Sales Tax Nexus: Economic Nexus Thresholds by State

Quick answer: Sales tax nexus is the connection with a state that obliges you to register, collect and file that state's sales tax. You get it through physical presence or through economic nexus, usually more than $100,000 in annual sales into the state. Some states also count transactions, and several have recently dropped that test.

If you sell online to customers in more than one state, sooner or later you need to know where you must collect sales tax. The answer turns on nexus. This guide explains how physical and economic nexus work, shows the common thresholds in a table, walks through a worked example with real numbers, and ends with a checklist and the mistakes we see most often. Thresholds change frequently, so treat the figures below as a starting point and confirm the current rule with each state before you act.

What is sales tax nexus?

Nexus is a legal term for a sufficient connection between a business and a taxing state. Once you have it, the state can require you to register for a sales tax permit, charge tax on taxable sales to customers there, and file regular returns. Without it, you generally do not collect that state's tax, although the buyer may owe use tax on the purchase.

Until 2018, nexus meant physical presence. In South Dakota v. Wayfair, Inc., the US Supreme Court overturned that rule and allowed states to require out-of-state sellers to collect tax based on their sales volume alone. You can read the Wayfair opinion on the Supreme Court website. Every state with a statewide sales tax has since adopted an economic nexus rule.

Sales tax nexus only decides whether you collect. What you charge, and how it appears on the invoice, is covered in our guide to sales tax on invoices in the US.

Physical nexus

Physical presence still creates nexus everywhere, regardless of sales volume. Common triggers include:

• An office, shop, warehouse or other place of business in the state.
• Employees, and in many states independent sales representatives, working there.
• Inventory stored in the state, including stock held in a third-party fulfillment center.
• Regular installation, repair or service visits.
• Attending trade shows and making sales, in some states.

Physical presence is the oldest form of sales tax nexus, and the fulfillment center point surprises many ecommerce sellers. If a marketplace moves your stock into a warehouse in another state, you may have physical nexus there even with modest sales.

Economic nexus

Economic nexus is based on what you sell into a state over a measuring period. The original South Dakota law used more than $100,000 in sales or 200 or more separate transactions. Many states copied that model, but they have since diverged in three ways: the dollar amount, whether a transaction count applies, and which sales are counted.

Economic nexus thresholds: common patterns by state

The table below groups states by the type of test they use. It is a summary of published rules as we found them in October 2026, not a complete 50-state chart. Always check the state's own guidance before registering or deciding you are under a threshold.

Pattern	Examples	What it means for you
$100,000 in sales, no transaction count	South Dakota (count removed July 1, 2023), Indiana, North Carolina, Utah, Illinois (count removed January 1, 2026)	Only the dollar figure matters; lots of small orders no longer trigger nexus on their own
$100,000 or 200 transactions	Several states still use the original Wayfair model	Crossing either test creates nexus, so low-value, high-volume sellers can be caught
Higher dollar threshold	California and Texas use $500,000	Fewer small sellers are affected
Dollar and transaction test	New York: more than $500,000 and more than 100 sales in the prior four quarters	You need to exceed both tests
No statewide sales tax	Delaware, Montana, New Hampshire, Oregon; Alaska has local taxes only	No statewide collection, but check Alaska local rules

South Dakota's Department of Revenue confirms that, from July 1, 2023, its remote seller criteria no longer include the 200-transaction test. Industry trackers also report that Kentucky planned to drop its transaction count from August 1, 2026. We could not confirm every state on an official page, so verify with the state before relying on any single figure.

Which sales count?

The threshold test is only as good as the number you plug into it. States differ on whether to count:

• Gross sales, including exempt sales and sales for resale.
• Retail sales only, excluding wholesale transactions.
• Taxable sales only, excluding exempt items such as groceries or some services.
• Marketplace sales, which some states exclude because the facilitator already collected the tax.

The measuring period also varies: the current or previous calendar year, the previous four quarters, or a rolling 12 months.

Marketplace facilitators and your nexus

All states with a sales tax now have marketplace facilitator laws. When you sell through Amazon, Etsy, eBay or a similar platform, the marketplace generally collects and remits the tax on those orders. That does not automatically end your obligations:

• Sales through your own website, a Shopify or WooCommerce store, or direct invoices are still your responsibility.
• Some states count marketplace sales toward your threshold even though the platform paid the tax.
• Inventory a marketplace stores for you can create physical nexus.

