Key takeaways:

1. Amazon doesn't handle every tax obligation. Marketplace facilitator laws may shift sales-tax collection to Amazon, but sellers remain responsible for income taxes, nexus monitoring, and applicable state filings.
2. Amazon sellers should monitor state-by-state sales and FBA inventory locations because economic or physical nexus can create additional tax obligations.
3. Properly setting up seller and tax information, reconciling Form 1099-K, and separating Amazon-collected taxes from business income can help prevent costly compliance issues.
4. Import duties and tariffs may form part of inventory costs and affect COGS, making accurate landed-cost accounting important in 2027.
5. This guide focuses specifically on US-based ecommerce businesses filing taxes with the IRS and complying with US federal and state regulations.

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Selling on Amazon can simplify sales tax collection, but it does not eliminate your tax responsibilities. For FBA sellers, Amazon generally calculates, collects, and remits sales tax on marketplace-facilitated transactions where marketplace facilitator laws apply. However, sellers still need to monitor economic nexus, understand where FBA inventory creates physical presence, maintain accurate records, and handle sales tax obligations outside Amazon.

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The 2026 tax environment adds another layer of complexity. Changes to tariffs, the continued suspension of the de minimis exemption, evolving state economic nexus rules, and federal reporting requirements can all affect an Amazon seller's tax position and cash flow.

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This ePlaybooks guide explains what Amazon collects, what you may still owe, how 2026 economic nexus thresholds work, and how to account for tariff-related costs.

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Types of taxes ecommerce businesses have to file.

Factors such as your business structure, location, and the types of products or services you sell play a crucial role in the type of taxes you pay. Before we look at Amazon sales tax, here are a few types of ecommerce taxes: 

Sales tax

This is a tax on the sale of goods and services. Most ecommerce businesses are required to collect sales tax on purchases made by customers in states where they have a physical presence (nexus) or meet certain economic nexus thresholds. 

Economic nexus refers to the level of physical presence or business activity in a state that makes you liable for sales tax. Thresholds can vary widely, from $100,000 in gross annual sales to specific transaction numbers. 

Sales tax rates vary by state and may also include local taxes. Some states may impose lower tax rates on specific commodities or may even exempt them altogether. 

In some cases, online marketplaces like Amazon or Etsy are deemed responsible for collecting and remitting sales tax on behalf of third-party sellers.

Income tax 

Income tax is a tax on the profits earned by a business. The structure of income tax can vary based on the business entity, such as sole proprietorship, partnership, corporation, or limited liability company (LLC), and can vary by state and country. Some ecommerce businesses may also be subject to self-employment tax if they are not incorporated. 

Value-added tax (VAT) or Goods and Services Tax (GST)

When selling internationally, especially to customers in the European Union or other countries, you may need to charge VAT or GST on your products. These taxes are typically added to the price of goods or services before they are sold. The rates can vary significantly depending on the country. 

Property tax 

Ecommerce businesses may be subject to property tax on both their real and personal property.  Real property can include offices, warehouses, and physical stores. The tax rate for real property varies by state and locality, and it's based on the assessed value of the property. Personal property includes machinery, equipment, furniture, and inventory, and can vary depending on the state and country. 

Payroll tax

If your ecommerce business has employees, you'll be responsible for payroll taxes. These include federal and state income taxes, Social Security and Medicare taxes, and federal and state unemployment taxes. For most employees, payroll taxes are automatically withheld from their wages by their employer. These taxes are a fixed percentage of the wages paid to employees and are paid by the employer. 

Digital goods and services tax

Some jurisdictions may have specific taxes on digital goods and services, including e-books, digital downloads, or streaming services. The taxation of digital goods can vary widely by state. Some states do not tax digital goods, while others may apply sales tax to digital products. It's essential to understand the tax laws for the states you sell to.

What is sales tax for Amazon FBA sellers?

Sales tax is a state and local tax imposed on taxable retail sales. Unlike federal income tax, sales tax generally isn't a tax on your business's profit. It is collected from the customer and remitted to the applicable taxing authority.

