As of this writing in Oct 2026, Shopify’s automated filing program is currently closed to new enrollments. There have been no changes to Shopify Tax, and it is still open to everyone.
If you sell on Shopify, you have two options for handling sales tax: Shopify's own Shopify Tax, or Avalara for Shopify, a separate integration now owned and priced by Avalara directly. This wasn't always the setup. Until April 30, 2025, Shopify Plus subscribers got Avalara's AvaTax engine bundled in for free, managed by Shopify itself. That arrangement is gone. If you were on that legacy integration, you've since had to migrate to one of the two current options, and if you're setting up sales tax on Shopify for the first time today, this is the choice you're actually making. Here's how the two compare.
Sales tax compliance: A quick background
If you sell online, you know that sales tax compliance is unavoidable. Marketplace facilitators like Amazon, Etsy, eBay handle it for you. But once you start selling on your own website, such as through Shopify, it's up to you to collect and remit sales tax on that channel. To make the ordering process seamless for your customers, you need a sales tax engine to calculate sales tax on the back end based on where the orders are being shipped.
How Shopify’s sales tax options got here
For years, Shopify used Avalara's AvaTax for Shopify as the backbone of its tax tool, essentially “borrowing” Avalara's engine to calculate sales tax, even though Shopify owned and maintained the integration. That product, AvaTax for Shopify, was bundled into the Shopify Plus subscription at no extra charge.
Behind the scenes, Shopify used that arrangement as a model to build its own tax engine, Shopify Tax, released in 2022 with US-only calculation at first. Once Shopify Tax was fully built out, Shopify handed ownership of the "borrowed" AvaTax integration back to Avalara. Avalara still offers a Shopify integration, it's just Avalara's own product now, priced and managed independently rather than bundled in by Shopify.
That transition was formalized on April 30, 2025, when Shopify officially sunset the old, Shopify-managed integration. Every legacy AvaTax-for-Shopify user has since had to choose between Shopify Tax or migrating to the new, Avalara-owned Avalara for Shopify integration. If you're not sure which one your store is currently on, check Settings > Taxes and duties in your Shopify admin.
Shopify Tax vs. Avalara for Shopify: Your two options today
Here's a breakdown of both.
Key Features to Consider
Both Shopify Tax and Avalara for Shopify offer:
- Rooftop calculations: The sales tax rate is calculated based on the full address, not just the zip code.
- Automatic rate change updates: Rates adjust for sales tax holidays and other changes without requiring manual updates.
- Sales tax analytics: Visibility into your sales tax obligations.
- Support for state fees: Including fees like the Colorado Retail Delivery Fee.
Shopify Tax: Pricing and Features
Pricing depends on when your store was created:
- Stores created before May 13, 2026: Free until you cross $100,000 in sales within a calendar year (the threshold resets annually). After that, Shopify Tax charges 0.35% per order (non-Plus) or 0.25% per order (Shopify Plus), capped at $0.99 per order and $5,000 per year per region (US and Canada are capped separately).
- Stores created on or after May 13, 2026: Free until you cross $100,000 in lifetime sales (not reset yearly). After that, Shopify charges 0.25% per US order and 0.15% per Canadian order, with the same $0.99 per-order and $5,000-per-region annual caps.
- Note: "Basic Tax," a simpler earlier tier, was discontinued as of July 1, 2025.
Automated filing is a separate, optional add-on powered by a Sovos partnership, priced at roughly $75 per return ($50 for Shopify Plus), and is only available in select states, not all 50.
Avalara for Shopify: Pricing
AvaTax is a solid tax engine that's been in place for years and has proven to work well. It's also a fully global solution, unlike Shopify Tax, it isn't confined to a few regions. If you're moving from the old, bundled AvaTax integration, Avalara has periodically offered promotional pricing for that transition, worth asking about directly. If you're new to AvaTax, pricing varies based on your specific needs, since every seller's sales tax situation looks different.
Reach out to LedgerGurus, and we can help you figure out the sales tax support you need.
Automated sales tax filings: A feature in Shopify Tax
Shopify Tax is also introducing automated sales tax filings as an optional, separately-priced add-on. While this sounds appealing at face value, there are real limitations to consider.
Eligibility requirements:
- Only available to U.S.-based stores using Shopify Tax.
- Merchants must use Shopify Payments, Shopify Balance, or Shopify Credit exclusively.
- Not available to stores that used a non-Shopify tax tool in the prior year.
Limitations to be aware of:
- Automated filings apply only to state-level returns, local jurisdictions (Colorado and Louisiana, for example) aren't supported.
- Sales from non-Shopify channels, imported orders, and marketplace sales where Shopify isn't the merchant of record are excluded. If you sell on Amazon or elsewhere too, this service won't cover those sales.
- Compatibility issues exist with certain apps, such as Loop Returns.
- Current returns only, no back filing or amended returns are supported.
Automated filing isn't included in Shopify Tax by default, it's an optional service with additional fees.
Are Shopify’s automated filings right for your business?
Shopify Tax offers real convenience, rooftop calculations and automated filings especially. But the pricing, eligibility criteria, and filing limitations are worth careful consideration, especially if your business has:
- Complex sales channels
- Significant non-Shopify sales
Weigh your specific situation carefully before deciding.
Frequently asked questions
Do I still need to choose between Shopify Tax and Avalara for Shopify?
If you were on Shopify's old, legacy Avalara integration, that choice needed to be made by April 30, 2025, when Shopify sunset the old arrangement. If you're setting up sales tax on Shopify today, you'll choose between these two options directly.
Is Shopify Tax actually free?
Only up to $100,000 in global annual sales. After that, Shopify Tax charges 0.25% per order for Shopify Plus subscribers or 0.35% for non-Plus subscribers, capped at $0.99 per order and $5,000 annually per region.
Is Avalara still bundled free with Shopify Plus?
No. That arrangement ended April 30, 2025. Avalara for Shopify is now a separate, paid integration priced on a per-transaction basis.
Does Shopify Tax's automated filing work for all my sales?
Only for U.S. state-level returns on stores using Shopify Payments, Balance, or Credit. It excludes home-rule jurisdictions like Colorado and Louisiana, sales from non-Shopify channels or marketplaces, and back filing or amended returns.
Which option should I choose if I sell internationally or on multiple channels?
Avalara for Shopify is generally the better fit, it's a fully global solution, whereas Shopify Tax is only available in the US, UK, and EU regions and doesn't cover non-Shopify sales channels.
Not sure which option fits your business?
Whether you're deciding between Shopify Tax and Avalara for Shopify, or trying to figure out if Shopify's automated filing actually covers your situation, our team of ecommerce accounting and sales tax compliance experts can help.
