Sales Tax for Etsy and Craft Sellers: A Simple Guide
A plain guide to sales tax for craft sellers: who collects it, markets and website sales, and how to keep records.
In this guide
Sales tax confuses many craft sellers. In the US, marketplaces like Etsy often collect and pay sales tax for you, but your own website and in-person sales may be your job. This guide explains the basics in plain words. It is not tax advice, so check your state rules.
- Sales tax is added on top of your price. It is not your income.
- Many marketplaces collect sales tax for you in US states with marketplace rules.
- Website and in-person sales may need your own sales tax permit.
- Check your state tax agency or a tax professional.
Why sales tax matters
If you should collect tax and do not, you may owe it yourself.
Tax-inclusive market prices lower your real income if you forget the tax.
The steps
1. Check your state rules
Visit your state tax agency site.
2. Know who collects
Marketplace or you.
3. Get a permit if needed
For your own sales.
4. Set up tax on your site
Shopify can calculate tax.
5. Keep records
Track tax collected and filed.
Worked example: prices before sales tax
$20 an hour, 10% overhead, 30% profit and 5% fees. Prices are before sales tax.
| Keychain | Candle | Wood sign | |
|---|---|---|---|
| Materials | $1.50 | $4.00 | $5.00 |
| Labor at $20.00/hr | 0.1 hr = $2.00 | 0.3 hr = $6.00 | 0.5 hr = $10.00 |
| Overhead (10%) | $0.35 | $1.00 | $1.50 |
| Cost to make | $3.85 | $11.00 | $16.50 |
| Plus 30% profit | $5.00 | $14.30 | $21.45 |
| Cover 5% selling fees (divide by 0.95) | $5.27 | $15.05 | $22.58 |
| Suggested price | $6 | $16 | $23 |
Sales tax is added on top, or taken out of a tax-inclusive price. See below.
Tax-inclusive market pricing
| Tax rate | Tax-inclusive price | Your share before tax |
|---|---|---|
| 6% | $23.00 | $21.70 |
| 7% | $23.00 | $21.50 |
| 8.25% | $23.00 | $21.25 |
This uses the wood sign price. If you price round numbers at markets and include tax, your share is less than the sticker price. Divide by (1 plus the tax rate) to find it.
Pricing mistakes to avoid
- Treating tax as income. It belongs to the state.
- Forgetting tax-inclusive math. Divide to find your share.
- Skipping permits. Check if you need one.
- No records. Keep tax records.
Sales tax checklist
- State rules.
- Who collects.
- Permit.
- Website tax setup.
- Records.
Price by sales channel
Type your costs and fees into the peach cells. The calculator shows prices by channel before tax.
Get the Multi-Channel Price CalculatorCalculators that help
- Etsy fees: Find Etsy profit. Use the Etsy Fee and Profit Calculator.
- Channel profit: Compare channels. Use the Sales Channel Profit Comparison Calculator – Etsy vs Website vs Amazon Handmade vs Craft Shows.
- Craft show: Plan market profit. Use the Craft Show & Event Profit Planner Pro – Booth & Travel Costs, Workers, Inventory, Break-Even & Profit per Hour.
- KPI dashboard: Track sales. Use the Craft Business KPI Dashboard – Monthly Sales, AOV, Conversion, Margin, ROAS, CAC & Profit per Hour vs Goal.
Common questions
Does Etsy collect sales tax for me?
In many US states, Etsy collects and remits sales tax under marketplace rules. Check your state.
Do I need a sales tax permit?
You may for your own website and in-person sales. Check your state.
Is sales tax part of my price?
No, it is added on top unless you price tax-inclusive.
How do I price tax-inclusive?
Divide the sticker price by (1 plus the tax rate) to find your share.
Are digital products taxed?
Some states tax them. Check your state.
Is this tax advice?
No. Check your state or a tax professional.
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