If you sell into other states online, remote seller sales tax by state works like this: once your sales into a given state cross that state’s economic nexus threshold, you have to register there, collect sales tax from buyers in that state, and file returns on the schedule the state assigns you. The threshold is $100,000 in annual sales in most states, higher in a few, and five states have no statewide sales tax at all. Everything else — which sales count, how fast you must start collecting, whether a marketplace handles it for you, and what local governments require on top — varies state by state.
What Triggers a Collection Obligation
The rule that governs remote sellers today comes from the 2018 Supreme Court decision in South Dakota v. Wayfair, Inc., which held that a state can require an out-of-state business to collect sales tax based on economic activity alone, without any physical presence in the state.1Supreme Court of the United States. South Dakota v. Wayfair, Inc. The South Dakota law upheld in that case used a threshold of $100,000 in sales or 200 separate transactions per year, and most states copied that framework.
The vast majority of states with a sales tax now use $100,000 in annual sales as the trigger. California, New York, and Texas each set the bar at $500,000, which lets smaller sellers operate in those markets without registering. Many states originally paired the dollar threshold with a 200-transaction count, but that trend has reversed. Colorado, Washington, Indiana, North Carolina, Louisiana, Utah, and Illinois are among the states that have dropped the transaction count entirely. If your business sells low-priced items in high volume, that shift matters: hitting 200 orders no longer creates nexus in states that repealed the count.
Which Sales Count Toward the Threshold
States don’t agree on what to measure. Some look at gross sales, meaning every dollar of revenue including wholesale and exempt transactions. Others count only retail sales, excluding wholesale. A third group counts only taxable sales. A business selling mostly exempt goods can still cross the line in a gross-sales state even though it would collect little tax there once registered.
The measurement period is usually a rolling 12 months or the calendar year. Once you exceed the threshold, you generally have nexus for the rest of that year and the entire following year, even if your sales dip.
How Fast You Have to Start Collecting
Some states require collection on the very next transaction after you cross the threshold. Others give you 30 to 90 days. A few tie the date to the calendar. Alabama requires registration by January 1 of the year after you exceeded the threshold. Connecticut treats crossing the threshold by September 30 as triggering collection on October 1. Missing the correct start date can leave you liable for tax on every intervening sale, so confirm the specific effective-date rule in each state where you approach the number.
States Where Remote Sellers Owe No State Sales Tax
Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax. Delaware, Montana, New Hampshire, and Oregon have no local sales tax either. Alaska is different: it has no state sales tax, but boroughs and cities can impose their own, and many have adopted economic nexus rules for remote sellers through the Alaska Remote Seller Sales Tax Commission. If you ship into Alaska, treat it as a state with local obligations, not a tax-free zone.
Marketplace Sales
Every state with a sales tax now has a marketplace facilitator law requiring platforms that host third-party sellers and process their payments to collect and remit sales tax on those sellers’ behalf.2Streamlined Sales Tax Governing Board. Marketplace Facilitator State Guidance If you sell through Amazon, eBay, Etsy, or Walmart Marketplace, the platform handles the tax on those orders in states where it has that obligation.
This does not eliminate your own responsibility. All of your sales into a state, across every channel, count toward that state’s economic nexus threshold. Sell $60,000 through your own website and $50,000 through Amazon into the same state and you’ve crossed $100,000. You’ll likely still need to register so the state can reconcile what the marketplace reported with your total activity.
On your return, you’ll typically report gross sales including the marketplace-facilitated portion, then deduct that portion so the same sales aren’t taxed twice.3Streamlined Sales Tax Governing Board. Marketplace Seller State Guidance Some states use a specific deduction line; others treat marketplace sales as exempt sales on the return. Either way, keep the marketplace’s monthly or quarterly jurisdiction reports so your numbers reconcile if audited.
Registering in Each State
You can register in one of two ways. For the 23 states that belong to the Streamlined Sales and Use Tax Agreement (SST), a single online application through the Streamlined Sales Tax Registration System (SSTRS) registers you in all member states at once at no cost.4Streamlined Sales Tax Governing Board. Sales Tax Registration SSTRS5Streamlined Sales Tax Governing Board. Streamlined Sales Tax Sellers who qualify as volunteer sellers under the agreement can also use a Certified Service Provider at no cost to handle calculation, filing, and remittance in member states.6Streamlined Sales Tax Governing Board. Certified Service Providers About Some SST states also offer amnesty on prior periods when you register for the first time through SSTRS, though availability changes, so check each state’s current terms.
