Do Creators Need to Collect Sales Tax on Merch or Digital Products

Sell a hoodie or a preset pack from your own site and a fair question follows: do you actually need to collect sales tax on merch or digital products, and if so, where. Most creators either ignore the question entirely or assume the platform they sell through handles it automatically. Sometimes that's true. Often it isn't, and the gap between those two situations is where the risk sits.

What creates the obligation

Since the Supreme Court's Wayfair decision, states can require an out-of-state seller to collect their sales tax once that seller crosses an economic nexus threshold in that state, regardless of whether the seller has any physical presence there. Most states set that threshold at $100,000 in annual sales, though a handful run higher, up to $250,000 or $500,000 in certain states. Cross the threshold in a given state and you're required to register, collect, and remit sales tax there going forward.

Your own site versus a marketplace

This is the distinction that trips up most creators. If you sell through a marketplace like Etsy or Amazon, marketplace facilitator laws generally require the platform to collect and remit sales tax on your behalf. If you sell through your own store on Shopify or WooCommerce, that responsibility falls on you by default. Shopify can calculate the tax at checkout, but it doesn't register you with states, and filing the returns is still your responsibility unless you pay for its add-on filing service.

Print-on-demand doesn't automatically solve it either. Fulfilling through Printful or a similar service doesn't usually give you a physical presence in the states where your goods ship from, but your own sales volume into a state can still trigger economic nexus there regardless of how the product gets made or shipped.

Digital products aren't a blanket yes or no

Whether a downloadable course, template, or ebook is taxable at all depends entirely on the state. Some states tax digital products the same as physical goods. Others don't tax them at all. There's no single national rule here, which means a creator selling a course nationally is potentially dealing with a different taxability answer in every state their customers are in.

What to actually do about it

Track your sales by state, not just in total, which is much easier once your books are actually separated by business account. Know where you're approaching a threshold before you cross it, since registering after the fact usually means a lookback period and potential penalties rather than a clean start. If you've already crossed a threshold in a state without realizing it, a voluntary disclosure agreement is generally the better path than waiting for the state to notice.

How All-In Advisors handles it

Multi-state sales tax exposure is something we review as part of ongoing bookkeeping for creators selling merch or digital products, so a threshold you crossed six months ago gets caught in a quarterly review instead of a state notice two years from now.