Sales Tax Basics for a Garage Business: Seller’s Permits, Marketplaces and Craft Fairs
If you sell physical products from your garage, sales tax will come up sooner or later. The rules are set by states (and sometimes cities and counties), so there’s no single national answer. What follows is a plain-language overview to help you ask the right questions.
Who sets the rules
There is no federal sales tax in the U.S. Each state decides what is taxable, what rate applies and how sellers register. As of September 2026, Stripe lists five states with no statewide sales tax: Alaska, Delaware, Montana, New Hampshire and Oregon. Even there, things aren’t always simple; Stripe notes that many Alaska cities and boroughs charge their own local sales tax.
The seller’s permit
In states that charge sales tax, a business that makes taxable sales usually registers with the state’s tax or revenue department before collecting tax. The registration goes by different names, such as seller’s permit, sales tax license or certificate of authority. The SBA keeps a list of state revenue department links that’s a good starting point.
Selling at craft fairs and markets
In-person sales are usually your own responsibility. Before a show, ask the organizer whether vendors need to show a permit and how tax applies to sales at that event, and check your state’s rules.
Selling on Etsy and other marketplaces
Many states have marketplace facilitator laws, which put the job of collecting sales tax on the marketplace for orders it processes. Etsy’s help center says it automatically calculates, collects and remits U.S. sales tax for orders shipped to states where it is required to, and sellers can’t opt out. For states not on Etsy’s list, sellers manage tax settings themselves.
Marketplace collection usually covers only sales made through that marketplace. Sales on your own website, at fairs or directly to local customers may still be your responsibility.
Selling across state lines
Since the Supreme Court’s 2018 South Dakota v. Wayfair decision, states can require out-of-state sellers to collect tax once their sales into the state pass a threshold, known as economic nexus. Stripe gives Nevada’s threshold of $100,000 in sales or 200 transactions as one example. Thresholds differ by state and can change, so check the state’s own website.
A simple starting checklist
- Look up your state revenue department and see whether your products are taxable
- Register for a seller’s permit before you start collecting tax, if your state requires one
- Note which channels collect tax for you (marketplaces) and which don’t (your site, fairs)
- Track sales by state and by channel in your bookkeeping
- Put collected tax aside; it isn’t your money
This is general information only. Sales tax rules vary by state, county and city and change often, so confirm with your state or a tax professional.
More on Garage Business Blueprint
- Etsy Fees in 2026: What a Garage Seller Actually Pays per Sale
- Getting Your Garage Business Ready for Holiday Craft Fairs
- Taxes for a Garage Business: Self-Employment Tax, Quarterly Payments and the Home Office Deduction
