Updated - Originally published February 26, 2025
With a global market value that’s projected to reach almost $13 billion in 2025, print on demand (POD) has become a game-changing business model for entrepreneurs and creatives alike. While multiple platforms make launching a custom POD product line easier, you can face serious challenges if you’re unaware of specific print-on-demand sales tax obligations.
Below I’ll explore all the key ideas related to sales tax for POD sellers need to know about sales tax nexus rules, platform-specific considerations, compliance for single and multistate operations, and tax collection and management.
Sales Tax Nexus for Print-on-Demand Sellers
Nexus is what obligates businesses to collect and remit sales tax in certain states or jurisdictions, and it is commonly broken out into two main categories based on unique qualifiers that can vary state by state.
- Physical nexus may arise if your printing facilities are located in certain states, creating a direct connection that obligates you to collect and remit sales tax there.
- Economic nexus means that even without a physical presence, exceeding a state’s sales or transaction threshold could trigger tax responsibilities.
These situations can become more complex for POD sellers with multiple printing locations, leading to overlapping obligations across states with varying nexus criteria.
Drop-shipping arrangements can also create nexus in states where customers or suppliers are located. Staying informed about where your operations create nexus and proactively structuring transactions can help minimize risks and ensure compliance in this ever-changing landscape.
Third-Party Platform Tax Considerations
I often get questions about Etsy and Shopify sales tax rules. The good news is that, in many cases, major marketplace platforms that facilitate sales are now required to collect and remit sales tax on behalf of sellers thanks to marketplace facilitator tax rules.
While this means you may not be responsible for collecting and remitting sales tax for items sold through these platforms, it’s important to know that each marketplace has its own individual policies and procedures.
- Amazon handles most tax obligations, but sellers may still have reporting obligations in states where they have nexus.
- Etsy handles tax obligations for sales made through its platform, but sellers remain responsible for other sales, such as those done in person.
- Shopify enacted a new policy in January of 2025 to collect and remit taxes on all US nexus orders made through the Shop sales channel, but sellers remain responsible for sales made through any other channels on the platform.
- Social media marketplaces handle most tax obligations, but understanding specific platform requirements is important.
These varying policies across platforms can be complex, but staying up to date on the requirements for those you use the most and maintaining compliance is the best way to help your POD business reach its full potential.
Single and Multistate Sales Tax Compliance
The specifics behind sales tax nexus rules can vary largely across all 50 states. These rules can also frequently change, including how some states no longer consider 200 separate transactions as a qualifier for economic nexus for print-on-demand sellers (and other businesses) in an effort to reduce compliance costs and responsibility.
Some states fully exempt items like clothing from sales tax, while others tax them at reduced rates or only exempt items under a certain price threshold. Taxes on digital products and custom items can be more complex. Even shipping charges can vary—some states consider them part of the taxable sale, while others do not.
At a minimum, POD sellers should ask themselves three questions:
- Do I have sales tax nexus (physical or economic) in a particular state?
- Are the products that I’m selling taxable in that state?
- Based on how I’m selling these products, am I responsible for collecting and/or reporting the sales taxes?
The answers to these questions can often lead to the need for tax registration in multiple states, each with its own filing frequencies and due dates. If not handled early, managing these various jurisdictions—including local tax obligations—can quickly become overwhelming for sellers.
Professional Sales Tax Management and Support
As your POD business grows and enters new markets, understanding and managing sales tax obligations is important for compliance across platforms and jurisdictions.
Tax rates and regulations change all the time, so staying updated can be a pain. Once you've identified your sales tax liability, you’ll need to set up proper collection systems using reliable calculation tools and develop processes for returns and refunds. Investing in the right tools or partnerships can save time, money, and reduce stress.
If you feel like navigating print-on-demand sales tax complexities is holding you back, The Sales Tax People can help. Contact us today to set up a free call where an expert can answer questions, discuss compliance strategies, and provide the support you need to keep your POD business compliant without slowing you down.
