Sales tax isn’t exactly the most glamorous topic in the online business world. But if you’re selling on Teachers Pay Teachers, it’s something you need to at least kind of understand.
This isn’t income tax (that’s a whole separate conversation). We’re talking about sales tax for TPT sellers – how it applies to digital products – and what you actually need to do about it.
** Disclaimer: I’m not a tax professional. This isn’t legal or financial advice. This is simply a summary of my research to help you make sense of sales tax without feeling overwhelmed. **
This post contains affiliate links, which means I may earn a small commission (at no extra cost to you) if you choose to purchase through them. I only share products I truly love and recommend!
Why Sales Tax for Digital Products is… Complicated
If you’ve ever bought a pair of shoes or groceries, you know sales tax is tacked on at the register. But for digital products, things aren’t quite as straightforward.
Here’s the tricky part: every U.S. state has its own rules for how sales tax applies to digital products. And those rules can (and do) change.
To make things even more interesting, the rules are different if you sell outside the U.S. – but more on that later.
Do you want the good news for TPT sellers?!
TPT is what’s called a marketplace facilitator, which means they collect and remit sales tax on your behalf for most transactions.
If you’re a new seller, that often means you don’t have to think much about sales tax – yet.
What Happens When You Make a Certain Amount of Sales as a TPT Seller?
Where you do need to pay attention is when you hit something called economic nexus in a state.
Economic nexus is a fancy way of saying you’ve sold enough to customers in that state that you’re now legally required to register for a sales tax permit there – even if TPT is already collecting the tax.
Each state sets its own thresholds, but here are two common ones:
- $100,000 in sales in a single state in a calendar year
- 200 transactions to customers in a single state in a calendar year
Some states use both – meaning you hit nexus if you reach either threshold.
What to Do if You Hit Nexus
If you’ve hit 200 transactions, $100,000 in sales in a state, or whatever threshold that is in place – don’t panic.
The likely next step is registering for a sales tax permit in that state and, in some cases, filing a sales tax return there. You don’t have to physically go to the state – you can register online.
And remember: TPT is still collecting and remitting the sales tax for you. You’re just making sure you’re set up correctly on the paperwork side.
How to Check Your Sales Tax Numbers Inside TPT
If you’re curious about whether you’ve hit nexus in a state, here’s where to look inside TPT:
- Go to your account settings and check your Sales Tax Settings.
- Review your sales by state by pulling a “Transaction by State” report for the past 12 months.
- Compare your numbers to that state’s thresholds.
If you need a shortcut, I’ve created a document that lists which states have the 200-transaction rule and/or their specific thresholds. Download the Sales Tax for TPT Sellers Guide here!
What About Sellers Outside the U.S.?
If you’re selling from outside the United States, you might run into VAT (Value-Added Tax) or GST (Goods and Services Tax).
The rules for these work similarly – different countries have different thresholds. The key takeaway: check the rules for your country and the countries where your customers are located.
Key Things to Remember About Sales Tax for TPT Sellers
Sales tax for digital products might feel intimidating, but here’s the truth:
- TPT does a lot of the work for you.
- The only time you need to take extra steps is if you hit nexus in a state.
- You don’t need to navigate it alone – tax professionals, your state’s sales tax office, and even TPT’s own FAQ page are there to help.
It’s not about memorizing every tax law in the country—it’s about knowing when it’s time to take action.
Remember that if you want the full state-by-state breakdown, download the Sales Tax for TPT Sellers Guide here! This free guide will keep your store running smoothly without tax-time anxiety.
