The Complete Guide to Shopify Sales Tax Reports in 2025

What Is a Shopify Sales Tax Report?

If you are an e-commerce retailer, you are likely highly concerned about sales tax matters. Selling goods is not the only thing on your radar. Instead, staying compliant with tax authorities ranks high on the list for anyone who desires to remain in business for the long haul.

But how can you stay compliant as a business owner when the laws are vastly confusing? How can sales tax compliance be a hallmark of your business when the rules change across states, industries, and even transaction types—making it nearly impossible to keep up without expert help or automated tools?

Taking advantage of Shopify sales tax reports will give you liability insights so that you can properly remit sales tax and fulfill your sales tax obligations. A Shopify sales tax report is a downloadable summary that details the amount of sales tax collected from customers, broken down by jurisdiction and time period, to help merchants accurately file tax returns and stay compliant.

Understanding Shopify Tax Reporting

As you seek to traverse the landscape of your Shopify reports, the first step is understanding three key areas.

• Shopify sales tax reports help track collected taxes for business owners. Every transaction is documented within Shopify. Shopify then produces reports to track key metrics. This gives the online store owner access to real-time tax data. Data, such as summaries of collected taxes by order, date, region, or product, is beneficial for both filings and audits. All of this data is accessible right from your Shopify admin dashboard, making it easy to file, pay, and reconcile your records.

  
  

• These reports also help ensure compliance with sales tax laws. With each state setting its own rules, sales tax reporting could scarcely be more confusing. While mastering the laws in your state seems challenging enough, what happens when you cross another state's sales tax nexus threshold and need to learn their rules as well? It is rare for a business owner to have the time and expertise to do such a thing. Nevertheless, Shopify will automatically adjust sales tax rates based on your customers' shipping addresses and local jurisdictions. Shopify also alerts business owners when they have crossed nexus thresholds.

  
  

• Finally, Shopify sales tax reports provide insight into liabilities for different countries. If you are an international seller, Shopify sales tax reports can help you prepare for filings by allowing you to know your sales tax liabilities in advance. They can also give country-specific breakdowns for foreign tax laws, such as VAT (Value-added tax) matters in the UK or GST (Goods and Services tax) compliance in Australia.

Who Needs to Use Shopify Tax Reports?

Hopefully, you will understand more about Shopify sales tax reports by now. But you may be wondering, “Do I need to use these reports”? Let’s answer the question: Who must use Shopify tax reports?

• First, Shopify store owners in the United States and other regions can significantly benefit from using these reports for local sales tax filings.

• Second, businesses with an economic nexus in the United Kingdom or New Zealand will profit from Shopify's sophisticated sales tax approach.

• Finally, online businesses with sales tax obligations throughout the United States and in multiple jurisdictions will experience the time-saving convenience of centralized, automated sales tax information—streamlining their reporting, reducing compliance risks, and freeing up resources to focus on growth.

How to Access and Use Shopify Tax Reports

Now that we have answered “What Is a Shopify Sales Tax Report?” it is essential to discuss accessing and using Shopify tax reports.

Steps to Download and View Reports

Here are some simple steps to access and download your Shopify sales tax reports.

• Log in to your Shopify admin account

• Go to the “Shopify reports” section (From the left-side menu, select Analytics > Reports)

• Select the sales tax reporting option (United States sales tax or the Taxes finance report)

• Choose a date range for your calendar year

• Download as a CSV file for detailed analysis

Features of Shopify’s Tax Reporting Tools

From this point, the primary sales tax report discussed is the United States sales tax report, which is the most helpful for sales tax filings and compliance. The report has a…

• Breakdown of local sales tax and state sales tax. This is very helpful as you will likely encounter destination-based sales tax filing requirements. This means that you must remit sales tax based on your customer’s location. Shopify considers and records this at checkout so that you can view state-specific information with breakdowns for cities and counties.

