Etsy taxes: what every seller should know

When working with Etsy taxes, the set of tax rules that apply to sales made on the Etsy marketplace. Also known as Etsy sales tax, it determines how sellers report income, collect sales tax, and handle deductions. Understanding Income tax, the federal or state tax on earnings from business activities and Sales tax, the consumption tax collected from buyers in certain jurisdictions is essential because Etsy automatically calculates and remits sales tax in many regions, but not all. Additionally, Self‑employment tax, the Social Security and Medicare tax for independent contractors often comes into play for full‑time Etsy artisans. Etsy taxes may look complicated, but breaking them into these parts helps you stay compliant. The marketplace‑facilitator rules adopted by dozens of U.S. states mean Etsy collects tax on your behalf in places like California and New York, yet you still must include the gross sales on your income return. International sellers face Value‑Added Tax (VAT) or GST obligations, so knowing the nexus of each market protects you from surprise liabilities. In short, Etsy taxes weave together reporting, collection, and payment duties that vary by location, product type, and business size.