Resellers Warned: Texas Taxing Poshmark Seller Fees Starting October 1, 2025
Poshmark sellers in Texas will soon face higher costs to sell as state law taxing seller fees goes into effect October 1st.
The law extends the definition of services which the state of Texas considers taxable to include certain data processing services provided by most online marketplaces, including but not limited to Poshmark.
Recent updates to the law have clarified that sales tax applies to listing and commission fees but fees for payment processing (if stated/charged separately) are exempt - and fees for advertising may be a bit more complicated.
Texas
In general it appears that fees for hosting/displaying ads may be exempt (so in theory Poshmark sellers who use Promoted Closet should not be paying tax on those ad fees) but if a company charges separate fees for advanced advertising services beyond ad placement - such as personalized analytics, data-driven targeting, or search engine optimization for ad campaigns - those additional services may be subject to the sales tax.
Here's how Poshmark is describing the new tax in their help and policy page for sellers located in Texas:
What is Texas Seller Fee Tax?
As of October 1, 2025, sellers located in Texas will see an additional tax on Poshmark’s fee due to a state tax regulation. This Texas Seller Fee tax is separate from the standard sales tax collected from buyers and is imposed on the commission that Poshmark collects for facilitating sales.As a result, Poshmark is required to apply this additional tax to 80% of the seller fee on sales made by sellers with a return address in Texas.
The tax rate imposed includes the 6.25% Texas state sales tax plus applicable local sales taxes (city, county, etc.) where the seller is located. Assuming the local sales tax rate is 2%, this results in a combined rate of 8.25%. This will be deducted from the seller’s earnings at the time of sale.
And here's the example Poshmark gives of how that would work out on a $100 sale.
- A buyer purchases an item for $100.
- Poshmark’s seller fee is $20 (20% of the sale).
- Texas applies a 8.25% tax on 80% of the seller fee ($20 × 80% = $16).
- The commission tax is $1.320 ($16 × 8.25%).
If that sounds overly complex and confusing, blame the state of Texas, not Poshmark as the law explicitly gives an exemption of 20%, which is why Poshmark and other marketplaces will have to do this complicated calculation to apply the total state and local tax rate to 80% of the applicable fees.
From Tex. Admin. Code § 3.330:
Twenty percent of the total amount charged for data processing services is exempted from tax. If the data processing service is also taxable as another type of taxable service other than an information service, the twenty percent exemption does not apply.
Other marketplace are also scrambling to figure out how to implement the taxes on fees for sellers in Texas, with Etsy vaguely telling sellers tax will likely apply on certain transaction and listing fees and eBay yet to make any public announcement explaining how they are going to be handling this change.
Liz Morton
The law will apply to other marketplaces like Amazon, Walmart, eBay, and more and could be even more confusing for platforms like Mercari and Etsy subsidiary Depop where certain fees are split between both buyers and sellers.
For example, it's likely the taxes will apply on the 10% fee Mercari charges sellers, but not clear if it will apply to the 3.6% Buyer Protection fee.
Liz Morton
Depop currently only charges sellers a payment processing fee of 3.3% + $0.45, which would be exempt, but again it's not exactly clear whether it would apply to the "marketplace fee" charged to buyers.
Liz Morton
And it's not just sellers in Texas who may face these new costs - Washington state has also passed legislation which would tax certain digital services and advertising which is also supposed to be going into effect October 1, though Poshmark and other marketplaces have not yet announced if/how WA sellers will be affected.
A similar law in Maryland has faced legal challenges on constitutional grounds due to a “pass-through” provision barring directly passing the tax on to customers by a “separate fee, surcharge, or line-item.”
Rachel Konieczny
The 4th U.S. Circuit Court of Appeals recently ruled that provision violates the First Amendment, saying it effectively forbade businesses from shifting blame for increased costs to lawmakers.
Circuit Judge Julius Richardson said, "The pass-through prevents companies from describing the tax in the one setting where the consumer is guaranteed to look: the invoice. Keeping out of hot water with voters is not among the interests that can justify a speech ban."
Challenges are no doubt in the works for the Texas and Washington laws as well, though they may not be on the same grounds, leaving online sellers holding their breath to see how their businesses will be impacted heading into the all important Q4 holiday shopping season.
Stay tuned for updates and let us know in the comments below how these tax updates will affect your ecommerce business!
