Overview

Amazon provides built-in tax calculation services that allow sellers to configure how sales and use taxes are determined and applied to their orders. While Amazon handles marketplace tax collection in many states, sellers still need to understand and properly configure their tax settings for states where they have tax obligations. Getting this right is essential to staying compliant and avoiding costly tax errors.

Key Points / What Sellers Need to Know

• State tax registration is required first — Before enabling tax calculations for any state, you must have a valid state tax registration number. You cannot configure taxing jurisdictions without one.
• Product Tax Codes (PTCs) drive taxability — PTCs are rules you assign to products that determine how they are taxed. If no PTC is assigned at either the default or item level, the system defaults to a non-taxable classification.
• Jurisdiction selection matters — You choose which tax jurisdictions (state, county, city, district) the system should calculate taxes for. Only selected jurisdictions will be included in the calculation.
• Marketplace Tax Collection limits your control — In states where Amazon collects and remits sales tax on your behalf, you will not be able to manually set jurisdiction configurations.
• Account changes affect tax enrollment — Downgrading your selling plan or closing your account will cancel your tax calculation enrollment and erase your corresponding tax settings.

How to Configure Tax Calculation Settings

To set up or modify your tax settings, navigate to your Seller Central account, open the Settings drop-down menu, and select Tax Settings. First-time users should review the tax methodology document before proceeding, as it explains exactly how Amazon will perform your tax calculations. You will then need to add each state where you want tax calculations enabled and enter your valid state tax registration number for that state. For each state, select the jurisdictions you want the system to cover — at minimum, the state-level jurisdiction must be enabled before you can activate county, city, or district calculations. Once your settings are configured, save your changes to activate them.