Does Amazon FBA create sales tax nexus in multiple states?

Yes. When Amazon stores your inventory in their fulfillment warehouses across the country, it creates physical nexus in each state where warehouses hold your products. This obligates you to collect and remit sales tax in those states. Amazon's Marketplace Tax Collection (MTC) handles collection for Amazon sales in most states, but you may still need to register.

Does Amazon send a 1099-K to FBA sellers?

Yes. Amazon issues a 1099-K when your gross sales exceed $20,000 AND 200+ transactions in a calendar year. The amount includes gross sales before any Amazon fees — you then deduct all fees and expenses on Schedule C.

What can Amazon FBA sellers deduct on taxes?

FBA sellers can deduct cost of goods sold, referral fees, FBA fulfillment fees, FBA storage fees, Amazon PPC advertising, software subscriptions (Helium 10, Jungle Scout, etc.), inbound shipping to warehouses, product photography, home office, and professional fees.

How does Amazon handle sales tax for FBA sellers?

Amazon acts as a Marketplace Facilitator in most US states, collecting and remitting sales tax on your Amazon sales automatically. However, you may still be required to register in states where you have nexus due to FBA warehouse storage. Check your inventory placement history to determine which states are affected.

Amazon · TaxReviewed by Michael Torres, CPAUpdated March 2026 · 18 min read

Amazon FBA seller tax guide: fees, nexus, 1099-K, and deductions (2026)

Amazon FBA adds tax complexity that no other platform has. Your inventory sits in Amazon warehouses across multiple states — creating physical nexus and potential sales tax obligations in every one of those states. On top of that, Amazon's fee structure (referral fees, FBA fulfillment fees, storage fees, and more) can consume 30–40% of your revenue — all of which is deductible. This guide covers the full tax picture for Amazon FBA sellers in 2026.

In this guide

Amazon fee breakdown: what FBA sellers actually pay

Amazon's fee structure is the most complex of any marketplace. For FBA sellers, there are three mandatory fee categories plus several situational ones:

Referral fees

8–15% of total sale price (most categories 15%)

Amazon's commission on every sale. Varies by product category — most common categories (home, toys, electronics accessories, books) are 15%. Some categories have tiered rates. Applied to total sale price including shipping. Unchanged for 2026.

FBA fulfillment fees

$3.22–$10+ per unit depending on size and weight

Covers picking, packing, shipping, and customer service. As of January 15, 2026, fees increased by approximately $0.08 per unit on average (less than 0.5% of average selling price). Fees vary significantly by product dimensions and weight tier. Items under $10 have a separate low-price fee schedule.

Monthly storage fees

$0.78/cu ft (Jan–Sep) | $2.40/cu ft (Oct–Dec)

Charged monthly based on daily average inventory volume in cubic feet. Holiday peak rates (October–December) are 3× the standard rate. Aged inventory surcharges apply for items stored over 181 days, starting at $0.50/cu ft and escalating.

Selling plan fee

$39.99/month (Professional) or $0.99/item (Individual)

Professional plan is required for most serious sellers (access to reports, advertising, Buy Box eligibility). Individual plan charges $0.99 per item sold — only worthwhile if selling under 40 items/month.

All Amazon fees are 100% tax-deductible business expenses. Download your monthly and annual fee summaries from Seller Central → Reports → Payments.

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Your Amazon 1099-K

Amazon issues a 1099-K through Amazon Payments when your gross sales exceed $20,000 AND you have more than 200 transactions (reinstated by OBBBA, July 2025). The 1099-K reports gross payment volume — including the full sale price before referral fees, FBA fees, and refunds.

Amazon's settlement reports are notoriously complex. The 1099-K amount will not match your bank deposits because Amazon nets out fees, refunds, and reimbursements before paying you. Use your Amazon annual sales summary (Seller Central → Reports → Tax Document Library) to reconcile.

The Amazon reconciliation problem Your 1099-K shows gross sales. Your bank deposits show net payouts after all fees. The difference between these two numbers is your total Amazon fees — and that entire difference is your tax deduction. If your 1099-K says $80,000 but you received $52,000 in deposits, the $28,000 gap is fees, refunds, and reimbursements that reduce your taxable income. See our 1099-K guide for the Schedule C walkthrough.

