Quick Answer
Merch by Amazon and print-on-demand earnings are taxed as business income, with most platforms issuing 1099-NEC forms for payments over $600. You'll pay self-employment tax (15.3%) plus income tax on net profits. Design costs and business expenses are deductible.
Best Answer
Alex Torres, Gig Economy Tax Educator
Best for people just getting started with print-on-demand and need to understand the tax basics
How print-on-demand income is taxed
Print-on-demand earnings from platforms like Merch by Amazon, Printful, Redbubble, and Society6 are treated as business income, not royalties, according to [IRS Publication 334](https://www.irs.gov/pub/irs-pdf/p334.pdf). This means you'll pay both income tax and self-employment tax on your net profits.
Most platforms will send you a 1099-NEC form (not 1099-MISC) if you earned $600 or more during the tax year. Even if you don't receive a 1099-NEC, you must still report all income.
Example: First-year Merch by Amazon earnings
Let's break down taxes for someone who earned $4,800 from Merch by Amazon in 2026:
Gross earnings: $4,800 (from Amazon royalty payments)
Business expenses:
Net profit: $4,060
This represents about 26% of your net profit going to taxes.
Understanding the 1099-NEC vs. royalty confusion
Many print-on-demand sellers think their earnings are "royalties" because platforms call them that. However, the IRS classifies this as business income because:
True royalties (reported on 1099-MISC) would be something like licensing an existing artwork to a company, where you do no additional work.
Major deductible expenses for print-on-demand sellers
Design and creation costs:
Business operations:
Research and development:
Platform-specific tax considerations
Merch by Amazon:
Printful/Printify (with your own store):
Redbubble/Society6:
Setting up proper record-keeping
Track these items monthly:
1. Gross earnings from each platform
2. All business expenses with receipts
3. Time spent on design work (for home office deduction)
4. Mileage for business travel
Use a simple spreadsheet or accounting software to categorize expenses by type.
Quarterly estimated tax planning
If you expect to owe more than $1,000 in taxes for the year, you should make quarterly estimated payments:
A good rule of thumb: set aside 25-30% of your net profit for taxes.
What you should do
1. Treat this as a business from day one — keep detailed records
2. Open a separate business bank account for print-on-demand income
3. Track all expenses related to design creation and business operations
4. Set aside tax money with each payment you receive
5. Consider business entity formation if you're making substantial income
Key takeaway: Print-on-demand earnings are business income subject to 15.3% self-employment tax plus regular income tax, but extensive business deductions including design software, equipment, and home office can significantly reduce your tax liability.
*Sources: [IRS Publication 334 - Tax Guide for Small Business](https://www.irs.gov/pub/irs-pdf/p334.pdf), [IRS Publication 535 - Business Expenses](https://www.irs.gov/pub/irs-pdf/p535.pdf)*
Key Takeaway: Print-on-demand earnings are business income taxed at 15.3% self-employment tax plus income tax rates, but design software, equipment, and home office expenses are fully deductible.
Tax comparison by print-on-demand platform and seller type
| Platform | Payment Threshold | Tax Form | Typical Royalty Rate | Business Complexity |
|---|---|---|---|---|
| Merch by Amazon | $600 | 1099-NEC | $1-5 per sale | Low (Amazon handles everything) |
| Redbubble | $600 | 1099-NEC | 10-20% of sale price | Low (platform handles fulfillment) |
| Printful + Etsy | $600 | 1099-K from payments | Your markup - $3-8 base cost | Medium (you set prices) |
| Own Shopify store | $600 | 1099-K from payments | Full retail margin | High (you handle everything) |
More Perspectives
James Okafor, Self-Employment Tax Specialist
Perfect for people with W-2 jobs who do print-on-demand as supplemental income
Balancing W-2 work with print-on-demand income
As a side hustler, your print-on-demand profits get added to your W-2 income for total tax calculation, but the business income portion is also subject to self-employment tax that your day job doesn't cover.
Tax withholding strategy
Since your employer won't withhold taxes on your print-on-demand income, you have two options:
1. Increase W-4 withholding: Have extra federal tax withheld from your paycheck
2. Make quarterly estimated payments: Pay taxes directly to the IRS four times per year
For most side hustlers earning under $10,000 from print-on-demand, adjusting your W-4 is simpler.
Example: $55,000 W-2 + $3,600 print-on-demand profit
You'd need to withhold an extra $36 per paycheck (bi-weekly) or $78 per paycheck (monthly) to cover this.
Time management and expense tracking
As a side hustler, focus on the most valuable deductions:
Don't overcomplicate record-keeping — use a simple app to track business expenses monthly.
Key takeaway: Side hustlers should adjust W-4 withholding to cover print-on-demand taxes rather than making quarterly payments, and focus on major deductions like software and equipment costs.
Key Takeaway: Side hustlers can adjust W-4 withholding to cover print-on-demand taxes and should focus on major deductions like design software and equipment rather than complex expense tracking.
Alex Torres, Gig Economy Tax Educator
Ideal for people doing print-on-demand as their primary income or part of a larger design business
Scaling print-on-demand as a full-time business
Full-time print-on-demand sellers should treat this like any serious business, with proper entity structure, comprehensive expense tracking, and strategic tax planning.
Business entity considerations
Once you're making $20,000+ annually, consider forming an LLC or S-Corporation:
LLC benefits:
S-Corp benefits:
Advanced deduction strategies
Home office deduction: If you use a dedicated space for design work, you can deduct:
Equipment depreciation: Expensive equipment can be depreciated over time or deducted fully in the purchase year using Section 179:
Professional development: Deduct costs for:
Multiple platform management
Many full-time sellers use multiple platforms. Track income and expenses separately by platform for better business insights:
Retirement planning for print-on-demand business
As a self-employed individual, maximize retirement contributions:
Key takeaway: Full-time print-on-demand sellers should consider LLC formation, maximize home office and equipment deductions, and implement retirement savings strategies to reduce current tax liability.
Key Takeaway: Full-time sellers benefit from LLC formation, comprehensive expense tracking including home office and equipment depreciation, and maximum retirement contributions to reduce tax liability.
Sources
- IRS Publication 334 — Tax Guide for Small Business
- IRS Publication 535 — Business Expenses
Reviewed by Alex Torres, Gig Economy Tax Educator on February 28, 2026
This content is for educational purposes only and is not a substitute for professional tax advice. Consult a qualified tax professional for advice specific to your situation.