Do My Amazon Marketplace Transactions Trigger Tax Nexus?
Yes, your Amazon earnings usually count towards sales tax nexus thresholds in many states, even if Amazon collects and remits sales tax on your behalf. This means your marketplace income can still create registration and filing obligations.
This is one of the most misunderstood areas of ecommerce sales tax.
Many Amazon sellers assume “If Amazon collects the tax, I don’t have sales tax obligations.”
In reality:
- Your marketplace sales may still be considered when determining nexus thresholds
- You may still need to register and file in certain states
- Inventory stored by Amazon can also create physical nexus
Marketplace collection does not always eliminate your compliance obligations.
The most important point to remember is that Amazon income often count toward economic nexus thresholds, meaning sellers may still trigger sales tax obligations even if Amazon collects and remits the tax.
How Economic Nexus Works
Economic nexus is created when your sales into a state exceed that state’s threshold.
Most states use thresholds such as:
- $100,000 in sales
- Some states use $500,000
These thresholds are based on:
- Revenue
- Sometimes transaction counts
The important point being that many states include Amazon marketplace revenue when calculating these totals.
Why Amazon Sellers Get Confused About Tax
Marketplace facilitator laws changed how tax is collected but not necessarily how nexus is calculated.
Under marketplace facilitator rules:
- Amazon often collects and remits tax for marketplace sales
- The state receives tax from Amazon directly
This creates confusion because:
- Sellers assume their obligations disappear completely
- But states may still count those sales toward nexus thresholds
In some states:
- You may still need to register
- You may still need to file returns
- You may still have reporting obligations
Marketplace Facilitator Laws Explained
Marketplace facilitator laws require platforms like Amazon to collect and remit sales tax on behalf of sellers in many states.
This means:
- Amazon calculates the tax and sends the tax to the state
However, the underlying sale is still considered your sale in many nexus calculations. This distinction is critical for compliance.
Physical Nexus and Amazon FBA
Amazon sellers may also create physical nexus through inventory storage. This is especially important for Amazon FBA Sellers. Amazon stores inventory in warehouses across multiple states.
If your inventory is stored in a state you may create physical nexus there immediately.
Physical nexus can exist even if:
- Turnover is relatively low
- You have no office or employees in the state
State Threshold Examples (2026)
| State | Threshold Includes Amazon Sales? | Notes |
| California | Yes | Marketplace sales generally included in economic nexus calculations |
| Texas | Yes | Amazon marketplace sales count toward the $500,000 threshold |
| Florida | Yes | Marketplace sales generally included |
| New York | Yes | Marketplace sales generally included |
| Illinois | Yes | Marketplace sales generally included |
| Missouri | Yes | Marketplace sales generally included |
| Arizona | No (in certain cases) | Arizona may exclude marketplace facilitator sales from remote seller threshold calculations if the marketplace is already collecting and remitting tax |
| Pennsylvania | Mixed treatment | Registration and filing obligations may still apply even where marketplace tax is collected |
This is why Amazon sellers cannot assume the rules are identical across all states. Some states still include marketplace income in sales tax nexus thresholds, while others provide exclusions or different treatment under marketplace facilitator laws.
Since state rules change frequently, Amazon sellers should, on a state-by-state basis, review both:
- Economic nexus thresholds
- Marketplace facilitator treatment
Will You Still Need to Register If Amazon Collects Tax?
Possibly yes. This depends on:
- The state
- Your total sales activity
- Whether you have physical nexus
- State-specific filing rules
In some states:
- Registration may still be required
- Zero-dollar filings may still be necessary
Sellers should not assume marketplace collection removes all obligations.
What Amazon Sellers Should Do
Amazon sellers should actively monitor their sales tax exposure rather than relying entirely on marketplace collection.
Key Steps
1. Track Sales by State
Monitor where your Amazon sales occur.
2. Review Nexus Thresholds
Compare your sales against state thresholds.
3. Check Inventory Locations
Amazon FBA inventory can create physical nexus.
4. Determine Registration Requirements
Some states still require registration despite marketplace collection.
5. Maintain Ongoing Compliance
Continue reviewing obligations as your business grows.
For broader guidance, see our article on how to determine if you owe tax in multiple states.
Worked Examples
Example 1: Amazon Marketplace Seller
- Amazon collects tax
- Seller exceeds $100,000 in Florida sales
Result:
- Sales may still contribute to nexus thresholds
- Registration may still be required
Example 2: Amazon FBA Seller
- Inventory stored in Texas warehouse
Result:
- Physical nexus created in Texas
- Sales tax obligations triggered
Example 3: Scaling Ecommerce Brand
- Selling on Amazon and Shopify
- Nationwide sales growth
Result:
- Multiple nexus states likely
- Ongoing compliance review required
Common Mistakes Amazon Sellers Make
- Assuming Amazon handles all sales tax obligations
- Ignoring economic nexus thresholds
- Not tracking FBA inventory locations
- Failing to register where required
- Assuming marketplace collection removes nexus exposure
These mistakes can lead to back taxes and compliance risk.
FAQs
Do Amazon sales apply toward nexus thresholds?
In many states, yes.
Does Amazon collecting tax mean I don’t need to register?
Not always, some states still require registration and filing.
Can Amazon FBA create physical nexus?
Yes, inventory storage can create immediate obligations.
Do all states treat Amazon sales the same way?
No, rules vary by state.
What happens if I ignore nexus obligations?
You may face back taxes, penalties, and audit risk.
Final Thoughts
Amazon marketplace facilitator laws simplified sales tax collection in many ways, but they did not eliminate compliance complexity for sellers.
The key takeaway is your Amazon earnings may still count toward sales tax nexus thresholds even if Amazon collects the tax.
For growing ecommerce businesses, this means:
- Nexus monitoring is still essential
- Registration requirements may still exist
- Inventory tracking remains critical
If you sell on Amazon and are unsure how marketplace sales affect your sales tax obligations, RJM Tax Exemption can help you determine where you have nexus and ensure you remain compliant across all states.
