Sales tax nexus rules vary by state, but they follow two patterns: a physical connection to the state (an office, employee, inventory, or certain in-state relationships) or an economic connection measured by how much you sell into the state. Cross either line and you generally must register, collect, and remit. The economic side dates to the Supreme Court’s 2018 decision in South Dakota v. Wayfair, Inc., which let states require collection from out-of-state sellers based on sales volume alone.1Supreme Court of the United States. South Dakota v. Wayfair, Inc. What follows is how each type of trigger works and where the state-to-state variations sit.
Physical Presence Triggers
A tangible footprint in a state almost always creates a collection obligation. Storefronts, offices, and warehouses are the obvious cases. Less obvious: a single remote employee working from their home in another state can create nexus, and so can an independent contractor who solicits sales on your behalf.
Inventory is a frequent trap for e-commerce sellers. If your products sit in a third-party fulfillment center, you likely have physical nexus in that state even if you’ve never seen the facility.
Affiliate and click-through relationships add another layer. Roughly 25 states have affiliate nexus laws and around 15 maintain click-through nexus provisions. These generally say that if an in-state person or business earns a commission for referring customers to you, that relationship counts as a tie to the state. Specifics vary: some states look at whether the affiliate uses your trademarks, others at whether referrals generate a minimum level of sales.
Temporary activities can also trigger registration. Attending a trade show, delivering with your own trucks, or sending a repair technician in for a few days may be enough in some jurisdictions. A handful of states treat even a single day of in-state activity as sufficient.
Economic Nexus Thresholds
After Wayfair, states adopted thresholds based on how much you sell into their borders. The most common benchmark is $100,000 in annual sales. South Dakota’s law, upheld by the Court, originally set the threshold at $100,000 in sales or 200 separate transactions.1Supreme Court of the United States. South Dakota v. Wayfair, Inc. Most states followed that shape, though the details diverge.
The $100,000 Standard
Most sales-tax states use $100,000 in annual revenue as the trigger. Many originally paired it with a 200-transaction alternative, meaning you’d also have nexus if you completed 200 or more individual sales into the state regardless of dollars. That transaction count has been falling out of favor. As of early 2026, at least 14 states have eliminated the transaction threshold entirely, including Colorado, South Dakota, Indiana, North Carolina, Washington, and Illinois (which dropped its 200-transaction count effective January 1, 2026). The direction is toward a revenue-only test.
Where transaction counts remain, the number is usually 200, though a few states go lower. Connecticut requires both $100,000 in sales and 200 transactions, so you must hit both. Most other states treat the dollar and transaction thresholds as alternatives, where crossing either one triggers nexus.
Higher-Threshold States
A few large states set the bar higher. California requires $500,000 in sales during the preceding or current calendar year. Texas uses the same $500,000 figure, measured over the preceding 12 calendar months. New York combines a $500,000 revenue threshold with a 100-transaction requirement, and you must meet both. Growing businesses get more room in these states, but a single national number doesn’t exist.
How States Count Your Sales
The threshold number is only half the answer. States differ on what counts toward it, and misreading this can mean you’ve had nexus for months without knowing.
Gross sales is the broadest measure. It includes taxable items, exempt items, sales for resale, and sales to tax-exempt organizations. Texas and Pennsylvania use gross sales, so exempt transactions still push you toward the threshold. Other states use retail sales, which exclude wholesale and resale transactions but still include exempt retail sales. A smaller group counts only taxable sales, excluding both exempt items and resale transactions.
The look-back period varies too. Most states evaluate sales over the previous or current calendar year, so you’re checking two rolling windows. Some use a trailing 12-month period that doesn’t align with the calendar year. Run the calculation regularly rather than once in January.
When a Marketplace Collects for You
All 46 sales-tax-collecting states plus Washington, D.C. now have marketplace facilitator laws. These shift the collection burden from third-party sellers to the platform. If you sell through Amazon, Etsy, Walmart Marketplace, or a similar site, the marketplace generally collects and remits sales tax on your behalf in every state where it has nexus, which for major platforms is everywhere.