  
  

• Summary of the sales taxes for specific states. The United States sales tax report shows a list of states where you have sales for a given period. Here is an easy way to see your sales obligations for states where you have enabled sales tax collection. Nevertheless, it is essential to know that just because Shopify shows that sales tax is not being collected does not mean you should not be collecting it. On the other hand, if Shopify shows you are collecting sales tax, this does not necessarily mean you should. More will be said on sales tax nexus requirements later.

  
  

• Detailed listing, including net sales, taxable sales, tax-exempt sales, shipping charges, and shipping tax. These key metrics will help you when it comes time to file. For instance, some states require that shipping be added to sales amounts when filing. Furthermore, while some states require you to pay sales tax on sales, some do not, and some may even require you to add shipping charges to sales but then take the amount out as a deduction. Finally, all states allow exceptions for sales tax purposes.

Key Information in Shopify Sales Tax Reports

As you get ready to file, you want to be aware of key information in your Shopify Sales tax reports. Here are some of those key considerations.

State and Local Jurisdiction Information

Within the United States sales tax report, you will see collected taxes by state and tax jurisdiction level. Using Illinois as an example, if you open the United States sales tax report, you will see Illinois if you made sales there during the period in question.

After opening the report, you will see a long list of jurisdictions. This can get confusing. For example, with Illinois, it is helpful to download the report to a CSV file. You can then delete the columns that do not apply as you do not often need the full report, leaving the jurisdictions and their taxable sales and shipping charges.

Then, you can “AutoSum” the taxable sales and shipping costs. This will give you the total amount of sales attributable to each jurisdiction. It can also be helpful to insert a pivot table to see the sales amounts for each city and county more clearly.

If all of this seems a little confusing, it is important to know that it is a more efficient way of filing sales tax if learned and will help you remit the right amount sales tax. However, you can always look at the US sales tax report and add the taxable sales amounts with the shipping charges when filing for Illinois and each jurisdiction within Illinois.

There is a lot of carryover between states regarding state taxes how filing should be done. At the same time, there are differences between them all that must be considered. To continue with Illinois, when filing, you will want to analyze the United States sales tax report and file for the cities listed on the report.

For whatever city is listed on the report, when you file an amount for that city, the system will automatically calculate the rate for the county as well. In other words, just because the county is listed in the Shopify report does not mean you will want to record an amount separately when you file.

However, after filing for the cities in Illinois, you may encounter that your total taxable sales recorded for these cities do not reach your total taxable sales for the state.

This is likely because some of the cities where you made sales require you to remit sales tax only at the county level. As a result, you will need to determine which counties these are by keeping track of the amounts you previously recorded and their corresponding counties.

You can then tell in the Shopify report which counties still require sales tax remittance.

Shipping Addresses, Product Categories, and Sales channels

Shipping addresses, product categories, and sales channels are critical when filing sales tax reports. Most states follow a destination-based sales tax approach, which Shopify considers in its calculations.

Also, Shopify can be configured so that your product categories can include tax-exempt sales or items taxed differently.

Finally, Shopify also studies your POS (Point of Sale) system when calculating your sales, whether it be your Shopify storefront, Amazon, a social media platform, etc. This is important because marketplace facilitators like Amazon remit sales tax for their sellers. As a result, you do not need to pay sales tax on those sales and certainly do not want to pay twice.

Tax-Exempt Customers and Tax Exemptions

If you sell to wholesalers, non-profits, or government agencies, you can mark these buyers as tax-exempt customers so they can take advantage of sales tax exemptions.

Understanding Filters

Filtering for the correct time period will give you a breakdown of the sales tax amounts that have been collected and are due for that period.

Ensuring Sales Tax Compliance for Your Business

Ensuring sales tax compliance for your US taxes involves understanding sales tax obligations and using Shopify tools for compliance.

Understanding Sales Tax Obligations

• When you set up a physical location within a state, you establish a physical nexus in that state. Furthermore, if you travel into a state to make sales or create economic nexus (crossing a state's sales tax threshold amounts), you gain nexus in that state. When either of these instances occurs, you must register for a sales tax permit with that state.

