If you’re using Shopify to sell online, you’ll need to make sure your tax settings are correctly configured to collect sales tax. Shopify offers a few different tax service options, but to ensure proper tax collection and reporting, we recommend selecting Shopify Tax.
This guide will walk you through the steps to set up Shopify Tax.
Step 1: Go to Shopify Tax settings
1. Log in to your Shopify admin.
2. From your Shopify admin, go to Settings.
3. Select “Taxes and Duties”
Step 2: Set up taxes for the region where you are selling
1. Find the region where you are selling. You can use the search bar. You can also select any region from the list.
For example, choose United States from the provided dropdown menu.
Step 3: Navigating Tax Settings in Shopify
To update the tax service, follow these steps:
Click the three dots.
Select “Downgrade Service”.
Step 4: Choose the correct tax service
Shopify offers three tax service options:
Shopify Tax (recommended)
Basic Tax (free)
Manual Tax (free)
If you are using Basic Tax or Manual Tax, your taxes may not be calculated accurately. These services are not optimized for most sellers and can lead to incorrect tax collection.
Why Use Shopify Tax?
Shopify Tax automatically…
Calculates sales tax rates by state, county, and city
Applies economic nexus rules based on your store’s activity
Keeps up with changing tax laws across jurisdictions
This makes it the most reliable way to stay compliant and ensure you’re collecting the right amount of tax from your customers.
Need more help?
You can check out Shopify’s official resources here:
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