US State by State Econmic Nexus Threshold: Find Out When & Where You Need to Collect and File Sales Tax

Selling online and managing sales tax used to be pretty simple. Now, things have changed and become trickier. This guide explains the new rules (called the economic nexus) and how they affect your online business. We’ll cover what an economic nexus is, how much you need to sell in each state to trigger it (an economic nexus threshold by state), and other things that can make you responsible for owing and collecting sales tax across various states in the US whether you’re a remote seller (does not own a physical store) or physical seller (own a physical store) 

What is Economic Nexus (for Online Sellers that Sell) Across the US States

An economic nexus is a business’s substantial connection with a state that triggers the obligation for the seller to register, collect, pay and remit sales tax on taxable sales they record in that state, even if they don’t have a physical presence in such states. 

In a simple term, what an economic nexus means is that if you do enough business in a state ( that is, reach a certain sales amount or number of transactions), then you’re basically creating a connection that requires/mandates you to collect sales tax in that state, even if you don’t have a physical location there. Thus, as long as you sell online across states lines in the US, you might owe sales tax in some states and become obligated to collect and remit them to avoid penalties

The concept of economic nexus gained significant traction in 2018 with the Supreme Court’s Wayfair decision. This landmark ruling essentially overturned the physical presence requirement for sales tax collection, paving the way for states to set economic nexus thresholds for remote sellers.

How Economic Nexus Thresholds by State is Triggered or Established Across US

Economic nexus thresholds vary from state to state. Some states have a dollar-based threshold, meaning that if your total sales into that state exceed a certain amount in dollars in a specific period (usually a calendar year), then you’ve crossed the economic nexus threshold and must collect sales tax.

Other states have a transaction-based threshold, which means that if your total sales into that state exceed a certain volume in a given period, then you have triggered your obligation to collect sales tax.

Many states actually use a combined threshold, considering both sales volume and transaction count.

Economic Nexus Thresholds by State Chart (How much you need to sell in each state to trigger sales tax nexus across US states)

Alabama economic nexus threshold

• $250,000 in sales during the prior calendar year
• Transactions made through a registered marketplace facilitator excluded: Yes
• Transactions made to a reseller excluded: Yes
• Limited to certain transaction types: TPP only
• Source
• Effective date: October 1, 2018

Alaska economic nexus threshold

• Over $100,000 in sales OR 200 transactions during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: No
• Effective date: January 1, 2019

Arkansas economic nexus threshold

• Over $100,000 in sales OR 200 transactions during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: Yes
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: Taxable transactions only
• Source
• Effective date: July 1, 2019

Arizona economic nexus threshold

• Over $100,000 in sales during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: Yes
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: No
• Source
• Effective date: October 1, 2019

California economic nexus threshold

• Over $500,000 in sales during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: TPP only
• Source
• Effective date: April 1, 2019

Colorado economic nexus threshold

• Over $100,000 in sales during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: Yes
• Limited to certain transaction types: TPP only
• Source 1, Source 2
• Effective date: December 1, 2018

Connecticut economic nexus threshold

• Over $100,000 in sales AND 200 transactions during the 12 month period ending 30 September (e.g. October 1 2021 to September 30 2022)
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: Yes
• Limited to certain transaction types: No
• Source
• Effective date: December 1, 2018

District of Columbia economic nexus threshold

• Over $100,000 in sales OR 200 transactions during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: Yes
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: No
• Source
• Effective date: January 1, 2019

Delaware economic nexus threshold

No sales tax

Florida economic nexus threshold

• Over $100,000 in sales during the prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: Yes
• Limited to certain transaction types: Taxable TPP only
• Source

Georgia economic nexus threshold

• Over $100,000 in sales OR 200 transactions during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: Yes
• Limited to certain transaction types: TPP only
• Effective date: January 1, 2019

Hawaii economic nexus threshold

• $100,000 in sales OR 200 transactions during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: No
• Source
• Effective date: July 1, 2018

Idaho economic nexus threshold

• Over $100,000 in sales during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: No
• Source
• Effective date: June 1, 2019

Illinois economic nexus threshold

• $100,000 in sales OR 200 transactions during a 12 month period ending any quarter (e.g. July 1, 2021 to June 30, 2022 or April 1, 2022 to March 31, 2023)
• Transactions made through a registered marketplace facilitator excluded: Yes
• Transactions made to a reseller excluded: Yes
• Limited to certain transaction types: TPP only
• Source 1, Source 2
• Effective date: October 1, 2018

Indiana economic nexus threshold

• Over $100,000 in sales OR 200 transactions during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: No
• Source
• Effective date: October 1, 2018

Iowa economic nexus threshold

• $100,000 in sales during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: No
• Source
• Effective date: January 1, 2019

Kansas economic nexus threshold

• Over $100,000 in sales during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: No
• Source
• Effective date: October 1, 2019

Kentucky economic nexus threshold

• Over $100,000 in sales OR 200 transactions during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: TPP and digital property only
• Source
• Effective date: October 1, 2018

Louisiana economic nexus threshold

• Over $100,000 in sales OR 200 transactions during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: No
• Source
• Effective date: July 1, 2020

Maine economic nexus threshold

• Over $100,000 in sales during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: TPP, taxable services, and products transferred electronically only
• Source
• Effective: July 1, 2018

Maryland economic nexus threshold

• Over $100,000 in sales during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: TPP + taxable services only
• Source
• Effective date: October 1, 2018

Massachusetts economic nexus threshold

• Over $100,000 in sales during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: No
• Source
• Effective date: October 1, 2017

Michigan economic nexus threshold

• Over $100,000 in sales during the prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: No
• Source
• Effective date: October 1, 2018