For Amazon sellers, the key concept is marketplace facilitator legislation. These laws generally make Amazon responsible for calculating, collecting, and remitting sales tax on qualifying Amazon marketplace transactions.

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Amazon states that when Marketplace Tax Collection (MTC) applies, Amazon is responsible for calculating, collecting, and remitting the tax as the marketplace facilitator. Amazon also identifies these transactions in Seller Central reporting.

However, Amazon collecting the tax does not necessarily mean you have no sales-tax compliance obligations.

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You may still need to:

• Determine where you have sales tax nexus.
• Register for sales tax permits where required.
• Monitor FBA inventory locations and other physical-presence factors.
• File required returns, including potentially zero-dollar or informational returns.
• Collect and remit tax on sales Amazon does not cover under marketplace facilitator rules.
• Keep records showing which taxes Amazon collected and remitted.
• Handle sales tax obligations from your own website or other sales channels separately.

Amazon itself notes that sellers may continue to have reporting obligations even when Amazon collects and remits marketplace taxes.

Setting up your Amazon seller account and tax information correctly

Setting up your Amazon seller account and tax information correctly should be done before making your first Amazon sale. The information you provide to Amazon can affect how your business income is reported and how you manage your tax obligations.

Make sure your seller account uses the correct legal business name, taxpayer identification number (TIN), business address, and banking information. Your tax classification should also match your actual business structure.

If you're deciding whether to structure your ecommerce business as an LLC, remember that an LLC is a legal business structure rather than a separate federal tax classification by default. Depending on ownership and elections, an LLC may be taxed as a sole proprietorship, partnership, S corporation, or C corporation.

Your business structure can affect income-tax reporting, self-employment taxes, payroll requirements, and administrative responsibilities. Consider your expected profits, ownership structure, liability considerations, and long-term plans before choosing an entity.

Keeping your Amazon account information consistent with your legal and tax records can also help prevent reporting discrepancies and unnecessary compliance issues.

What does Amazon collect for you?

For transactions covered by Marketplace Tax Collection, Amazon generally:

1. Determines whether the transaction is taxable.
2. Calculates the applicable sales or use tax.
3. Collects the tax from the customer.
4. Remits the tax to the appropriate taxing authority.
5. Reports the collected amounts through Seller Central.

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You can identify these transactions in Amazon reporting. When an order shows “Marketplace Facilitator” and “Amazon” as the tax collection responsible party, Amazon is responsible for remitting that tax. This means you generally should not collect and remit the same tax again.

However, Amazon's responsibility is limited to the taxes and jurisdictions covered by its marketplace-facilitator obligations. Amazon does not file your federal income tax return or other business taxes on your behalf.

What taxes does an Amazon FBA seller still owe?

Sales tax is only one part of your overall tax picture. Depending on your business structure and operations, you may have:

• Federal income tax on business profits
• Self-employment tax for qualifying sole proprietors and partners
• State income or franchise taxes
• Sales and use taxes on applicable direct sales
• Local taxes or gross receipts taxes
• Payroll taxes if you have employees
• Customs duties and tariffs on imported inventory
• Other state-specific business taxes or fees

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Marketplace facilitator laws primarily address sales and use tax collection. They do not eliminate your federal income-tax liability or necessarily eliminate state registration and filing requirements.

Amazon FBA economic nexus in 2026

Economic nexus means that your sales activity in a state can create a sales-tax obligation even if you don't have an office, store, or employees there. For Amazon FBA sellers, this is particularly important because marketplace sales may or may not count toward your own economic nexus threshold depending on the state.

The following table reflects 2026 rules as of August 1, 2026. State rules can change, so you need to confirm registration and filing requirements with the relevant state tax authority before acting.

Source: Economic Nexus State by State Chart

*Alaska has no statewide sales tax, but participating local jurisdictions can impose sales taxes under the state's remote-seller framework.

Several states have recently removed their 200-transaction test. As of August 1, 2026, the states identified as having eliminated that test include Illinois, Indiana, Iowa, Kentucky, Maine, North Dakota, North Carolina, South Dakota, Utah, Washington, Wisconsin, Wyoming, and others.

