What are the economic nexus thresholds by state?
Economic nexus means you owe sales tax in a state based on your sales activity there, even without any physical presence. After the 2018 Supreme Court ruling in South Dakota v. Wayfair, states gained the power to require remote sellers to collect and remit sales tax once they cross certain thresholds.
The dominant threshold is $100,000 in gross sales or 200 transactions in a calendar year. The majority of states adopted this standard or something close to it. Cross either number and you’ve established nexus in that state. This includes Alabama, Arizona, California, Colorado, Georgia, Illinois, Indiana, Massachusetts, Michigan, New York, North Carolina, Ohio, Pennsylvania, Texas, Washington, and roughly 25 others.
Several states have eliminated the transaction count and look only at dollar amounts. Florida, Mississippi, and Tennessee now focus purely on sales volume. This matters if you sell high-value items with fewer transactions versus lower-priced goods with high volume.
A handful of states set lower thresholds. Kansas requires registration at just $10,000 in sales. If you sell nationwide, you likely hit Kansas nexus quickly even if your volume there feels insignificant.
Five states have no statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. However, Alaska allows local jurisdictions to impose their own sales taxes, which can still create obligations for sellers shipping there.
Thresholds are measured by destination, not origin. E-commerce sellers shipping from Massachusetts to Texas count those sales toward their Texas threshold, not their Massachusetts one. Track sales by where your customers are located.
Once you cross a threshold, you generally need to register for a sales tax permit before your next transaction or by a state-specified deadline. Then you collect tax on applicable sales and file returns according to that state’s schedule. Missing the registration deadline exposes you to back taxes, interest, and penalties on sales you should have been collecting.
States adjust thresholds periodically, and a few have changed rules multiple times since 2018. Verify current requirements before relying on any specific number, especially if you’re approaching thresholds in multiple states.
If you’re selling across state lines and growing, sales tax compliance becomes complicated fast. A business hitting $100,000 in one state is usually generating enough revenue nationally to trigger obligations in several states at once. Working with a Merrimack Valley bookkeeper who understands multi-state sales tax can prevent expensive surprises when you realize you should have been collecting in eight states for the past two years.
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