How to Turn Off Sales Tax on Shopify Successfully

Table of Contents

1. Introduction
2. Understanding Shopify’s Tax Logic
3. Step-by-Step: How to Turn Off Sales Tax on Shopify
4. Digital Products and the Sales Tax Challenge
5. Managing Tax-Inclusive vs. Tax-Exclusive Pricing
6. Practical Scenario: The Hybrid Merchant
7. Advanced Tax Settings and Overrides
8. Why Native Integration Matters for Your Bottom Line
9. Success Through Digital Expansion
10. International Markets and Localized Taxing
11. Reporting and Compliance: The Final Step
12. Maximizing Value with Tevello
13. Frequently Asked Questions
14. Conclusion

Introduction

Did you know that the global e-learning market is projected to exceed $460 billion by 2026? This massive shift in the creator economy has prompted thousands of traditional Shopify merchants to expand their inventory beyond physical goods into digital courses, memberships, and exclusive communities. However, as business models evolve, so do the complexities of tax compliance. Many merchants find themselves asking how to turn off sales tax on Shopify, either because they are selling tax-exempt items, targeting specific tax-free regions, or transitioning into digital products that carry different tax obligations than physical hardware.

The purpose of this guide is to provide a granular, step-by-step walkthrough on managing and disabling sales tax settings within your Shopify admin. We will explore the global tax settings, individual product overrides, and customer-specific exemptions. Furthermore, we will discuss how these settings intersect with digital product delivery, especially when using an integrated solution like Tevello to host your educational content.

At Tevello, our mission is to turn any Shopify store into a digital learning powerhouse. We believe that you should have full control over your brand and your data. By understanding the nuances of Shopify’s tax engine, you can ensure a friction-less checkout experience that keeps your customers happy while maintaining rigorous compliance with local and international tax authorities. Mastering these settings is not just about avoiding extra fees; it is about building a scalable, professional storefront that supports both physical and digital revenue streams with ease.

Understanding Shopify’s Tax Logic

Before diving into the "how-to," it is essential to understand the logic Shopify uses to calculate tax. Shopify is not a tax remitter (except for specific marketplace channels like the Shop app); rather, it is a calculation tool. It uses the tax registrations you provide to apply the correct rates based on the customer’s shipping address or your store’s nexus.

Sales tax is generally triggered by "nexus," which is a significant connection to a state or country. This could be physical (an office or warehouse) or economic (reaching a certain sales threshold). If you are selling digital products, such as an online course, the rules for nexus and taxability can differ wildly from state to state and country to country. In some jurisdictions, digital goods are completely tax-exempt, while in others, they are taxed at the same rate as physical products.

This distinction is why many merchants need to know how to turn off sales tax on Shopify for specific scenarios. You might be a wholesaler selling to other businesses who hold resale certificates, or you might be a creator selling a digital service that doesn’t meet the definition of a taxable "tangible good" in your home state.

Step-by-Step: How to Turn Off Sales Tax on Shopify

There are three primary levels where you can control tax collection: the global store level, the individual product level, and the customer level. Depending on your business model, you may need to use one or a combination of these methods.

1. Disabling Tax at the Global Level

If your entire business operates in a way that does not require sales tax collection (for example, if you are located in a tax-free state and have no economic nexus elsewhere), you can manage this in your global settings.

1. Log in to your Shopify Admin.
2. Navigate to Settings and then click on Taxes and duties.
3. In the Regional settings section, you will see the countries or regions where you have active tax registrations.
4. To stop collecting tax for a specific region, you must manage your "Nexus" or "Tax Registrations." If you remove a registration, Shopify will no longer calculate tax for customers in that region.

However, many merchants don't want to stop collecting tax entirely; they just want to change how the price is displayed. If you prefer to show prices that already include tax—a common practice in Europe and Australia—you can adjust this in the Global settings section of the Taxes and duties page. By unchecking "Include sales tax in product price," you ensure that tax is calculated only at the final stage of checkout.

2. Turning Off Tax for Specific Products

This is the most common requirement for digital creators. If you are selling a physical book and a digital video course, the book might be taxable while the course is not.

1. Go to Products in your Shopify admin.
2. Click on the product you wish to edit.
3. Scroll down to the Pricing section.
4. Uncheck the box that says Charge tax on this product.
5. Click Save.

By unchecking this box, Shopify will ignore this item when calculating the total tax for an order. This is a critical step when you install Tevello from the Shopify App Store today to start selling digital content. Since our app allows your digital products to live directly alongside physical stock, managing taxability at the product level ensures your "Barista Basics" video course isn't taxed the same way as your "Premium Espresso Beans."

