Introduction
Running a Print-on-Demand (POD) business through Amazon in 2025 sounds simple: upload a design, list it, and let Amazon handle the rest. But behind the scenes, sales tax compliance for POD sellers is one of the most misunderstood aspects of eCommerce.
As a seller, you may think Amazon handles it all but that’s only partially true. Depending on the states where your products are printed, shipped, or stored, you may have a sales tax obligation, especially if you also sell through platforms other than Amazon (e.g., Etsy, Shopify).
Let’s decode how POD sellers on Amazon should approach sales tax in 2025 and avoid compliance nightmares.
IRS Tax Code References
While sales tax is governed by state laws, federal tax principles still apply:
- IRC §162 – Deductibility of business-related expenses (e.g., design software, subscriptions)
- IRC §263A – Inventory and indirect cost allocations
- IRC §6050W – 1099-K reporting via Amazon
- IRC §6001 – Recordkeeping obligations for all sellers
Relevant IRS and State Forms
- Form 1099-K – Reports total Amazon sales (not net of refunds or tax)
- Schedule C (Form 1040) – Used by sole proprietors to report profits and deduct POD expenses
- State Sales Tax Returns – Monthly/quarterly/annual returns filed based on nexus
- State Sales Tax Permit Applications – Required before collecting any tax
Example: Print-on-Demand Seller with Multi-State Exposure
Example: Arya is a Florida-based designer selling custom hoodies via Amazon Merch on Demand. Her products are printed and shipped from Amazon facilities in TX, CA, and PA.
In 2024:
- She earned $98,000 from Amazon POD
- Amazon issued a Form 1099-K showing gross sales
- Her designs were fulfilled from multiple states, creating nexus
- Amazon collected and remitted sales tax on her behalf, but she also sold on Etsy (which required her to register in CA and TX separately)
Tax strategy:
- Deducted Adobe subscription, Canva Pro, and design tablet under IRC §162
- Tracked total product cost under IRC §263A
- Used Schedule C to report income and expenses
- Registered for state sales tax in Etsy-relevant states
Step-by-Step Sales Tax Guide for Amazon POD Sellers (2025)
- Understand Marketplace Facilitator Rules
Amazon is a marketplace facilitator, meaning they collect and remit sales tax on your behalf in most states. - Know Where Amazon Ships From
Even with marketplace collection, you may have inventory nexus if your POD products are fulfilled from warehouses in states that require seller registration. - Review Other Platforms You Sell On
If you sell POD items through Shopify, Etsy, or your own site, you must collect and remit tax where you have economic nexus (e.g., 200 transactions or $100,000 in revenue). - Don’t Assume Amazon Covers Everything
Amazon may collect tax, but you still need to:
- Report that income
- Reconcile tax collected (for recordkeeping)
- Register in states where Amazon doesn’t remit on your behalf (if any)
- Register for Sales Tax Permits If Required
For non-Amazon sales, apply for permits before collecting any tax. States penalize unregistered sellers who collect without authorization. - Reconcile 1099-K with Your Income
Amazon’s 1099-K reports gross income. Use Amazon reports to deduct:
- Refunds
- Platform fees
- Shipping (if charged separately)
- File Sales Tax Returns On Time
Use software like TaxJar, Avalara, or your CPA to file state returns. Even $0 sales must be filed to stay compliant. - Keep Digital Proof of Tax Collected
Download monthly Amazon tax reports showing amounts collected by state. This is critical for audits or platform disputes. - Deduct POD Expenses Correctly
Design assets, software, freelancers, mockup tools, and product photography are deductible under IRC §162. - Separate Income from Tax Collected
Don’t treat collected sales tax as revenue. Keep it in a separate category in your bookkeeping.
Conclusion
In 2025, print-on-demand sellers can’t afford to be confused about sales tax. While Amazon does some of the work, you still carry the responsibility of knowing where you owe tax, how to stay compliant, and how to handle other platforms properly.
Ignorance isn’t a defense if a state comes knocking.
Call to Action
Running a POD business on Amazon or other platforms? Unclear about which states you have nexus in, or how to report income vs. collected tax?
Book a call with Anshul Goyal, CPA, EA, FCA
Anshul helps POD entrepreneurs:
- Register only where legally required
- Deduct design and software tools properly
- Reconcile 1099-K forms with actual profits
- Avoid penalties from state tax authorities
- File clean, audit-ready returns
Get tax clarity for your POD hustle:
https://calendly.com/anshulcpa/
About Our CPA
Anshul Goyal, CPA, EA, FCA
Anshul brings 15+ years of U.S. and international tax experience. He specializes in helping online sellers, foreign founders, and U.S. residents with IRS and multi-state compliance. Known for his deep knowledge in Shopify and Amazon seller tax strategy, Anshul has helped hundreds of entrepreneurs minimize taxes and scale legally.
Disclaimer
This blog is for informational purposes only and does not constitute legal or tax advice. Please consult a qualified tax professional regarding your individual tax situation.
Top 5 High-Searched FAQs for 2025
1. Do I need a sales tax permit for Amazon POD sales?
Usually no, because Amazon is a marketplace facilitator. But if you sell elsewhere, you may need to register.
2. Does Amazon collect and remit sales tax for me?
Yes, in most states. You should still track and report this income properly.
3. What if I also sell POD products on Etsy or Shopify?
You are responsible for collecting and remitting sales tax in states where you have economic or inventory nexus.
4. Do I have to file a tax return even if Amazon handles sales tax?
Yes. Sales tax is separate from income tax. You must still report income via Schedule C or Form 1120.
5. Is design software tax deductible?
Yes. Adobe, Canva, and other design-related tools are deductible under IRC §162.