Why marketplace sales matter

Don't assume that Amazon-collected sales automatically disappear from your nexus calculation.

For example, California counts marketplace sales toward an individual seller's economic nexus threshold, while Alabama, Arizona, Colorado, Florida, Illinois, Indiana, Maine, Massachusetts, New Mexico, Oklahoma, Tennessee, Utah, Virginia, and Wyoming have rules that exclude certain marketplace sales from the seller's threshold.

This is one reason Amazon sellers should monitor state-by-state sales, marketplace-facilitator treatment, and FBA inventory locations.

Does FBA inventory create sales tax nexus?

Yes, it can. Physical presence is a separate concept from economic nexus. If your inventory is stored in an Amazon fulfillment center in a state, that physical presence can potentially create nexus under that state's rules. FBA makes this difficult because Amazon can move inventory between fulfillment centers. That means you should monitor:

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• Where your inventory is stored
• When inventory enters or leaves a state
• Whether the state treats marketplace inventory as creating seller nexus
• Whether marketplace-facilitator legislation changes your collection obligation
• Whether you have additional physical presence through employees, offices, affiliates, or third-party facilities

Marketplace facilitator laws can shift the collection and remittance obligation to Amazon without necessarily eliminating every other state-level obligation.

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2026 marketplace facilitator and IRS guidance

A common misconception is that Amazon collecting sales tax means the IRS considers those sales fully handled. It doesn't. The IRS and state tax authorities address different taxes.

State sales tax

Marketplace facilitator laws generally determine whether Amazon or the seller is responsible for collecting and remitting state sales tax. Amazon confirms that it acts as the marketplace facilitator for qualifying transactions and remits Marketplace Tax Collection amounts directly to tax authorities.

Federal income tax

For federal income-tax purposes, you still have to report your business income and deduct legitimate business expenses.

The IRS's 2026 guidance on Form 1099-K is particularly important. Third-party settlement organizations, including online marketplaces, generally report transactions when payments exceed $20,000 and 200 transactions for the year. However, the threshold is only a reporting threshold. It does not determine whether your income is taxable. Your Form 1099-K may also show gross payments without reducing them for fees, refunds, shipping, discounts, or other adjustments. You therefore need to reconcile the form against your Amazon records and books.

How 2026 tariffs affect Amazon FBA sellers

Tariffs and customs duties are not sales tax. If you import inventory into the United States, you may owe customs duties based on factors such as:

• The product's Harmonized Tariff Schedule classification
• Country of origin
• Customs value
• Applicable additional duties
• Trade remedies such as Section 301 or Section 232 duties
• Other applicable customs fees

The 2026 tariff environment can therefore increase your landed cost even when Amazon handles sales tax collection from the customer.

How to correctly account for tariff and duty costs

One of the most important accounting mistakes to avoid is treating every tariff payment as an immediate operating expense.

For inventory businesses, IRS inventory rules generally require the cost of purchased merchandise to include the invoice price plus transportation and other charges incurred in acquiring the goods.

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For an imported Amazon product, your landed inventory cost may include:

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Product cost plus freight plus customs duties/tariffs and other qualifying acquisition costs. For example, if you import 1,000 units:

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• Product cost: $20,000
• Freight: $3,000
• Customs duties/tariffs: $5,000
• Other qualifying acquisition costs: $2,000

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Your inventory cost may be $30,000, rather than simply the $20,000 supplier invoice.

How FBA sellers should record duties

Maintain separate records for product purchase cost, customs duties, tariffs and additional duties, freight and transportation, customs broker fees, Amazon FBA fulfillment costs, and other acquisition costs. Then work with your tax professional to apply the appropriate inventory accounting method.

Do not automatically classify tariffs as “sales tax expense.” Customs duties are import costs, while sales tax is generally a transaction tax collected from the customer.

If you use an inventory method that requires capitalization, the duty becomes part of inventory cost and generally affects taxable income when the inventory is sold through COGS. Small-business taxpayers may have alternative inventory accounting options, so the correct treatment depends on your accounting method and circumstances.