If all of your sales go through a marketplace, you may not need to register or file in most states. The platform handles collection, reporting, and remittance. Two caveats matter. First, any direct sales through your own website remain your responsibility and count toward economic nexus thresholds. Second, some states still require marketplace sellers to register even when the platform collects, particularly if the seller independently meets the state’s threshold.
Whether marketplace sales count toward your own threshold also varies. Some states exclude marketplace-facilitated sales from your nexus calculation because the platform is already collecting. Others include them. If marketplace sales are most of your revenue, this distinction changes where you register.
The definition of “marketplace facilitator” is broad. It generally covers any entity that lists products for third-party sellers, processes payments, or helps with fulfillment or shipping.
States With No Statewide Sales Tax
Five states impose no statewide general sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. Economic nexus thresholds don’t apply to statewide sales tax in these states. Two footnotes: Alaska lets local jurisdictions levy their own sales taxes, and some Alaska municipalities have adopted economic nexus rules for remote sellers. Delaware has no sales tax but imposes a gross receipts tax on businesses that can create its own compliance obligations. Montana, New Hampshire, and Oregon are genuinely sales-tax-free at both state and local level.
SaaS, Digital Goods, and Services
If you sell software subscriptions, digital downloads, or cloud services, the nexus question is only half of it. States split on whether SaaS is taxable at all. Some treat it as a tangible product and tax it, others view it as an intangible service and exempt it, and a third group taxes SaaS only under certain conditions (for example, off-the-shelf versus custom-built).
Digital goods like e-books, music downloads, and streaming subscriptions show similar inconsistency. Most states have rules addressing digital products, but treatment varies widely. You could owe tax on the same download in one state and not the state next door.
So SaaS and digital-goods sellers face a two-part question in every state: do you have nexus, and is what you sell taxable there? You can have nexus and still owe nothing if your product is classified as exempt. Confirm the classification; don’t assume it.
Trailing Nexus: When You Can Stop Collecting
Crossing a threshold is straightforward. Falling back below one usually isn’t. Most states require you to keep collecting for some period after your sales drop below the threshold. The most common rule is collection through the end of the calendar year in which you fell below plus the entire following calendar year. California, Colorado, and Washington all follow that pattern.
Others use different timelines. Minnesota requires collection for at least 12 months after you first started collecting. Michigan requires an entire calendar year to pass with no nexus-triggering activity before you can stop. Missouri is the most aggressive: you must keep collecting until you formally cancel your sales tax registration, regardless of sales volume. A handful of states have no trailing nexus at all, so the obligation ends as soon as you drop below.
Never assume you can stop collecting just because this year’s sales are lower than last year’s. Check the state’s specific rule before canceling any registration.
After You Cross a Threshold
Once you have nexus, register for a sales tax permit before collecting anything. Charging sales tax without a valid permit is illegal in most states. Registration is generally free through each state’s department of revenue website. If you need to register in several states at once, the Streamlined Sales Tax Registration System lets you register in all 23 participating member states through a single free online application.2Streamlined Sales Tax. Streamlined Sales Tax Registration System Participating states include Georgia, Indiana, Michigan, Minnesota, New Jersey, North Carolina, Ohio, and Washington.3Streamlined Sales Tax. Streamlined Sales Tax Non-member states require individual registration through their own portals.
If you discover you’ve had nexus in a state for years without collecting, most states offer a Voluntary Disclosure Agreement. A typical VDA limits the look-back period to three or four years of unpaid tax, waives most or all penalties, and may reduce interest. Without a VDA, the state can audit you for its full statute of limitations period with full penalties. VDAs work best when you approach the state before it contacts you; once an audit or notice has arrived, the option may be gone. The Multistate Tax Commission runs a program that helps businesses negotiate VDAs with multiple states at once.
For any business selling into more than a handful of states, plan on reviewing your sales by state at least quarterly against each state’s current thresholds. Thresholds change, transaction counts get dropped, and marketplace rules shift responsibilities, and quarterly review is the practical minimum for catching a new obligation before it becomes back tax.