Shopify and Stripe Tax can both calculate sales tax and add it at checkout, but only for places where the merchant has told them it is registered. This guide walks through the settings the two companies document for US sales tax in Shopify and for Stripe Tax.

A note before starting: whether a business must collect tax, and where, depends on the business, what it sells and where its customers are. This guide describes software settings only and is not tax advice. Check with the relevant tax authority or a qualified tax adviser before collecting or remitting tax.

Registration comes first

Both companies put registration ahead of configuration. Shopify’s US setup guide says to decide whether you need to collect sales tax, checking with state tax authorities or a tax professional if unsure, and to register with each relevant state tax agency, because a sales tax ID is needed before collection is set up. Stripe says businesses must register with the local tax authority before collecting tax, and that without a registration in the customer’s location, its calculation returns zero tax.

Collecting tax is separate from filing it. Shopify says it doesn’t remit sales tax unless a store’s US sales tax is managed by Shopify or the store is enrolled in automated filing with Shopify Tax. Stripe describes automated filing as a separate step after registrations are added and collection starts.

Part 1: Shopify (United States)

Review liability insights. Go to Settings > Taxes and duties and select United States to see a preview; the full Tax liability insights page lists states where Shopify has flagged a possible obligation. Shopify’s insights guide uses two statuses: “Action required,” where potential liability has been identified, and “Monitoring,” for states without a store location where sales have reached at least 80% of the state’s economic nexus threshold.

Set up collection. If inventory ships from somewhere other than the address in Settings > General, Shopify says to create a location first, because the location address determines nexus. Then:

  1. In the Shopify admin, go to Settings > Taxes and duties.
  2. In the Manage sales tax collection section, click United States.
  3. In the Regional settings section, click Add new state.
  4. Select a state where the business is registered.
  5. Enter the sales tax ID in the Sales tax ID field.
  6. Optionally, click Advanced options and choose a Shipping tax setting.
  7. Click Collect taxes.
  8. To add more states, click Collect sales tax.

The shipping tax option applies only to registrations in California, Colorado, Florida, Illinois, Louisiana, Maine and Maryland. Its choices are “When applicable” (the default, where Shopify decides), “Always” and “Never.” Tax overrides can be created afterward for products that don’t use default rates.

Part 2: Stripe Tax

Stripe’s setup starts on the tax settings page in the Dashboard:

  1. Confirm the head office address. Stripe defines it as where the business is located or, for physical goods, where goods ship from. It defaults to the Stripe business address.
  2. Select a preset product tax code. This default applies to products without their own tax code. Stripe says to check the product catalog afterward and edit any product that needs a more appropriate code. Sellers of physical goods who charge tax on shipping can use the preset shipping tax code.
  3. Choose the default tax behavior. “Exclusive” adds tax on top of prices, “Inclusive” includes it, and “Automatic” decides by currency: Stripe excludes tax from USD and CAD prices and includes it for other currencies.
  4. Add registrations. Use the Locations tab in the Dashboard. A registration can be scheduled to start on a future date.
  5. Turn on tax collection. Stripe says that after clicking Get started, Stripe Tax is enabled automatically for new invoices, subscriptions and payment links created in the Dashboard. Integrations built on the API add automatic_tax.enabled=true to Invoices, Subscriptions, Payment Links or Checkout Sessions.

Watch thresholds. The monitoring tool‘s Needs attention tab groups locations into statuses such as “Needs attention,” “Collecting tax” and “Not collecting tax.” Stripe says the tool highlights potential obligations, “but it’s up to you to confirm whether registration is actually required.” Stripe sends threshold notifications by email and in the Dashboard to the account owner; one precondition is 10,000 USD in revenue in the previous year.

Common problems

  • Stripe charges zero tax. One documented cause is that the customer’s location has no registration in Stripe. Add it under Locations once the business is registered there.
  • Older invoices, subscriptions or payment links have no tax. Stripe says enabling Stripe Tax doesn’t update existing ones; edit each to turn on automatic tax.
  • Shopify shows no liability insights. Insights appear only when US sales tax is self-directed, not when it is managed by Shopify. Sales can also take a few days to appear.
  • Sales elsewhere aren’t counted. Shopify’s insights cover transactions within Shopify, plus marketplace sales where state law requires it, and don’t track local taxes. Stripe monitors Stripe-processed sales and imported transactions, and doesn’t monitor obligations in the business’s home US state or country.
  • The shipping tax option is missing in Shopify. It appears only for registrations in the seven states listed above.
  • Stripe’s threshold totals look out of date. Stripe says new transactions are added within seven days, and refund adjustments typically process within 24 to 48 hours.