3. Exempting Specific Customers from Sales Tax

If you sell to non-profit organizations, government entities, or resellers, you may need to turn off sales tax for those specific individuals while keeping it active for everyone else.

1. Navigate to Customers in your Shopify admin.
2. Select the customer profile.
3. In the Tax settings section on the right-hand side, click Manage.
4. Uncheck Collect tax.
5. You may also need to provide a reason for the exemption for your own records.

Digital Products and the Sales Tax Challenge

The rise of the "Digital Learning Powerhouse" model has introduced a unique challenge: digital tax nexus. When you sell a digital course, you aren't shipping a box, but you are still conducting a transaction. In the United States, several states have moved toward taxing digital downloads. In the European Union, the VAT MOSS (Value Added Tax Mini One Stop Shop) rules require you to charge VAT based on the location of the buyer, not the seller.

When you use Tevello, we provide all the key features for courses and communities that allow you to scale internationally. However, because we believe merchants should own their customer data, it is your responsibility to ensure your Shopify tax settings reflect the laws of the regions where your students live.

For instance, a merchant might use retention strategies that drive repeat digital purchases by offering a subscription-based community. If that community is based in a region like the UK, you might need to ensure VAT is correctly applied or excluded based on the nature of the "service" provided. Because Tevello uses a "Native Shopify Integration," it relies on the same payment gateways and tax engines you already trust for your physical products, making this coordination much simpler than using a third-party site.

Managing Tax-Inclusive vs. Tax-Exclusive Pricing

A frequent point of confusion for Shopify merchants is whether to include tax in the displayed price. This is particularly relevant when trying to securing a fixed cost structure for digital products.

• Tax-Exclusive (Common in North America): The price seen on the product page is $100. At checkout, a $7 sales tax is added. The customer pays $107.
• Tax-Inclusive (Common in UK/EU/Australia): The price seen on the product page is $100. At checkout, the total remains $100, but the receipt shows that $15 of that was VAT.

If you are wondering how to turn off sales tax on Shopify specifically for the "added cost" at checkout, the "Include sales tax in product price" setting is your best friend. In your Shopify admin, go to Settings > Taxes and duties. Under Global settings, checking this box means your customers will never see a higher price at the final step than what they saw on the product page. This often leads to higher conversion rates because it removes the "sticker shock" of added taxes and shipping.

Practical Scenario: The Hybrid Merchant

Consider a merchant who sells high-end photography equipment. Their Shopify store is a success, but they want to increase their Customer Lifetime Value (LTV) without the overhead of more inventory. They decide to create a "Mastering Manual Mode" video course.

For the cameras and lenses, the merchant must charge sales tax in any state where they have nexus. However, for the digital course, they may find that certain states do not tax "educational services." By unchecking the "Charge tax on this product" box for the course, they can remain competitive and offer a lower total price to the student.

This hybrid approach is where many merchants excel, generating revenue from both physical and digital goods. By using a platform that keeps everything on one URL, they avoid the confusion of having two different checkout systems with two different tax behaviors.

Advanced Tax Settings and Overrides

Sometimes, standard tax rules don't apply. Shopify allows for "Tax Overrides" to handle these exceptions. An override can be used to set a specific tax rate for a collection of products or a specific shipping destination.

For example, if a state has a "sales tax holiday" on educational materials, you could create a collection for your Tevello-powered courses and set a temporary tax override of 0% for that specific state. This level of control is why we chose to build a native integration. We want you to leverage Shopify's powerful core features, like tax overrides, while we handle the heavy lifting of video hosting and community engagement.

If unifying your stack is a priority, start by a simple, all-in-one price for unlimited courses.

Why Native Integration Matters for Your Bottom Line

When you look at how to turn off sales tax on Shopify, you are essentially looking at how to optimize your checkout experience. Many third-party course platforms force your customers to leave your website and pay on a completely different domain. This creates two major problems:

1. Tracking and Analytics: It becomes much harder to see which of your marketing efforts led to a sale when the transaction happens off-site.
2. Tax Complexity: You now have two separate systems calculating tax. If the third-party platform doesn't sync perfectly with your Shopify settings, your accounting will be a nightmare.

By keeping customers at home on the brand website, Tevello ensures that your Shopify tax settings are the single source of truth. Whether you are selling a physical hat or a digital membership, the tax is calculated once, in one place, using one set of rules. This transparency is a cornerstone of our value proposition.

Success Through Digital Expansion

We have seen incredible growth from merchants who move beyond physical shipping. For example, some have seen success generating over €243,000 by upselling existing customers with digital add-ons. These merchants didn't just "get lucky"; they optimized every part of their store, including their tax settings, to ensure a professional and seamless experience.

