Why are some customers not being charged tax on my online store?

Accounting & Taxes

Topic summary

Store owners are confused about Shopify’s default tax collection behavior, which only charges sales tax to customers within the merchant’s home state. Many merchants mistakenly believe they need to charge tax on all orders and are concerned about paying uncollected taxes.

Key clarification from tax professional:

  • Merchants should only collect sales tax in states where they have physical presence (nexus) or meet economic nexus thresholds
  • Most states use $100,000 in sales OR 200 transactions as thresholds
  • Charging tax without proper state registration is illegal (“collecting not remitting”)
  • Origin-based states like Texas still only tax in-state sales at the origin rate

Common issues reported:

  • Tax only charging for home state customers (working as intended for most cases)
  • Confusion about whether to manually add tax rates for all states (generally not recommended)
  • Some reports of tax calculation errors after platform updates
  • Difficulty getting clear guidance from Shopify support

Recommended actions:

  • Consult local tax professionals to determine actual obligations
  • Only enable tax collection in states where legally required to register
  • Use tax overrides cautiously and only when necessary
  • Verify economic nexus status in other states before expanding collection
Summarized with AI on October 28. AI used: claude-sonnet-4-5-20250929.
2

Hi, @Richardson1014 .

This is Max from the Shopify Team.

It sounds like you are working with the automatic tax rules for the United States. If you need to charge and collect taxes for all sales made, then, you would want to use some overrides and exemptions. Check out this link for some more details on how to implement those.

I’d also advise working with a local tax expert or accountant to make sure that you are charging the correct amounts for based on location (you and your customers) and the products being sold!

Cheers,
Max