Economic Nexus: Sales Tax Thresholds by State

What Is Economic Nexus?

Economic nexus is a sales tax obligation triggered by your revenue or transaction volume into a state, with no physical presence required. Cross a state’s threshold and you must register, collect, and remit sales tax there. As of 2026, 45 states, Washington, D.C., and Puerto Rico enforce it; Alaska enforces it locally through the Alaska Remote Seller Sales Tax Commission (ARSSTC).

The rule comes from the U.S. Supreme Court’s 2018 decision in South Dakota v. Wayfair, Inc. (full opinion). For a live, state-by-state view, see Commenda’s US nexus exposure guide.

What Did South Dakota v. Wayfair Change?

The U.S. Supreme Court decided South Dakota v. Wayfair, Inc. on June 21, 2018, by a 5-4 vote. It overturned Quill Corp. v. North Dakota (1992) and National Bellas Hess (1967), the precedents that had required physical presence to compel tax collection. The Court upheld South Dakota’s $100,000 OR 200 transactions law, which became the template most states copied.

That $100,000-or-200-transaction combination shaped nearly every state statute that followed. The 200-transaction count came straight from South Dakota’s original bill, and it is the piece states are now repealing.

Why Does Economic Nexus Matter for Your Business?

The liability is yours, not your customer’s. Back taxes accrue from the day you crossed the threshold, not the day you register. Penalties and interest stack on top. In most states, the statute-of-limitations clock never starts if you never registered, so exposure stays open-ended.

A seller that crossed a threshold three years ago owes three years of uncollected tax out of its own pocket, because it never charged customers. Remediation exists, but it comes later. First you have to know where you crossed.

What Triggers Economic Nexus for Sales Tax?

Three activities trigger economic nexus: (1) crossing a state’s revenue threshold, most commonly $100,000 in annual sales; (2) crossing a transaction threshold, typically 200 transactions, where one sale over the line is enough; and (3) selling into the U.S. from abroad, since foreign sellers with no U.S. entity get no exemption.

Any one of the three creates the obligation. You do not need to hit all of them.

Does Physical Presence Still Create Nexus?

Yes. Economic nexus is additive to physical nexus, not a replacement. Inventory, including Fulfillment by Amazon (FBA) stock, remote employees, offices, and contractors still create physical nexus regardless of sales volume. A seller can hold physical nexus in one state and economic nexus in another at the same time.

Both must be tracked. See our physical nexus explainer for how presence-based nexus works.

Economic Nexus Thresholds by State (2026)

In most states the threshold is $100,000 in sales. The high outliers are California, New York, and Texas at $500,000; Alabama and Mississippi sit at $250,000. The table below lists every state’s threshold, measurement period, and effective date, verified against each state’s Department of Revenue or equivalent tax authority (DOR). Click a state for its full Commenda guide.

Which States Have No Sales Tax?

Five states levy no statewide general sales tax: New Hampshire, Oregon, Montana, Alaska, and Delaware, known as the NOMAD states (per the Tax Foundation). Alaska is the asterisk. Its local jurisdictions enforce a shared $100,000 threshold through the Alaska Remote Seller Sales Tax Commission, so remote sellers can still owe local Alaska tax.

Which States Removed the Transaction Threshold?

States are repealing the 200-transaction test because it captured tiny sellers. Two hundred sales of $10 items is $2,000 in revenue but still triggered nexus. South Dakota, the state that invented the standard in South Dakota v. Wayfair, repealed its own transaction count effective July 1, 2023, per the South Dakota DOR.

What Counts Toward an Economic Nexus Threshold?

It varies by state. Some count gross sales, including exempt and marketplace sales; others count only taxable sales. States also split between “OR” thresholds, where either test triggers nexus, and “AND” thresholds, where both are required. Measurement periods differ too. The table below shows the distinctions the threshold column alone cannot convey.

How Do I Check If I Have Economic Nexus in a State?

Three steps. First, pull revenue and transaction counts by delivery (ship-to) state. Second, apply each state’s measurement period. Third, compare the totals against each state’s threshold and inclusion rules. For example, $120,000 into Pennsylvania crosses its $100,000 threshold; the same $120,000 into Texas does not, because Texas sits at $500,000.

Doing this by hand across 47 jurisdictions is where errors creep in, especially with rolling-12-month states where the answer can change every quarter.

When Do I Need to Register for Sales Tax in a State?

Crossing the threshold starts a state-specific clock. Some states expect registration by your next transaction; most give 30 to 60 days; a few let you wait until January 1 of the following year. Register before you collect, since collecting without a permit is a bigger red flag to states than not collecting.

Our US state sales tax registration guide walks through the filing process.

How Do Marketplace Facilitator Laws Affect Economic Nexus?

Every sales tax state now has a marketplace facilitator law, so Amazon, Etsy, Walmart, and eBay collect and remit on marketplace sales. That does not make thresholds irrelevant. Most states exclude marketplace sales from your own threshold count, but California, Hawaii, and Michigan still count them, so heavy marketplace volume can force registration on modest direct sales.

Smaller and foreign platforms often do not collect U.S. sales tax at all, which leaves the liability with you.

Who Does Economic Nexus Affect?

Any remote seller that crosses a state threshold, regardless of platform or business model. The obligation follows revenue wherever it lands, and it reaches four groups most often.

Ecommerce and Shopify Sellers

Shopify calculates and collects sales tax only after you configure it. It never registers you with a state and never remits on your behalf. Crossing $100,000 in sales into a state creates nexus regardless of platform, so the tracking and registration duty stays with you.

SaaS Companies

Software as a Service (SaaS) is taxable in roughly half of U.S. states and exempt in the others, and the rules are inconsistent. A Delaware-incorporated SaaS company with zero physical footprint can owe tax in 20 to 30 states once it crosses their revenue thresholds, without ever shipping a box.

Dropshippers

Nexus follows the customer’s location, not where product ships from. A dropshipper who never touches inventory can still cross state thresholds on delivered sales. The resale and exemption certificate chain between dropshipper, supplier, and end customer adds a documentation trap on top.

Foreign Sellers

Yes, it applies to you. Non-U.S. businesses get no exemption. Once a foreign seller crosses a state threshold, it carries the same registration, collection, and remittance obligation as a domestic seller, even with no U.S. entity. Platform and marketplace gaps make this a common blind spot for companies expanding into the U.S.

What Should You Do If You Already Crossed a Threshold?

File a Voluntary Disclosure Agreement (VDA). You come forward, the state limits the lookback period, often to three or four years, and waives or reduces penalties. A VDA takes months to negotiate, and for small liabilities the fee can exceed the exposure, so registering and paying directly is sometimes cheaper. The cheapest path is catching thresholds before you cross.

How Commenda Tracks Economic Nexus Automatically

Monitoring 47 different thresholds, measurement periods, and registration deadlines in a spreadsheet is how sellers end up with surprise back-tax bills. Commenda’s global indirect tax software monitors your sales against every state’s threshold in real time, alerts you before you cross, and handles registration and filing. It covers sales tax, VAT (Value-Added Tax), and GST (Goods and Services Tax) from one platform, integrated with 100+ Enterprise Resource Planning (ERP) systems, APIs, and custom integrations.

Keep the US nexus exposure guide bookmarked as your always-current threshold reference, and use the sales tax calculator to look up rates once you register. Book a demo at https://www.commenda.io/book-a-demo for a free nexus exposure assessment.