Another creator found massive success how one brand sold $112K+ by bundling courses with physical kits. By carefully managing which parts of the bundle were taxable and which were not, they were able to maximize their margins and provide clear, honest pricing to their global audience.

When you scale to this level, you need predictable pricing without hidden transaction fees. Many other apps take a "success fee"—a percentage of your hard-earned revenue. At Tevello, we charge 0% transaction fees. You pay one flat rate, and the rest is yours to keep. This allows you to reinvest in your community and your content rather than losing a slice of every sale to your software provider.

International Markets and Localized Taxing

Shopify Markets is a powerful tool that allows you to customize your store for different countries. If you are selling digital products globally, this is where you can truly refine your tax strategy.

Inside Settings > Markets, you can choose to "Include or exclude tax based on your customer’s country." This is a game-changer. It allows you to display a tax-inclusive price for your UK customers (who expect it) while showing a tax-exclusive price to your US customers (who expect tax to be added at the end).

This level of localization ensures that your digital learning products feel local to every student, regardless of where they are in the world. It builds trust, and trust is the foundation of any successful online community.

Reporting and Compliance: The Final Step

Turning off sales tax where appropriate is only half the battle; the other half is reporting. Shopify provides robust tax reports that show exactly how much tax was collected (or not collected) and why.

If you have used the "Charge tax on this product" toggle to turn off tax for your digital courses, your tax reports will clearly show those sales as "Non-taxable." This is vital information for your accountant when it comes time to file your state or federal returns. It proves that you weren't just "forgetting" to charge tax, but rather that you made a deliberate, compliant choice based on the nature of the product.

For those using the Shop sales channel, remember that Shopify now automatically handles marketplace sales tax for US orders. This simplifies things immensely, but it also means you need to ensure your product categories are correctly assigned so the automated system knows which items are taxable.

Maximizing Value with Tevello

As you refine your Shopify store, remember that the tools you choose should empower your growth, not hinder it. We designed Tevello to be a robust tool that amplifies your existing efforts. Our Unlimited Plan is priced at a flat $29.99 per month, which is a small investment compared to the potential revenue of a well-executed course or membership site.

With this plan, you get:

• Unlimited courses and students.
• Unlimited video hosting and bandwidth.
• A native community platform with social feeds and member directories.
• Drip content and quizzes to keep students engaged.
• A 14-day free trial to get everything set up perfectly.

We want you to start your 14-day free trial and build your first course now before you ever have to worry about a monthly bill. This gives you the space to experiment with your tax settings, build your curriculum, and launch your community with confidence.

Frequently Asked Questions

Can I turn off sales tax for only my digital products on Shopify?

Yes. You can do this by going to the product page in your Shopify admin, scrolling to the pricing section, and unchecking "Charge tax on this product." This ensures that while your physical products still calculate tax, your digital offerings do not.

Does Shopify automatically know which digital products are tax-exempt?

Not always. While Shopify Tax has improved its categorization, tax laws for digital goods vary by jurisdiction. It is always best to manually verify your product settings or consult with a tax professional to ensure you are meeting the requirements of your specific region.

If I turn off sales tax, will I still see the sales in my tax reports?

Yes. Shopify tracks all sales in its finance and tax reports. Items that have tax turned off will simply appear in the "Non-taxable" or "Exempt" columns. This is actually very helpful for audit purposes as it shows a clear record of your tax logic.

How do I handle VAT for digital courses sold to customers in Europe?

The easiest way is to use Shopify’s "Include tax in prices" setting and then use a tax app or Shopify’s built-in VAT settings to handle the calculation. Since digital products in the EU are taxed based on the customer’s location, Shopify’s native tax engine is designed to handle these calculations automatically once you have enabled the correct tax registrations.

Conclusion

Managing sales tax on Shopify doesn't have to be a daunting task. Whether you are trying to understand how to turn off sales tax on Shopify for a specific niche product or you are looking to overhaul your entire international tax strategy, the platform provides the flexibility you need. By mastering the global, product, and customer-level settings, you can create a checkout experience that is both compliant and user-friendly.

Transitioning into the world of digital products—like courses and memberships—offers a unique opportunity to diversify your revenue and build a more stable, recurring income stream. At Tevello, we are here to support that journey by providing an all-in-one ecosystem where physical products and digital learning live side-by-side. Our commitment to 0% transaction fees and a flat-rate $29.99/month Unlimited Plan means you keep more of your money to grow your business.

Ready to transform your Shopify store into a digital learning powerhouse? You can begin by reviewing the Shopify App Store listing merchants install from and starting your 14-day free trial today. Build your community, launch your first course, and experience the power of a truly native Shopify integration.