De Minimis exemption elimination: What to know

The U.S. de minimis exemption historically allowed qualifying low-value shipments to enter the country without ordinary customs duties and certain entry requirements. That changed significantly beginning in 2025. The U.S. suspended duty-free de minimis treatment for covered shipments, effective August 29, 2025.

In February 2026, the administration continued the suspension and directed CBP to continue collecting applicable duties, taxes, fees, and charges on covered shipments, including shipments sent through the international postal network.

Why does this matter for Amazon sellers?

The change is particularly important for sellers using direct-to-consumer international fulfillment models. A seller shipping individual low-value orders directly from overseas to U.S. consumers can no longer assume that a package under the former de minimis threshold will enter duty-free. The result can include higher landed costs, additional customs duties, customs brokerage or entry costs, more complex import documentation, longer fulfillment times, etc. 

For sellers importing bulk inventory into the U.S. for FBA, de minimis was generally less relevant because commercial inventory shipments commonly require formal customs entry regardless of the value of individual units.

Estimated quarterly tax payments for Amazon sellers

Tariff increases can change your profit picture even if your Amazon revenue remains stable. For example, suppose an FBA seller previously had:

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• $500,000 in annual sales
• $300,000 in total deductible costs
• $200,000 in estimated profit

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If tariffs and other import costs increase annual inventory costs by $40,000, the seller's profit could fall to approximately $160,000. That reduction may lower the seller's federal income-tax liability.

However, the opposite problem can also occur. Sellers may underestimate their tax payments because they use outdated profit projections while sales remain strong. The IRS recommends recalculating estimated taxes when income, deductions, or tax-law changes affect the current-year picture. For calendar-year taxpayers, estimated payments generally follow this schedule:

How tariff-driven cost changes affect estimated taxes

If tariffs change your margins:

1. Recalculate your projected annual revenue.
2. Update inventory and COGS projections.
3. Include expected tariff and duty costs using your applicable accounting method.
4. Recalculate estimated taxable income.
5. Recalculate federal and applicable state estimated taxes.
6. Compare the result against prior estimated payments.
7. Adjust the next quarterly payment if necessary.

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The IRS specifically notes that taxpayers can recalculate estimated income during the year and should make adjustments when circumstances or tax laws change.

Lastly, don't confuse lower profit with lower cash needs. Tariffs can reduce taxable profit, but they also require cash. You may pay a customs duty when importing inventory months before you recover that cost through Amazon sales. Therefore, you should monitor both tax liability and working capital when tariffs increase. 

How to stay Amazon sales tax compliant in 2026

Here is an easy checklist to keep your tax records organized.

1. Track your state nexus: Monitor sales by state, not just total Amazon revenue.
2. Monitor FBA inventory locations: Review where Amazon stores your inventory and determine whether physical presence creates additional obligations.
3. Separate Amazon-collected tax from seller-collected tax: Use Amazon reports to identify transactions where Amazon acted as the marketplace facilitator.
4. Don't double-remit sales tax: If Amazon collected and remitted the tax, don't independently remit the same amount unless your state-specific filing requirements require another treatment.
5. Review marketplace sales in nexus calculations: Whether Amazon sales count toward your economic nexus threshold varies by state.
6. Reconcile Form 1099-K: Compare Amazon's Form 1099-K with your sales records, refunds, fees, shipping charges, and other adjustments. The IRS says Form 1099-K reports gross payments and does not automatically represent taxable profit.
7. Track tariffs separately: Maintain detailed records of duties and tariffs so your accountant can determine the appropriate inventory and COGS treatment.
8. Review your estimated taxes: Recalculate quarterly estimates when tariff changes, pricing changes, sales growth, or other factors materially change expected profit. 
9. Keep import documentation: Maintain commercial invoices, customs entries, tariff classifications, broker statements, and payment records.
10. Review state filings regularly: Amazon's tax collection does not automatically mean your business has no state filing obligations.

When should you work with a tax professional?

