You have sales tax nexus in a state whenever your connection to it is strong enough that the state can require you to collect and remit sales tax on your sales into it. That connection can come from a physical footprint, from crossing an economic activity threshold (most commonly $100,000 in sales), or from affiliate and referral relationships with in-state businesses. Every state that imposes a sales tax now enforces economic nexus rules against remote sellers, so a purely online business with no offices anywhere can still owe tax in dozens of states.
Physical Presence Nexus
Owning or leasing property in a state — a store, an office, a warehouse — creates an immediate obligation. Storing inventory in a third-party fulfillment center counts too in most states. If you use Amazon FBA or a similar service that spreads your goods across warehouses around the country, each warehouse state can require you to register and collect.
Employees and contractors working in a state trigger the same footprint for their employer, and the role doesn’t matter. A remote software developer working from a home office creates the same state-level connection as a traveling sales rep. As remote work has grown, many businesses have quietly expanded their sales tax obligations into new states just by hiring or letting employees relocate.
Temporary activity can create nexus as well. Attending a trade show, sending technicians for on-site installations, or delivering with your own vehicles can establish a short-term physical presence. The threshold varies: some states treat a single day of in-state activity as enough, while others tolerate limited visits before requiring registration.
Economic Nexus After Wayfair
Before 2018, a state generally couldn’t force a business without a physical presence to collect its sales tax. The U.S. Supreme Court changed that in South Dakota v. Wayfair, Inc., holding that states can require remote sellers to collect based on the volume of their economic activity in the state.1Cornell Law Institute. South Dakota v. Wayfair, Inc. Every state with a sales tax has since adopted an economic nexus law.
The most common threshold is $100,000 in sales into a state during a calendar year. Some states also use a transaction-count trigger, originally set at 200 transactions per year to mirror the South Dakota law upheld in Wayfair.1Cornell Law Institute. South Dakota v. Wayfair, Inc. The trend has moved away from transaction counts. More than half of states with economic nexus laws have dropped that test entirely, leaving only the dollar threshold. As of early 2026, roughly 19 jurisdictions still include a transaction count alongside the dollar figure.
Most states measure against either the previous or current calendar year. Once you cross the line, you generally have to register and start collecting within 30 to 60 days, though the exact timeline varies. A few states expect collection on the very next transaction after you exceed the threshold, so watching your sales in real time matters more than a year-end review.
What Sales Count Toward the Threshold
States don’t all measure the same type of sales. They fall into three broad camps: those that count gross sales, those that count retail sales, and those that count only taxable sales.2Streamlined Sales Tax. Remote Seller Threshold Terms
- Gross sales states count every sale into the state, including wholesale, exempt, and nontaxable transactions. Roughly half of states with economic nexus laws use this method.
- Retail sales states exclude sales for resale, but exempt product sales (groceries in a state that exempts food, for example) still count.
- Taxable sales states count only transactions that are actually subject to tax, excluding both exempt sales and sales for resale.
The difference is not academic. A wholesaler shipping $150,000 in goods for resale into a gross-sales state has crossed the line; the same volume into a retail-sales state has not. If your mix includes exempt and nontaxable products, check each state’s measurement rule before assuming you’re under.2Streamlined Sales Tax. Remote Seller Threshold Terms
Affiliate and Click-Through Nexus
Around 25 states have affiliate nexus laws that apply when an out-of-state seller has a relationship with an in-state business that helps maintain the seller’s market. A related company, subsidiary, or contracted entity in the state that solicits customers, provides services, or supports sales on your behalf can create a taxable link between you and the state even if you have never set foot there.
Click-through nexus is narrower and aimed at online referrals. About 15 to 20 states apply it when you pay commissions to in-state residents (bloggers, influencers, website owners) who link customers to your online store. The typical trigger is $10,000 or more in referred sales over a 12-month period, though a handful of states set the bar higher or lower. Cross it and the state treats the in-state referrer as an extension of your business.
Both categories matter less than they used to, because most sellers producing that much affiliate revenue in a state have already blown past the $100,000 economic threshold. They still catch smaller sellers who sit below the economic line but keep active referral programs in specific states.
