Reselling as a Side Hustle: When Does Sales Tax Apply?

Here's the direct answer: it depends less on how much you make than on what you sell and how often. Clearing out your own closet a couple of times a year usually isn't a business for sales tax. Buying things to flip usually is, even as a side hustle. Texas puts it plainly: "A person who buys or otherwise gets items from others to sell (including barters, trades and donated items) or a person who regularly sells taxable items (including artists or craftsmen who make items to sell) is engaged in business" (Texas Comptroller).

What being "in business" means for you then depends on where you sell. When you sell through a marketplace like eBay or Mercari, the marketplace generally charges and sends the tax in the states that require it. Some home states still want you registered anyway, and anything you sell outside the apps is on you. This guide walks through each of those lines.

Key Takeaways

• Occasional-sale rules protect people selling their own things now and then, not resellers. Texas says you don't qualify if "You buy, barter or trade taxable items to resell" (Texas Comptroller).
• The cut-offs are state by state. Texas and California both put the occasional-sale limit at two sales in a 12-month period, and Texas also has a $3,000 test for personal items (Texas Comptroller, CDTFA). New York's garage-sale exemption covers sales at your home for three days or less a year, with expected sales of $600 or less and the buyer picking up (NY DTF). Washington sets no number: "Sales that are routine or continuous are not casual or isolated sales" (Washington DOR).
• Marketplaces like eBay and Mercari collect sales tax for you in the states on their lists. That covers the tax on those orders, not every obligation.
• Your home state may still want you registered. California generally doesn't if every sale goes through a registered marketplace, but Texas says Texas sellers need a permit "even if your only sales are through a marketplace provider" (Texas Comptroller). If you're a Texas seller still near the occasional-sale line, ask the Comptroller how the two rules fit together.
• Sales outside the apps, like your own website, local pickups or a flea market booth, are yours to handle.

Selling Your Own Stuff vs. Buying to Resell

This is the line that matters most, and states draw it in similar terms.

Selling things you bought for yourself. Texas has a specific test for items "originally bought for you or your family members for personal use." You can sell as many of those as you like in a calendar year "as long as your total sales are $3,000 or less during a calendar year" (Texas Comptroller). That test is for personal items only, and it's Texas's rule, not a national one.

Buying things to resell. Once you're sourcing inventory, the occasional-sale protection generally goes away. Texas lists three conditions that disqualify you, including "You buy, barter or trade taxable items to resell" (Texas Comptroller). California says you need a permit "if you are selling, even temporarily, new or handcrafted items or used items you purchased for the purpose of reselling to others" (CDTFA).

So a side hustle that started as a closet clean-out can change character the day you start buying at thrift stores or estate sales to sell on. If that's you, our thrift and vintage reseller guide covers the category-specific questions, like whether used clothing is taxed.

How Many Sales Before It Counts as a Business?

There's no single national number. Here's what four states say.

Two details catch side hustlers out:

• California's own regulation is broader than the "three sales" shorthand. It says "A person who makes a substantial number of sales for relatively small amounts is also required to hold a seller's permit" (CDTFA Regulation 1595). Lots of small sales don't keep you under the line.
• New York's garage-sale rule doesn't cover shipped sales. "If you deliver or mail an item to an address in New York State, you must collect the tax on the sale price of the item" (NY DTF). New York also says registration applies "to items that you sell on a regular basis through online auctions or other Web sites."

Texas makes the same point about selling online: "If you have a garage sale or sell personal items through the internet or an advertisement, you may need to obtain a Texas Sales and Use Tax Permit and collect sales tax" (Texas Comptroller).

Does Selling Only on eBay or Mercari Cover You?

For the tax on those orders, generally yes. eBay says it "calculates, collects, and remits sales tax on behalf of sellers for items shipped to customers in the states and territories listed below," and that sellers "can't opt out" (eBay). Mercari collects "in the marketplace states listed in the Marketplace Facilitator Laws table" on its sales tax policy page (Mercari). Poshmark's terms say it collects "where legally obligated to do so" (Poshmark).

The platforms are just as clear that they don't take on everything. eBay tells sellers "You are responsible for paying all fees and taxes associated with using eBay as an eBay seller" (eBay). Poshmark says "you will be ultimately responsible for the verification and reporting of any and all applicable taxes to the appropriate tax authorities, including instances where Poshmark does not collect taxes on your behalf" (Poshmark).

Your home state is the open question. States disagree on whether a marketplace-only seller based there still has to register:

• California: a marketplace seller is "not required to be registered with CDTFA for a seller's permit or a Certificate of Registration – Use Tax if all of your retail sales of merchandise will be facilitated by a marketplace facilitator that is registered as a retailer with CDTFA" (CDTFA).
• Texas: "If you are a Texas seller and sell through a marketplace, you are still responsible for having a Texas tax permit and filing your sales and use tax returns timely. This is true even if your only sales are through a marketplace provider" (Texas Comptroller). That page doesn't say how this fits with the occasional-sale exemption, so if you're a Texas seller still near the two-sale line, ask the Comptroller.