Get the Amazon FBA tax organizer (PDF)

Settlement report reconciliation worksheet, fee category breakdown for Schedule C, and the multi-state nexus checklist — built for FBA sellers.

The FBA warehouse nexus problem

This is the #1 tax compliance issue unique to Amazon FBA sellers. When Amazon stores your inventory in their fulfillment centers, you have physical nexus in every state where your inventory sits — even if you've never set foot in that state.

Amazon operates fulfillment centers in 40+ states. If your inventory is distributed across warehouses in California, Texas, Pennsylvania, and Ohio, you potentially have sales tax obligations in all four states. Amazon handles sales tax collection as a marketplace facilitator (so you're covered for Amazon marketplace sales), but this nexus can create filing obligations:

You may need to register for a sales tax permit in states where you have inventory, even though Amazon collects and remits the tax.
Some states require $0 returns — once registered, you must file even in periods with no direct sales.
If you also sell on your own website (Shopify, etc.), you must collect and remit sales tax in every state where you have FBA inventory — not just where you meet economic nexus thresholds.

You can see where Amazon is storing your inventory in Seller Central → Inventory → Inventory Planning → Inventory by Warehouse. Use this to identify which states you have nexus in.

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Every deduction for Amazon FBA sellers

FBA sellers have a unique deduction profile because so many costs are baked into Amazon's fee structure. For the universal deductions list, see our complete deductions guide.

Product inventory (COGS)

Varies — typically 25–40% of revenue for private label sellers

Your product purchase price, manufacturing costs, import duties and customs fees, and inbound shipping to Amazon warehouses. Track beginning and ending inventory for Schedule C Part III. This is your largest deduction.

Amazon referral fees (8–15%)

100% deductible

Amazon's commission on every sale. For most categories at 15%, this is $15,000 on $100,000 in sales. Download your fee summary from Seller Central.

FBA fulfillment fees

100% deductible — often $3–$7 per unit

Picking, packing, shipping, customer service. At 10,000 units/year, this can exceed $40,000 in deductible fees.

FBA storage fees

100% deductible

Monthly storage, long-term storage surcharges, and removal/disposal fees. All deductible as business expenses.

Amazon PPC advertising spend

100% deductible

Sponsored Products, Sponsored Brands, Sponsored Display. Your total Amazon Advertising spend is deductible on Schedule C, Line 8. This is often the second-largest expense after COGS for private label sellers.

Software subscriptions

100% deductible

Jungle Scout, Helium 10, Keepa, Sellerboard, A2X, RestockPro, InventoryLab — every tool you pay for to run your Amazon business is a deductible business expense.

Inbound shipping to Amazon

Part of COGS

Freight costs, Amazon's inbound placement fees, UPS/FedEx charges to send inventory to FBA warehouses. These are part of your cost of goods sold.

Product photography and branding

100% deductible

Professional product photography, A+ Content design, brand registry costs, packaging design.

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Quarterly estimated taxes

Amazon does not withhold any taxes from your disbursements. If you expect to owe $1,000+ in federal taxes, quarterly payments are required. Due dates: April 15, June 15, September 15, January 15. Set aside 25–30% of your net profit. See our quarterly tax guide.

Real example: $120,000 gross Amazon FBA seller

A private label seller grosses $120,000 (1099-K amount). After deductions:

COGS (product + inbound shipping): $36,000
Amazon referral fees (15%): $18,000
FBA fulfillment fees: $14,400
FBA storage fees: $2,100
Amazon PPC advertising: $12,000
Professional plan: $480
Software (Helium 10, A2X, etc.): $1,800
Home office: $1,500
Internet/phone (50%): $870
Product photography: $600

Total deductions: $87,750. Net profit: $32,250. SE tax: ~$4,558. Income tax (22% bracket): ~$3,553. Total federal tax: approximately $8,111 on $120,000 gross — a 6.8% effective rate. For sellers who want to model these numbers before launch, the FBA profit calculator at Bag Engine lets you stress-test margins across different price points and fee structures.

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Jungle Scout shows you real Amazon sales data, competition levels, and fee estimates before you invest in inventory.

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Know your FBA margins before you scale

The free FBA profit calculator models fees, COGS, and advertising across all your SKUs in seconds.

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