Major Fashion Brands Are Pushing to End Sales Tax on Used Clothing
A coalition of some of the biggest names in fashion and resale wants governments to stop taxing secondhand clothing. The group, led by the UK-based Ellen MacArthur Foundation, includes H&M, Primark, Arc'teryx, Lacoste, Stella McCartney, and Wilson Sporting Goods on the brand side, alongside resale marketplaces ThredUp, Vestiaire Collective, The RealReal, Etsy, and Depop. Their argument is straightforward: taxing a piece of clothing when it sells for the second time is double taxation, since the government already collected tax when the item was new.
“Used goods have already been sold once in the stream of commerce, so the government has already collected taxes on the item,” Alon Rotem, chief strategy officer at ThredUp, told Retail Brew. “It shouldn't be taxed twice.”
Why the Resale Industry Is Making This Push Now
The secondhand apparel market has grown fast enough to justify a serious policy campaign. ThredUp's 2025 annual resale report found that US consumers spent nearly half of their clothing budget on secondhand items, and the global secondhand market grew 18% last year to reach a $197 billion valuation. That scale gives the coalition real standing to make an economic argument to lawmakers, not just an environmental one.
The coalition is also making a jobs argument that is specifically calibrated for the current political climate. ThredUp employs roughly 2,000 people for sorting and preparing items to be resold, based across distribution centers in Georgia, Pennsylvania, Arizona, and Texas. If the labor taxes companies like ThredUp pay on behalf of those employees were reduced by 20 to 30%, Rotem told Retail Brew, the company could either hire more people or pay existing workers more. The argument frames resale job creation as an onshoring story: US-based sorting and repair work growing at the expense of offshore manufacturing.
This is not the first time someone has made the double taxation case. ThredUp CEO James Reinhart was already advocating for this change in 2022. During Earth Month in 2024, IKEA Canada launched a Change.org petition to eliminate Canada's tax on secondhand items and exceeded its 35,000-signature goal by more than 1,000 signatures. The American Circular Textiles coalition made a similar push in the US earlier this year, arguing that sales tax on secondhand goods discourages sustainable shopping and hinders the circular economy's growth. What is different about the current effort is the scale of brands behind it and the inclusion of the Ellen MacArthur Foundation as the organizing force.
The Economics Behind Why Resale Is Harder Than It Looks
One of the more candid admissions in the Ellen MacArthur Foundation's new report is that resale is structurally more expensive to operate than manufacturing at scale. The report puts it plainly: sorting, cleaning, and repairing 100 items of used clothing takes 100 times the effort of sorting, cleaning, and repairing one. In new goods manufacturing, increasing production lowers cost per unit. In resale, every item requires individual handling regardless of volume.
That cost structure explains why the largest resale platforms are fighting for every margin point they can find, whether through fee structures, technology investment, or policy changes. For brands building their own resale programs, the cost of running those operations has consistently surprised companies that assumed the economics would mirror their new goods business. Danielle Holly, executive lead for North America at the Ellen MacArthur Foundation, described the goal as decoupling growth from production, meaning brands grow revenue through resale rather than by manufacturing more units. Tax relief on resale transactions and labor cost reductions for resale workers are the specific levers the coalition is asking governments to pull to make that math work.
H&M Group's chief sustainability officer Leyla Ertur put the business case bluntly: “Fixing the economics of resale is one of the fastest and most concrete ways to scale circularity in fashion.”
What This Means for Sellers
For individual sellers and small resale businesses operating on platforms like eBay, Etsy, and Depop, a sales tax exemption on secondhand clothing would lower the effective cost to buyers, which in theory increases demand and potentially supports higher sell-through rates and prices. The practical impact would depend heavily on how each state or country implements the exemption, since sales tax policy in the US is set at the state level rather than federally, meaning any change would require a patchwork of state-by-state legislative action rather than a single national rule change.
Sales tax compliance for ecommerce sellers is already one of the more complex ongoing obligations in running an online business, with marketplace facilitator laws shifting collection responsibility to platforms in most states. Adding a new category exemption for secondhand goods would introduce another layer of classification requirements, though it would also remove a cost that currently makes resold items less competitive against new goods at the same price point.
The coalition has not announced a specific legislative target or timeline. The current push appears focused on building public and industry support rather than advancing a specific bill, though the combination of major brand names and a well-funded foundation behind the effort gives it more momentum than prior attempts have had.
