Only want to collect Sales tax in the state I'm registered

Accounting & Taxes

Topic summary

A Shopify store owner registered for sales tax only in South Carolina is unexpectedly collecting tax on Nebraska orders despite not meeting economic nexus thresholds in other states.

Potential Solution - Tax Settings:

  • Navigate to Settings > Taxes and duties > United States
  • Remove all states except South Carolina from tax collection list
  • Delete any tax registrations for other states in the “Tax registrations” section
  • Check for and remove manual tax overrides for unwanted states
  • Verify nexus settings aren’t incorrectly configured for other locations
  • Test with orders using both Nebraska and South Carolina addresses

Alternative Cause - Shop App Channel:
If the Nebraska order came through the “Shop” channel (not “Online Store”), this is expected behavior. As of January 1st, Shop became a marketplace facilitator, meaning Shopify automatically collects and remits sales tax on all U.S. orders placed through that channel—regardless of the seller’s nexus.

Key Distinction:

  • Orders through Shop app: Shopify handles all tax collection/remittance
  • Orders through Online Store: Seller’s tax settings apply (should only collect in South Carolina)

Check the order’s channel to determine which scenario applies. If settings adjustments don’t resolve the issue, contact Shopify support directly.

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

I just set up our sales tax last night in the state of South Carolina. I had a sale in Nebraska and sales tax was applied. We are brand new and have very limited sales so we are not hitting any thresholds. I should only be charging sales tax in South Carolina. I’ve spent a good amount of time how to change this but have not found a solution. I just want to charge sales tax with sales in South Carolina. How can I do this? Appreciate the response.

2

Hello there!

I had the same issue in the past and followed these steps:

1. Verify and Edit Sales Tax Settings1. Log in to Your Shopify Admin Panel.

  1. Go to Settings > Taxes and duties.
  2. Under United States, check the list of states for which you’ve enabled tax collection.
    • If Nebraska or any other states are listed here, remove them unless you’re required to collect tax in those states.
  3. Confirm that South Carolina is the only state where sales tax is enabled.

2. Remove Automatic Tax Registrations for Other States

Shopify uses automatic tax settings based on your account information, and it may add states where it thinks you need to collect tax. To ensure taxes are applied only in South Carolina:

  1. Under Settings > Taxes and duties, click Manage tax rates for the U.S.
  2. Look for the “Tax registrations” section. If other states (e.g., Nebraska) are listed, click the trash bin icon or “Remove” to delete them.
  3. Leave only South Carolina listed.

3. Disable Tax Overrides or Manual Rates1. Go to Settings > Taxes and duties.

  1. Check for manual tax overrides for Nebraska or other states.
    • Overrides can sometimes be set for specific products or regions.
    • Delete any overrides for states other than South Carolina.

4. Adjust the Tax Nexus Settings

Shopify calculates tax based on nexus (your obligation to collect tax in a state). If you’ve set a nexus in Nebraska or other states by mistake:

  1. Go to Settings > Taxes and duties.
  2. Click United States > Edit tax regions.
  3. Make sure only South Carolina is selected as a state where you have nexus.

5. Check Product Tax Settings1. In your Shopify admin, go to Products > All products.

  1. Select a product to edit.
  2. Scroll down to the Pricing section and ensure “Charge tax on this product” is enabled for all taxable items.
  3. Verify that no Nebraska-specific overrides or settings are applied.

6. Test Your Tax Settings1. Place a test order on your store using a Nebraska address to confirm that no tax is applied.

  1. Place another test order using a South Carolina address to ensure tax is correctly applied.

Why Did Shopify Apply Tax in Nebraska?- Shopify automatically calculates tax for states where you have set up a nexus or where certain default tax settings exist.

  • If Shopify’s system assumes you have nexus in Nebraska (e.g., due to incorrect setup), it will apply the tax.

Contact Shopify Support (If Needed)

If you’ve followed these steps but Nebraska or other states are still charging tax, contact Shopify support for help:

  • Open the Shopify Help Center and chat or email support.
  • Request them to check your store’s tax settings and confirm that South Carolina is the only state enabled.

As a side note, for your size, I would be using an alternative and much cheaper way to collect, reconcile, and pay sales tax! Happy to talk through what I did!

3

Hey, the other comment did a great job explaining one potential issue. However, if that didn’t resolve it for you, do you mind sharing what “channel” the order was sold through? You can find this on the page where you’re viewing the order. If it says “Shop” instead of “Online Store,” that means the sale was made through the Shop app.

This distinction is important because, as of January 1st, the Shop app is now a marketplace facilitator. If you sell through the Shop channel (which is likely since stores are automatically opted in if they qualify), and the order was sold through this channel, taxes will be collected on all U.S. sales. This is because it’s now Shopify’s responsibility—not yours—to collect and remit tax for sales made in the U.S. through the Shop app.

On the other hand, if someone went directly to your site and purchased there, your tax settings (as explained in the other poster’s comment) would determine when you collect sales tax. For the “Online Store” channel (your Shopify site), you should only collect sales tax when you ship to a state where you have nexus.

So, what does this mean for filing? Shopify has already collected and remitted the sales tax for orders made through the Shop app. Your responsibility is to collect, report, and remit sales tax only for sales made outside of marketplace facilitators (in this case, outside the Shop app). The same principle applies if you decide to sell on platforms like Amazon, Walmart, Etsy, or eBay—those marketplaces also act as facilitators and handle the tax, even in states where you have nexus.

I hope this helps clarify things if the other poster’s suggestions didn’t work for you. Feel free to reach out with any questions!