If you run a store alongside marketplace listings, our guide to ecommerce invoices for Shopify and WooCommerce explains how tax lines and order invoices fit together.

Worked example: checking three states

Here is an illustrative case. Priya runs a small online shop based in Texas selling handmade candles through her own website. Over the previous calendar year her sales into three states were:

State	Sales	Orders	Rule used in this example	Nexus?
South Dakota	$22,400	640	More than $100,000 in sales	No
A state using $100,000 or 200 transactions	$38,000	1,050	More than $100,000 or 200 or more transactions	Yes
New York	$118,000	3,200	More than $500,000 and more than 100 sales	No

The arithmetic for each:

• South Dakota: $22,400 is less than $100,000. Before July 2023, 640 orders would have exceeded 200 transactions and created nexus. Under the current rule, the order count is irrelevant, so no nexus.
• Transaction-count state: $38,000 is under $100,000, but 1,050 orders is more than 200. Either test is enough, so Priya has nexus and must register.
• New York: 3,200 sales is more than 100, but $118,000 is less than $500,000. Both tests must be met, so no economic nexus yet.

Now suppose Priya registers in the second state, where her combined state and local rate is, say, 7.25%. An order of $64.00 would carry tax of $64.00 × 0.0725 = $4.64, for a total of $68.64. You can check figures like this with our sales tax calculator, and if a customer quotes a tax-inclusive price, our guide to reverse sales tax calculation shows how to split it.

What to do once you have sales tax nexus: step by step

1. Pull sales by state. Export the last 12 to 24 months of orders from your store, payment processor and invoices, and total them by ship-to state.
2. Compare against each state's current rule. Use the state's official remote seller page and note the measuring period and which sales count.
3. Record the date you crossed. Many states start the collection obligation from a specific point after crossing, so the date matters.
4. Register for a permit. Apply through the state's revenue department. Registration is usually free. Do not charge tax before you hold a permit.
5. Set up rates. Most states are destination-based, so the rate depends on where the customer receives the goods, often including local taxes.
6. Show tax correctly on invoices. List the tax as a separate line with the rate, and add your permit number if the state or customer expects it; see our guide to showing a tax ID on an invoice.
7. File and pay on time. States assign monthly, quarterly or annual filing based on volume. File even if you collected nothing, if the state requires zero returns.
8. Review quarterly. Thresholds and your sales both change. Re-run your state totals every quarter.

When you start charging tax, our free US invoice generator creates a PDF invoice with a separate tax line in your browser. It is honest to say what it does not do: it does not track your state totals, decide where you have nexus, register you or file returns.

Common mistakes

• Using an old threshold chart. Several states dropped the transaction count between 2023 and 2026. A chart from a few years ago can be wrong in either direction.
• Counting only taxable sales when the state counts gross sales, or the reverse.
• Forgetting fulfillment center inventory as a source of physical nexus.
• Assuming marketplace sales never count. In some states they still count toward your threshold.
• Charging tax before registering. Collecting a state's tax without a permit creates its own problems.
• Not keeping records. Keep sales reports, exemption certificates and invoices; our guide on how long to keep invoices covers retention periods.
• Ignoring past exposure. If you crossed a threshold years ago, talk to an adviser about voluntary disclosure rather than quietly registering today.

Sales tax nexus checklist

• Sales by ship-to state totaled for the right measuring period
• Each state's current dollar and transaction tests checked on an official site
• Marketplace and wholesale sales treated the way each state requires
• Physical presence reviewed: staff, inventory, offices, service visits
• Date of crossing recorded for each state
• Permits obtained before collecting tax
• Destination rates set up, including local taxes
• Invoices show the tax as a separate line
• Filing calendar created for each registration
• Quarterly review scheduled

Different countries handle consumption tax very differently; our explainer on sales tax vs VAT vs GST puts the US system in context. For more state and federal topics, browse our tax and compliance articles.

This article is general information, not tax or legal advice. State thresholds and rules change often; confirm the current rule with each state's revenue department or a qualified tax professional before acting.