Our guide to whether you need a reseller permit to sell online covers more states' answers on that question, including New York's.

Where Side Hustlers Get Caught: Sales Outside the Apps

Marketplace collection covers what goes through the marketplace. Texas says marketplace providers engaged in business in Texas "must collect, report and remit state and local sales and use tax on all sales made through a marketplace" (Texas Comptroller). Sales made any other way are yours. California says it directly: "if you make any sales of tangible merchandise other than those facilitated by a marketplace facilitator (for example, through your own website or at craft fairs) you may be required to register as a seller or retailer with CDTFA" (CDTFA).

Common side-hustle sales that fall outside the apps:

• Local pickup paid in cash or through a payment app, arranged off-platform.
• Your own website or online store.
• A flea market, swap meet or pop-up booth. In Texas, "If you are required to pay a fee or commission to participate in events such as flea markets, arts and crafts shows, or other similar 'community-wide' type events coordinated or produced by a third party, the occasional sales exemption does not apply" (Texas Comptroller). In California, "In general, sellers at swap meets, flea markets and special events that make retail sales are required to obtain a seller's permit," and a temporary permit is free (CDTFA).

Our thrift and vintage reseller guide goes deeper on pop-ups and vintage fairs.

A Quick Self-Check

Run through these in order:

1. Are you selling your own used things, or things you bought to resell? If you're buying to resell, assume the occasional-sale exemptions above don't protect you.
2. How often do you sell? Compare yourself with your own state's rule, not another state's number. Washington, for example, treats routine or continuous sales as part of a business even when they're infrequent; check whether your state uses similar wording.
3. Where do your sales happen? List each channel: marketplaces, your own site, local pickups, events.
4. What does your home state say about marketplace-only sellers? California and Texas give opposite answers, as shown above.
5. Do you sell outside the apps? Those sales are yours to register for and collect on where a state requires it.
6. If you register, use it. A permit can let you buy inventory tax-free with a resale certificate. In Texas, "If you have a sales tax permit, you can buy items tax free to resell as part of your business" (Texas Comptroller). Our guide to resale certificates for thrift and flea market sourcing shows how.

Sales Tax Isn't Income Tax

These are separate systems. Sales tax is what buyers pay on the sale. Income tax is about your profit.

The IRS says payment apps and online marketplaces have to report payments on Form 1099-K "when the total amount of payments you receive for goods or services through the platform exceeds $20,000 in more than 200 transactions," and that "No matter the amount of reported payments, if you receive payments for selling goods or services, you must report all income on your tax return" (IRS). For personal items, "If you sold items at a loss, which means you sold the items for less than you paid, there is no tax liability," but "If you made a profit or gain on the sale of a personal item, your profit is taxable" (IRS).

A 1099-K doesn't tell you anything about sales tax, and not getting one doesn't mean you're under any sales tax line.

Frequently Asked Questions

Do I need to charge sales tax if I resell as a side hustle?

On marketplace orders in the states on the marketplace's list, the marketplace generally charges and sends the tax for you. On sales outside the marketplace, you may need to register and collect where a state requires it. Buying items to resell usually takes you outside occasional-sale exemptions, whatever your volume.

Is there a dollar amount below which I don't need a permit?

Not a general one. Texas has a $3,000 calendar-year test, but only for items originally bought for your own or your family's personal use. California and Texas otherwise look at the number of sales, with two in a 12-month period as the occasional-sale limit, and New York's garage-sale exemption is limited to sales at your home for three days or less a year, with expected sales of $600 or less.

I only sell on eBay. Do I need a seller's permit?

eBay collects the tax on orders shipped to buyers in the places on its list. Whether you also need a permit depends on your home state. California generally doesn't require one if all of your sales go through registered marketplace facilitators. Texas requires one from Texas sellers even if every sale is through a marketplace; its guidance doesn't say how that fits with the occasional-sale exemption, so if you're near that line, ask the Comptroller.

Does selling my old clothes count as reselling?

Not usually. Selling things you bought for yourself is treated differently from selling things you bought to resell. In Texas, personal items you sell for a total of $3,000 or less in a calendar year can qualify as occasional sales. The picture changes once you start buying to resell.

Is a Form 1099-K the same as a sales tax notice?

No. Form 1099-K is an IRS information return about payments you received. It's about income tax, not sales tax, and the IRS says you must report income from selling goods or services whether or not you get one.

The Bottom Line for Side Hustlers

Selling your own things now and then often qualifies for an occasional-sale exemption in states that have one, but each state sets its own conditions. Buying to resell usually takes you outside those exemptions, even when it's a few hours a week. Marketplaces handle the tax on most of what you sell through them, but check what your home state wants from marketplace-only sellers, and treat every sale outside the apps as your own to handle.

If you sell in more than one place, run a free Taxero nexus check to see where your sales stand.

This article is for general information only and is not tax, legal, or accounting advice. Rules change and your situation is specific, so consult a tax professional or the state's own guidance.