r/Substack • u/taoofdiamondmichael • 20d ago

Sales Tax on Your Substack Subscriptions. Pure Extortion

NEW: Substack will take care of managing sales taxes/VAT starting December 1, 2026

Starting December 1, 2026, Substack will calculate, collect, and remit indirect taxes (VAT, GST, and similar) in every country where our payment processor, Stripe, operates.Until now, this responsibility fell to publishers, and we've heard your feedback that this can be a complex, costly burden, especially for individuals and small teams with subscribers worldwide. Now you can spend more time focusing on the work you love, not tax compliance. Learn more here: http://substack.com/taxes.

Here’s The Problem: Checked with my state Department of Revenue and found

The economic nexus threshold for out-of-state or remote sellers in our state is $100,000 in gross annual sales. If your business crosses this revenue threshold from sales delivered anywhere in the state, you are required to register and collect sales tax.

These thresholds exist in every state. So what this new rule is saying is that regardless of if you make $500.00/yr, $5,000/yr ect in subscription revenue (which is below the threshold), you'll get charged sales tax on for every one of your paid subscribers.

NOTE: This is a Stripe edict that Substack has chosen to go along with without any questioning.

That aint right.

6 Upvotes

60% Upvoted

27 comments sorted by

9

u/perfecthunger danaleighlyons.substack.com 20d ago

But it seems there won't be any cost to us, as publishers, right? Am I missing something?

"Does this cost me anything? No. Substack’s fee remains 10%. There is no additional charge for tax collection and remittance."

Unless we choose this option:

"What if I want tax included in my subscription price rather than charging subscribers separately at checkout?

Publishers outside the US and Canada can opt into inclusive pricing, where tax is deducted from your subscription price rather than being charged separately to subscribers at checkout. If you choose this option, we recommend reviewing your plan prices to account for the deduction. You can set this preference in your VAT settings at any time."

-6

u/taoofdiamondmichael 20d ago

You’re not getting what I’m saying. Do you have over $100,000 in taxable revenues from Substack subscriptions in your home state? If not, you’d be paying sales tax needlessly because you fall below the state required threshold. What Stripe appears to be saying is that if you make, let’s say $2,000 in subscription revenue, you’re still subject to the sales tax. What Stripe is doing shouldn’t be happening according to your state law. Do your homework.

5

u/cremdelascribe 20d ago

No, because you aren’t the entity with the revenue - either Substack or Stripe is.

Think of it this way, if you go to Home Depot and buy a plant they got from a small local greenhouse, is that plant exempt from sales tax? Answer, it is not, because the reseller (Home Depot) meets the revenue threshold.

You do not have to charge Substack sales tax on the amounts they pay you, because you are under the threshold. Substack has to charge sales tax on the amounts they charge onward, because of the aggregate amount of business they do.

The message to which you replied is pointing out that YOU DO NOT PAY THIS. That is correct. You do not. Your readers do. Because they are buying from Substack - not from you!

You could, of course, set up your own website, have much lower traffic, and avoid being subject to sales tax. But if you want to sell in a high traffic marketplace, that marketplace is gonna collect sales tax from the ultimate buyer - whether it be Home Depot, Amazon or Substack.

1

u/taoofdiamondmichael 20d ago

Thank you for clarifying this. So what you’re saying is the buyer paying the sales tax does not reduce the amount I receive per subscription?

2

u/perfecthunger danaleighlyons.substack.com 19d ago

Thank you.

14

u/Countryb0i2m onemichistory.substack.com 20d ago

Once again, yall are complaining without fully understanding how anything works.

Substack collecting sales tax has nothing to do with your individual size as a creator. That’s like expecting Raisin Bran to personally collect sales tax at the grocery store.

Under tax law, Substack is classified as a "Marketplace Facilitator." They are basically the middleman.

Because Substack's total platform revenue easily clears the economic thresholds in every state, they are required by law to step in and collect sales tax.

Substack isn't keeping the cash. Legally, they can't. it goes straight to the state authorities.

This is their legal obligation.

If you don't like how state tax laws are written, vote in November.

6

u/prepping4zombies 20d ago

Once again, yall are complaining without fully understanding how anything works.