For states outside SST, register directly through the state department of revenue’s website. Applications are usually free. You’ll need your Federal Employer Identification Number, which the IRS issues at no cost.7Internal Revenue Service. Get an Employer Identification Number Sole proprietors without employees can sometimes substitute a Social Security number, but an EIN keeps personal information off the state form. States also ask for your legal business name, entity type, formation date, business address, a description of what you sell, and often projected monthly sales so they can assign a filing frequency. You’ll be asked for a nexus start date, meaning the day you first exceeded the economic threshold. Get this date right; a wrong answer creates a gap the state can later assess against you.
Filing, Remitting, and the Timely-Filing Discount
The state assigns your filing frequency based on volume. High-volume sellers file monthly, smaller sellers quarterly or annually. Returns go through the state’s online portal, with payment by electronic bank transfer or, in some states, credit card (usually with a processing fee).
File every period, even when you owe nothing. A missed filing can prompt the state to estimate your liability from industry averages and bill you. A zero-dollar return takes seconds. Most returns require you to break sales down by local jurisdiction so cities and counties get their share; accounting or tax automation software should track this at the transaction level. If you spot an error later, most states let you file an amended return, though corrections may draw a manual review.
Around 27 states pay a vendor collection allowance — a small discount on the tax you remit, in exchange for handling collection for the state.8Federation of Tax Administrators. State Sales Tax Rates and Vendor Discounts The discount ranges from about 0.25% to 5% depending on the state and only applies when you file and pay on time. Losing the discount and paying a late penalty stacks against you on the same return.
Keep transaction records, exemption certificates, and filed returns for at least three to four years from the filing date. Some states have longer audit windows, and where you had nexus but never registered, there may be no statute of limitations at all.
Home-Rule Localities That Register Separately
In most states, one state registration covers state and local sales tax together. A few states let local governments run their own systems under home rule. Alabama, Colorado, and Louisiana are the notable examples on the state side, and Alaska works the same way for its local jurisdictions. In these places, cities and counties can set their own rates, run their own registration portals, and audit independently.
Colorado alone has dozens of self-collecting home-rule municipalities, each with its own rules.9Colorado Department of Revenue – Taxation. Local Government Sales Tax Local rates layer on top of state rates and can add 1% to 5% or more, applied by delivery address. Filing separate local returns by hand is impractical at any real volume, which is where tax automation software earns its cost.
Exemption and Resale Certificates
Not every sale into a taxable state is actually taxable. Resellers, qualifying nonprofits, and government agencies can buy tax-free if they give you a completed exemption or resale certificate. Your job is to collect the certificate, confirm it’s filled in, and keep it on file.
If you don’t charge tax and the certificate later turns out to be invalid or missing, the state will assess the uncollected tax against you, plus interest and penalties. It won’t chase the buyer. Missing certificates are one of the most common audit findings. In SST member states, sellers generally aren’t required to verify the purchaser’s registration number, with limited exceptions, but the completed certificate still has to be in your file.10Streamlined Sales Tax Governing Board. Exemptions Store them digitally, organized by state and customer, alongside your other sales tax records.
Penalties and Cleaning Up Past Non-Compliance
Late-filing penalties commonly run 5% to 10% of the tax due per month, capped somewhere between 25% and 50%. Several states also charge a flat minimum penalty, often $10 to $50, even when no tax is owed. Interest accrues separately, generally in the 5% to 12% annual range depending on the state and year.
Collecting sales tax from customers and not remitting it is a different category of problem. States treat that money as trust funds held for the government, and they can pursue criminal charges, including jail time, for converting it.
If you realize you should have been collecting in a state but never registered, a Voluntary Disclosure Agreement is usually the right move. Under a VDA, you approach the state (often anonymously through a representative at first) and negotiate terms. Most states waive penalties and limit the look-back to three or four years of unpaid tax, rather than the full period, which could otherwise stretch back to the day you first had nexus. The eligibility catch: if the state has already contacted you about the liability, the VDA option is gone and you face the full exposure. Sellers who have quietly accumulated obligations in several states can often save far more by coming forward through VDAs than by waiting to be found.