Sales tax is the thing most Amazon sellers ignore until it becomes a problem. The rules are confusing, the stakes are high, and the advice online is often outdated or flat-out wrong.
Here’s what you actually need to know about sales tax as an FBA seller in 2025.
The Big Change: Marketplace Facilitator Laws
Before 2019, Amazon sellers were responsible for collecting and remitting sales tax in every state where they had nexus. It was a nightmare.
Now, all 50 states with sales tax have marketplace facilitator laws. This means Amazon collects and remits sales tax on your behalf for orders shipped to those states.
For most sellers, this is huge. Amazon handles the calculation, collection, and remittance. You don’t have to register in dozens of states just because Amazon stored your inventory there.
What Amazon Actually Handles
Amazon collects and remits sales tax for orders placed on Amazon.com and shipped to customers in states with marketplace facilitator laws. This covers:
- Standard FBA orders
- Seller Fulfilled Prime orders
- FBM orders placed through Amazon
Amazon also handles the tax calculations, including state, county, city, and special district rates. They file and pay the tax directly to each state.
What Amazon Doesn’t Handle
Here’s where sellers get tripped up:
Sales on Your Own Website
If you sell on Shopify, WooCommerce, or any non-marketplace channel, you’re fully responsible for sales tax on those orders. Amazon’s facilitator status doesn’t extend to your other sales channels.
B2B and Wholesale Sales
If you sell wholesale or to businesses outside of Amazon, you need to collect tax or obtain exemption certificates. Amazon’s system doesn’t cover these transactions.
Certain States With Exceptions
Some states have specific rules about what qualifies as a marketplace sale. Missouri, for example, had delayed implementation. Always verify current rules for states where you have significant sales.
Do You Still Need to Register Anywhere?
Maybe. Here’s when you still need state sales tax registration:
Your Home State
You almost certainly need to register in the state where your business is located. Even if all your sales are on Amazon, you have nexus in your home state through physical presence.
States Where You Have Physical Presence
If you have employees, offices, or your own warehouse in a state, you have nexus there regardless of marketplace facilitator laws. You may need to register for other tax obligations even if Amazon handles the sales tax.
States With Income Tax Requirements
Some states require income tax registration or filing if you have sales into that state, even if you don’t have a sales tax obligation. This is separate from sales tax but often triggers the same nexus questions.
The FBA Inventory Nexus Question
Before marketplace facilitator laws, FBA inventory created nexus in every state where Amazon stored your products. Sellers were technically required to register and file in 20+ states.
Now, this matters much less for sales tax purposes because Amazon handles collection and remittance. But it can still matter for:
- State income tax obligations
- Business registration requirements
- Other state-specific taxes and fees
If you want to know where Amazon stores your inventory, check your FBA Inventory Placement reports in Seller Central.
Common Mistakes Sellers Make
Assuming Amazon Handles Everything
Amazon handles marketplace sales. If you have any other sales channel, you need a separate sales tax solution. Many sellers with Shopify stores don’t realize they’re accumulating liability.
Not Registering in Their Home State
Some sellers think marketplace facilitator laws mean they don’t need to register anywhere. You still need to register in your home state and file returns, even if the return shows zero tax due because Amazon collected it all.
Ignoring Tax Exemption Certificates
If you sell wholesale or to resellers, you need to collect and store exemption certificates. If a state audits you, “they said they were tax exempt” isn’t documentation.
Not Reconciling Amazon’s Tax Reports
Amazon’s tax document library includes reports showing what they collected and remitted. Review these periodically to ensure they align with your records. Errors happen.
What About Past Liability?
If you’ve been selling for years and never dealt with sales tax, you might have historical liability from before marketplace facilitator laws took effect. This varies by state and by when each state’s law became effective.
Options include:
- Voluntary Disclosure Agreements (VDA) — Many states offer programs to come into compliance with reduced penalties
- Amnesty programs — Some states periodically offer amnesty for unregistered sellers
- Waiting it out — Statutes of limitation apply, but this is risky and not recommended
If you have significant past sales and never addressed sales tax, talk to a professional. The cost of cleaning this up is almost always less than the cost of getting caught.
Tools That Help
For your non-Amazon sales channels, consider:
- TaxJar — Automated calculations and filing for most states
- Avalara — Enterprise-level solution with more integrations
- Manual filing — Feasible if you only sell in 1-2 states outside Amazon
These integrate with Shopify, WooCommerce, and most e-commerce platforms to handle what Amazon handles for marketplace sales.
The Bottom Line
Marketplace facilitator laws made Amazon sellers’ lives dramatically easier. But they didn’t eliminate all sales tax obligations.
If you only sell on Amazon and have no other business presence outside your home state, you’re mostly covered. Register in your home state, file your returns, and let Amazon handle the rest.
If you sell on multiple channels, have a physical presence in multiple states, or do any wholesale business, you need a more comprehensive approach. The cost of getting this right is a fraction of the cost of getting it wrong.
We keep your books reconciled, reviewed, and consistently up to date, so you can see your profit after platform fees, ad spend, and the cost of inventory sold.