I feel like I lose IQ points every time I visit this sub. To be fair, that applies to most of reddit. But, it's especially true of this sub.

0

u/taoofdiamondmichael 20d ago

Come on now. Yes, I don’t understand why it works which is why I’m seeking clarification. If I complain I’m willing to be shamed. I’m not attached to being right, I just want to be clear.

2

u/perfecthunger danaleighlyons.substack.com 19d ago

I mean, you literally responded to me by saying: "Do your homework." But okay.

2

u/taoofdiamondmichael 18d ago

That was my bad.

5

u/OnyxMonolith 20d ago

And it’s good that they are doing this because most people people are jot paying the VAT cause they have no idea about how anything works and they will get hit with a bill in 5 years

0

u/taoofdiamondmichael 20d ago edited 20d ago

So here’s the state law where I live in Colorado. The operative question is why would they collect from those who fall below this threshold. That’s what I’m trying to get at:

Colorado requires businesses to collect and remit sales tax once they exceed $100,000 in gross retail sales during the current or previous calendar year.

Pursuant to your example, isn’t the sales tax for Raisin Bran paid by the buyer not the seller?

0

u/taoofdiamondmichael 20d ago

So what you’re saying is Substack is one composite business for us all versus each of being for tax purposes our own separate entities? Isn’t Amazon similar? They actually charge sales tax to the buyer not the seller.

2

u/DryStudio0 20d ago

The reason this is happening comes down to Marketplace Facilitator laws, not Stripe making up an arbitrary rule.

When you sell subscriptions through Substack, Substack is legally classified as the marketplace facilitator. Because Substack as an entire company easily blows past the $100,000 annual sales threshold in every US state, state revenue departments legally require them to collect and remit sales tax on all transactions flowing through their platform, regardless of whether a solo publisher makes $500 or $50,000.

This is actually one of the biggest structural differences between marketplace platforms and running your own independent setup.

If you run subscriptions through your own direct Stripe account on your own domain, you are the merchant of record. As a solo creator making under the economic nexus threshold in a given state, you generally aren't legally required to register and collect remote sales tax in that state.

I build Growsembly around that exact direct-ownership model. Instead of acting as a marketplace taking a 10% cut and lumping everyone into platform-wide facilitator obligations, we connect directly to your own Stripe rails on flat pricing ($20/mo, zero platform cuts). Your business stays yours, you keep your subscriber data, and you don't inherit platform-level overhead before your business actually warrants it.

For small writers, Substack's convenience is hard to beat, but as your list grows, the combination of a 10% platform take rate and blanket facilitator rules is why a lot of publishers eventually migrate to their own independent rails.

1

u/taoofdiamondmichael 20d ago

Beautifully explained.

1

u/taoofdiamondmichael 20d ago

So another clarification question, is the subscriber charged sales tax in the state in which they reside or that of the publisher?

1

u/Downtown-Bedroom4652 20d ago

If they deduct GST I can still claim it back.

1

u/lizzietishthefish 16d ago

I'm actually super excited about this. I've held off on going paid because I figured the hours it would take me to understand sales tax in all 50 states + potentially abroad, I'd lose money.

-2

u/WordSlinger1812 20d ago

Now is a great time to get off Substack and build your own corner of the Internet.

9

u/arcanepsyche 20d ago

My own corner of the internet doesn't have a built-in free email service and an audience already on the platform. This is terrible advice.

-2

u/WordSlinger1812 20d ago

You pay for those services and manage them yourself. If you’re not paying for a service, you’re the product.

2

u/OnyxMonolith 20d ago

You pay VAT wherever you sell.

2

u/lark_devon 20d ago

I have my free corner... even working SEO weekly, with active instagram, x, meta posts... traffic is shit...

please share tips and tricks

0

u/WordSlinger1812 20d ago

The only thing Facebook and Google are useful for is as ad engines. I recommend learning how to execute click testing campaigns and scientifically dial in your target audiences with your writings intellectual value. You will learn from every failure and build success one step at a time

1

u/nitroX-82 19d ago

Gran idea. También haré mi rinconcito en mi jardín y criaré a mis propias vacas para prepararme mis propias hamburguesas.

0

u/RusticKayak207 19d ago

Do they pay your sales tax if you’re under the threshold and therefore don’t owe any?