when items are purchased from your store via the Shop channel. Let me know if you have any questions after reading my answer below!

I totally get your frustration—this change has been confusing for a lot of folks. I’ll take a shot at explaining it since there’s a lot of questions around this in this thread. Feel free to ask if anything’s unclear or you’ve got questions.

The Shop App is now acting as a marketplace facilitator. That means Shopify is automatically calculating, collecting, and remitting sales tax on orders processed through the Shop App, even if you don’t have nexus in the state where the customer is located. The reason states are opting for these laws is to try to take the burden of sales tax off of individual merchants plates, like yourself. It’s also a lot easier for the states to work with one company to get tax information rather than hundreds of thousands. Theoretically, this is a move to take weight off of your shoulders, but I get how it might feel like they’re overstepping—especially if you’ve already got your sales tax setup figured out.

Marketplace facilitator laws in many states require platforms like Shopify, Amazon, Walmart, Etsy, eBay, to take on the responsibility for sales tax in certain situations.

The good news for you is that your products are automatically searchable in the Shop App by default (if they’re eligible). The idea is to get your products in front of more potential customers. When someone buys through the Shop App, Shopify handles the sales tax as part of their marketplace facilitator responsibilities.

I want to point out that this is different from Shop Pay. To my knowledge, nothing has changed with Shop Pay itself, just the Shop app.

If someone comes directly to your store and checks out using Shop Pay, your store’s tax calculations will rely on whatever tax service you’re using—probably Shopify Tax.

So, if Shopify started charging sales tax in states where you don’t have nexus for direct purchases on your store, that wouldn’t be correct. But in this case, they’re only charging tax for purchases made via the Shop App, which is now operating more like a marketplace (similar to Amazon, Etsy, or Walmart).

If you’re unsure about how this applies to your store specifically, it’s worth reaching out to Shopify support and asking them to explain it more clearly. I’m happy to help look into it with you, but they probably could do it with more efficiency.

If this change doesn’t work for your business right now, you might want to look at deactivating your visibility in the Shop App instead of turning off Shop Pay altogether.

I believe you can do that by:

  1. From your Shopify admin, go to Sales channels > Shop.
  2. Click Settings.
  3. Under the Shopping section, deactivate Discovery.

My thought is that this might reduce extra traffic coming to your store. The Shop App is more about helping customers discover specific products rather than specific stores, so it could be driving additional sales for you. That said, if it’s causing more headaches than it’s worth, turning off visibility could be the way to go.

Let me know if you need help figuring this out or want me to take a closer look—I’m happy to help!

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