  
  

• You will also need to charge the correct tax rates for online sales. Shopify can help with this, but you must enable sales tax collection in the jurisdiction where you have nexus and are registered to file.

  
  

• After your sales tax registration process is complete, you should also open online accounts with the state to file sales tax returns with local tax authorities. Each state has its own portal, which makes filing sales tax returns much easier than paper filing. Opening your online account is also helpful for maintaining tax documents and correspondence with the state.

Shopify Tools for Compliance

• A Shopify POS for in-person transactions can also be used to record sales in Shopify. If you travel to multiple states, you should consider setting up different locations in Shopify for your POS sales, as this will make your nexus obligations easier to track.

• Automated sales tax calculations with Shopify payments help determine the amount of tax you must pay the local authorities. They will also help ensure you collect the proper amount of sales tax from your customers.

• You will also want to know how to handle tax overrides and additional charges. Tax overrides allow you to manually adjust the tax rates or rules for products, regions, or customer scenarios.

Common Challenges and Shopify Support Solutions

While Shopify helps to simplify the sales tax process, common challenges will still arise, and support may be needed to help solve these issues.

Overcoming Sales Tax Challenges

Tax Jurisdictions

A significant challenge retailers face is understanding tax jurisdictions in the United States. Each state often has a sales tax obligation amount at the state, county, and city level. Some states do not have a sales tax altogether, while some may require that you only pay at the county or state level.

Nevertheless, you will want to know how your specific state operates. You will likely need to file and pay at the state level. However, determining if you should file and pay at the city and county levels will also be essential, as will ensuring you are filing properly while not paying twice, as mentioned in the previous example of Illinois.

Physical Presence and Economic Nexus

Managing physical presence requirements and economic nexus has been a

headache for many online store owners. It is enough to file and pay for your state. But things tend to get a little trickier when other states seem to want their portion of your profits.

Not only that, but retailers are often caught off guard when they cross sales tax thresholds. This can cause a significant hardship to business owners, as they are required to pay sales tax after they cross a threshold, but in these scenarios, they have usually not been collecting sales tax.

Looking up an up-to-date sales tax chart with threshold amounts can often be helpful to ensure compliance. Most states follow a 200 transaction or $100,000.00 sales threshold for the previous or current calendar year.

Analyzing your total sales by billing location report for sales data by region and shipping destination can help you be aware of how much sales you have had in a given period and if you have crossed these nexus figures. You will also want to be mindful of in-person Shopify POS sales, which may not be reflected in the total sales by billing location report.

Charging taxes

Ensuring the correct sales tax amounts are charged has also been problematic for many e-commerce retailers. While Shopify auto-calculates amounts, you will want to be sure that Shopify's sales tax collection is enabled in Shopify for the appropriate states and that it has not been enabled for any states where you should not charge taxes.

Furthermore, properly setting up your Shopify account will be important to ensure you are collecting the correct amounts. If you need help with this, see our step-by-step guide blog post.

Getting Support from Shopify

• As a Shopify account owner, contacting the Shopify support team for help by chat, email address, or phone is often a remarkable problem-solving solution when facing some of the previously mentioned challenges.

• Using the virtual help center assistant for step-by-step guidance has also been a time-saving remedy for many.

• Exploring the Shopify sales tax guide for business owners will prove to be the answer you are looking for in a vast number of situations.

Conclusion: Simplifying Shopify Sales Tax Reports

• Shopify tax reports offer a comprehensive guide for sales tax compliance that should not be overlooked. Ensure you take advantage of these reports when it comes time to file. Better yet, look over them now to be well-prepared when it comes time to file.

• Use tools like detailed reports and Shopify support for accurate tax reporting. Learning to customize your reports and download them to an Excel file will help streamline the sales tax filing process.

Don’t forget that when all else fails, you have a large Shopify support team to help.

Finally, while we would love to fill you with the knowledge needed for sales tax compliance, if you would rather have someone file and pay your sales tax for you, do not hesitate to contact us. We are happy to help!