A tax professional can be especially valuable if your Amazon business:

• Has FBA inventory in multiple states
• Sells through Amazon and other marketplaces
• Operates its own Shopify or ecommerce website
• Imports products from overseas
• Has experienced major tariff increases
• Has direct-to-consumer international shipments
• Has significant sales across multiple states
• Receives multiple Forms 1099-K
• Operates as an LLC, S corporation, partnership, or corporation
• Has received a state tax notice or audit request

An ecommerce-focused CPA or sales-tax professional can help separate sales tax, income tax, customs duties, and business deductions so that one tax category isn't incorrectly treated as another.

Seeking professional assistance 

Many ecommerce business owners opt to file their taxes independently. However, seeking professional assistance can provide valuable expertise and peace of mind.

If your ecommerce business operates across multiple states or countries and deals with significant international sales, working with a tax professional can help navigate complex tax implications. Tax professionals can offer strategic advice on minimizing tax liabilities and maximizing deductions. 

Here's a step-by-step guide on how to find and work with tax professionals for your ecommerce business:

Identify your needs

First, you want to determine the specific tax-related needs of your ecommerce business. This may include general tax preparation, international tax compliance, sales tax issues, or any other industry-specific knowledge.

Understand your business structure.

Know your business structure (e.g., sole proprietorship, LLC, corporation) as it affects the type of tax professional you might need. Different structures have distinct tax obligations, and professionals may specialize in specific areas.

Research types of tax professionals

Explore different types of tax professionals, such as Certified Public Accountants (CPAs), Enrolled Agents (EAs), tax attorneys, or tax consultants. Ensure the tax professional you choose is qualified and has the necessary certifications. CPAs are licensed by state boards of accountancy, EAs are licensed by the IRS, and tax attorneys are licensed by state bar associations. Each has its strengths and areas of expertise. 

Interview several tax professionals to assess their expertise, communication style, and compatibility with your business. Ask about their experience with ecommerce businesses and their approach to handling specific tax issues relevant to your industry.

Discuss the fee structure upfront. Some tax professionals charge hourly rates, while others may provide flat-fee packages. You also want to understand the scope of services covered by the fees. 

Establish a relationship with the tax professional.

Lastly, you want to properly define the roles and responsibilities of both parties. Understand what information and documents you'll be required to provide and what tasks the tax professional will handle. Establish a regular communication schedule with your tax professional. This ensures that you can address any issues or questions promptly and make necessary adjustments to your tax strategy as your business evolves. 

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Regularly review your relationship with your tax professional. If there are changes in your business structure, industry regulations, or other relevant factors, ensure that your tax professional is aware and can adjust their approach accordingly. 

How to file taxes for your ecommerce business

Here are the steps to file taxes for your ecommerce business: 

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1. Understand your business structure 
2. Gather necessary documents 
3. Prepare and file your tax returns 

Understand your business structure 

First, you need to understand your business structure (sole proprietorship, LLC, partnership, S corporation, or C corporation), as this impacts how you file taxes. Each structure has its tax implications and filing requirements. 

• Sole proprietorship: If you operate your ecommerce business as a sole proprietorship, your business income and expenses are reported on your personal tax return using Schedule C (Form 1040).
• Partnership: If you have a business partner or multiple owners, you'll need to file a partnership tax return (Form 1065) and provide each partner with a Schedule K-1 (Form 1065), which will include their share of the income, credits, and tax deductions.
• Corporation: If your ecommerce business is structured as a corporation (C-Corp or S-Corp), you'll need to file a separate corporate tax return (Form 1120 for C-Corp or Form 1120-S for S-Corp).

Gather necessary documents 

Next, you want to gather all the necessary documents to prepare your tax returns effectively. This includes income statements, expense reports, tax forms, and sales tax receipts. You can use accounting software or spreadsheets to track your income, expenses, and overall financial performance. Organize all your records by month or quarter, depending on your accounting practices.

Prepare and file your tax returns.

With all the necessary documents and information at hand, it's time to prepare and file your tax returns. 