Marketplace Sales and Your Own Nexus
Every state with a sales tax has marketplace facilitator laws requiring platforms like Amazon, Etsy, and eBay to collect and remit tax for the third-party sellers on them.3Streamlined Sales Tax. Marketplace Facilitator Selling exclusively through one of these platforms usually means the platform handles calculation, collection, and remittance for you.
Marketplace sales still affect your own nexus math. In most states, sales made through a facilitator count toward your economic threshold. If you sell through Amazon and your own website, the combined figure across channels can push you past $100,000, which means you need to register and collect on your direct website sales even though Amazon already handles the tax on its share.
Some states also require you to file returns when every one of your sales went through a marketplace and the facilitator collected everything owed. These zero-tax returns confirm to the state that your activity has been accounted for. Skipping them can produce delinquency notices even when no tax is actually due.
Digital Products and SaaS
Sales tax was built for physical goods, but a growing number of states now tax digital products, cloud-based software, and electronically delivered services. As of 2025, roughly 25 states tax SaaS in some form, and the rules vary widely. Some treat digital products the same as physical goods; others draw distinctions between downloaded software, streamed content, and cloud-hosted services.
The economic nexus thresholds apply the same way. Crossing $100,000 in sales of taxable digital goods into a state triggers registration and collection just as it would for merchandise. The harder question is which states consider your specific product taxable in the first place. A SaaS offering fully exempt in one state may be taxable in the next, and there is no uniform national rule.
States Without Sales Tax
Five states impose no statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. You have no state-level collection duty in those states regardless of your sales volume or physical presence. Alaska is a partial exception. It has no state tax, but some local jurisdictions do impose their own, and the state participates in a remote seller program that can require collection at the local level.
What to Do Once You Have Nexus
Once you determine you have nexus in a state, register for a sales tax permit before you start collecting. Applications typically require your Federal Employer Identification Number, the names and identification numbers of owners or officers, and basic business details.4Internal Revenue Service. Get an Employer Identification Number Most states offer online registration through their revenue department and issue permits within a few business days. Most charge no fee; a small number charge a modest one-time fee or a refundable deposit, rarely more than $100. Collecting without a valid permit is illegal in most states.
If you need to register in multiple states at once, the Streamlined Sales Tax Registration System lets you submit a single application covering up to 24 participating states.5Streamlined Sales Tax. Sales Tax Registration SSTRS It’s free, and you can select only the states where you actually have nexus rather than registering everywhere in the system.6Streamlined Sales Tax. Registration FAQ Non-member states require separate applications.
If You Should Have Registered Earlier
If you discover you’ve had nexus in a state for months or years without collecting, a Voluntary Disclosure Agreement is usually the cleanest way in. Through a VDA, the state agrees to cap how far back it will assess unpaid tax, waive most or all penalties, and hold off on a full audit of prior years.7MTC: FAQ. Frequently Asked Questions – Multistate Voluntary Disclosure Program In return, you register, file returns for the look-back period, and pay the back tax plus interest.
The Multistate Tax Commission runs a Multistate Voluntary Disclosure Program that lets you negotiate with multiple participating states through one process, and your identity stays confidential until the agreement is finalized.7MTC: FAQ. Frequently Asked Questions – Multistate Voluntary Disclosure Program Eligibility generally requires that the state hasn’t already contacted you about the tax at issue. Once a notice or audit letter arrives, the VDA door usually closes, which is why pursuing disclosure proactively matters.
What Non-Compliance Costs
Failing to register and collect after nexus attaches has real financial consequences. Late-filing penalties commonly start at $50 per missed return and can escalate to a percentage of unpaid tax, often 10 to 30 percent, plus compounding interest. Those amounts stack quickly across multiple states and multiple filing periods.
Some states hold business owners personally liable for uncollected sales tax, treating it as money that belonged to the state from the moment of sale. Criminal charges are possible in cases of deliberate evasion but rare for businesses that simply didn’t realize they had crossed a line. The more common risk is a large retroactive assessment covering several years of unreported sales.
Leaving a state doesn’t always end the obligation right away. Some states impose trailing nexus, which extends your collection duty for a set period after the activity that created nexus ends. You may need to keep collecting and filing for another 6 to 12 months after closing a warehouse, letting go of an in-state employee, or dropping below the economic threshold. Check each state’s rule before you stop filing.