First, review and organize your financial documents, ensuring you have everything needed to complete your tax returns accurately. You want to separate business and personal expenses to avoid any confusion or errors during the filing process. Understanding Amazon seller fees and their tax implications is an important part of accurately calculating your ecommerce business's taxable profit. 

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Next, decide whether you'll file your taxes manually using paper forms or electronically through tax preparation software or online platforms.

Next, fill out the required tax forms carefully, double-checking all information for accuracy and completeness. You can utilize tax software features or online calculators to ensure you're maximizing deductions and credits while minimizing errors.

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Lastly, review your completed tax returns thoroughly to identify any discrepancies. Verify that you've included all relevant income, deductions, and credits before submitting your tax returns to the appropriate tax authorities.

What tax deductions can Amazon FBA sellers claim?

Legitimate business expenses can reduce taxable income, although inventory-related costs may need to be capitalized and recognized through COGS rather than deducted immediately.

Common categories include:

Inventory and COGS

Inventory costs generally become deductible through COGS when the related inventory is sold, subject to the seller's applicable accounting method.

This can include qualifying product costs, import duties, tariffs, freight, transportation, and other acquisition costs. IRS inventory guidance requires purchased merchandise cost to account for the invoice price plus transportation and other acquisition costs.

Amazon fees

Depending on the nature of the charge and the seller's accounting treatment, Amazon selling, referral, fulfillment, storage, and advertising fees are generally business expenses associated with operating the Amazon business.

Advertising

Potentially deductible marketing expenses include Amazon PPC, Meta advertising, Google Ads, influencer marketing, content creation, and promotional campaigns.

Software

Business software can include accounting platforms, inventory management software, Amazon analytics tools, keyword research tools, sales tax software, project management tools, etc.

Shipping and fulfillment

Qualifying business shipping, packaging, freight, and fulfillment expenses can generally be deducted or included in inventory cost depending on their relationship to acquiring or selling inventory.

Home office and other operating costs

Qualifying sellers may also have deductions for expenses such as home office costs, business insurance, internet and utilities, business travel, and education and training. The exact treatment depends on the expense and your business structure.

Common Amazon FBA compliance mistakes that cost sellers money

Tax problems often result from relatively simple recordkeeping and compliance mistakes. Some common Amazon FBA compliance mistakes that cost sellers money include:

1. Assuming Amazon handles every tax obligation: Amazon may collect and remit marketplace sales tax, but it does not file your federal income-tax return or eliminate every state filing requirement.
2. Ignoring economic nexus: Sellers may need to register or file in states where their sales exceed the applicable economic nexus threshold.
3. Failing to monitor FBA inventory locations: Inventory stored in Amazon fulfillment centers can create physical-presence considerations depending on state law.
4. Treating tariffs as sales tax: Customs duties and tariffs are import costs, not sales taxes collected from customers.
5. Deducting inventory costs incorrectly: Qualifying inventory acquisition costs may need to be capitalized and recognized through COGS rather than deducted immediately.
6. Failing to reconcile Form 1099-K: The amount reported on Form 1099-K may not equal your taxable profit because it generally reflects gross payment activity before certain fees, refunds, and other adjustments.
7. Mixing business and personal expenses: Separate business accounts and accurate bookkeeping make it easier to substantiate legitimate deductions.
8. Using outdated tax estimates: Significant changes in sales, margins, tariffs, or operating costs can affect quarterly estimated tax payments.

Avoiding these mistakes can help you reduce unnecessary tax exposure, improve cash-flow planning, and maintain cleaner tax records. 

Wrapping up 

Amazon FBA can simplify sales-tax collection, but it doesn't make your entire tax obligation disappear. The safest approach is to maintain detailed state-by-state sales records, reconcile Amazon's tax reports with your accounting system, track FBA inventory locations, and separately document import duties and tariffs. Keep in mind that tax laws and regulations can change, so it's important to stay informed and consult with a tax professional to ensure you're meeting all your tax obligations. In addition to working with an ecommerce-focused CPA or tax professional, you can benefit from specialized marketplace support. ePlaybooks' Amazon account management services can help you manage the operational side of your Amazon business while you focus on growth, profitability, and broader business strategy.