Minnesota economic nexus threshold

• Over $100,000 in sales OR 200 transactions during any 12 calendar month period
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: Yes
• Limited to certain transaction types: No
• Source 1, Source 2, Source 3
• Effective date: October 1, 2018

Mississippi economic nexus threshold

• Over $250,000 in sales during any 12 calendar month period
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: No
• Source
• Effective date: September 1, 2018

Missouri economic nexus threshold

• Over $100,000 in sales during a 12 month period ending any quarter (e.g. July 1, 2021 to June 30, 2022 or April 1, 2022 to March 31, 2023)
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: Yes
• Limited to certain transaction types: TPP only
• Source 1, Source 2

Montana economic nexus threshold

No sales tax

Nebraska economic nexus threshold

• Over $100,000 in sales OR 200 transactions during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: Yes
• Limited to certain transaction types: No
• Source
• Effective date: January 1, 2019

Nevada economic nexus threshold

• Over $100,000 in sales OR 200 transactions during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: Yes
• Limited to certain transaction types: No
• Effective date: October 1, 2018
• Source

New Hampshire economic nexus threshold

No sales tax

New Jersey economic nexus threshold

• Over $100,000 in sales OR 200 transactions during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: TPP, specified digital products, and taxable services only
• Effective date: November 1, 2018
• Source

New Mexico economic nexus threshold

• $100,000 in sales during the prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: No
• Effective date: July 1, 2019
• Source

New York economic nexus threshold

• Over $500,000 in sales AND 200 transactions during any 12 month period ending any quarter (e.g. July 1, 2021 to June 30, 2022 or April 1, 2022 to March 31, 2023)
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: TPP only
• Effective date: June 21, 2018
• Source

North Carolina economic nexus threshold

• Over $100,000 in sales OR 200 transactions during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: No
• Effective date: November 1, 2018
• Source

North Dakota economic nexus threshold

• Over $100,000 in sales during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: Taxable transactions only
• Effective date: October 1, 2018
• Source

Ohio economic nexus threshold

• Over $100,000 in sales OR 200 transactions during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: Yes
• Limited to certain transaction types: No
• Effective date: August 1, 2019
• Source

Oklahoma economic nexus threshold

• $100,000 in sales during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: Taxable transactions only
• Effective date: July 1, 2018
• Source

Oregon economic nexus threshold

No sales tax

Pennsylvania economic nexus threshold

• Over $100,000 in sales during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: Taxable transactions only
• Effective date: July 1, 2019
• Source

Puerto Rico economic nexus threshold

• Over $100,000 in sales OR 200 transactions during the seller’s accounting period
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: No
• Source

Rhode Island economic nexus threshold

• $100,000 in sales OR 200 transactions during the prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: Nontaxable services excluded
• Effective date: August 17, 2017
• Source

South Carolina economic nexus threshold

• Over $100,000 in sales during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: No
• Effective date: November 1, 2018
• Source

South Dakota economic nexus threshold

• Over $100,000 in sales during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: No
• Effective date: November 1, 2018
• Source

Tennessee economic nexus threshold

• $100,000 in sales during any 12 calendar month period
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: Yes
• Limited to certain transaction types: No
• Effective date: October 1, 2019
• Source 1, Source 2

Texas economic nexus threshold

• $500,000 in sales during any 12 calendar month period
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: No
• Source

Utah economic nexus threshold

• Over $100,000 in sales OR 200 transactions during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: No
• Effective date: January 1, 2019
• Source

Virginia economic nexus threshold

• Over $100,000 in sales OR 200 transactions during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: Yes
• Transactions made to a reseller excluded: Yes
• Limited to certain transaction types: No
• Effective date: July 1, 2019
• Source

Vermont economic nexus threshold

• $100,000 in sales OR 200 transactions during any 12 calendar month period
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: No
• Effective date: July 1, 2018
• Source

Washington economic nexus threshold

• Over $100,000 in sales during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: No
• Effective date: October 1, 2018
• Source

West Virginia economic nexus threshold

• $100,000 in sales OR 200 transactions during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: No
• Effective date: July 1, 2019
• Source

Wisconsin economic nexus threshold

• $100,000 in sales during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: No
• Effective date: October 1, 2018
• Source

Wyoming economic nexus threshold

• Over $100,000 in sales OR 200 transactions during the current or prior calendar year
• Transactions made through a registered marketplace facilitator excluded: No
• Transactions made to a reseller excluded: No
• Limited to certain transaction types: No
• Effective date: February 1, 2019
• Source

Other Factors that Can Establish or Trigger Sales Tax Economic Nexus

Understanding economic nexus thresholds is crucial, but it’s not the only factor that might establish nexus in a state. Here are some additional situations that could trigger sales tax collection obligations:

• Affiliate Marketing Programs: If you partner with affiliates who promote your products or services in a particular state and generate sales, you might have nexus in that state, even if you don’t have a physical presence or meet the economic nexus threshold.
• Fulfillment Centers: Using a fulfillment center located in a state could create nexus, even if you don’t have any other physical presence there. The logic is that the fulfillment center essentially acts as an extension of your business within that state.
• In-State Employees: Having employees working remotely in a state could potentially establish nexus, depending on the specific circumstances and the state’s regulations.

Economic Nexus vs. Physical Nexus and Beyond

Here’s a breakdown to help you

• Physical Nexus: This is the traditional way of establishing sales tax obligations. It simply means having a physical presence in a state, such as a store, warehouse, or even employees working there. If you have a physical presence in a state with sales tax, you’re required to collect and remit sales tax.
  
• Economic Nexus: This is a newer concept that allows states to collect sales tax from businesses without a physical presence, but with significant economic activity within the state. This activity is typically measured by exceeding a certain threshold of sales or transactions within the state. The Supreme Court’s Wayfair decision in 2018 solidified the economic nexus for sales tax purposes.
  

Does Economic Nexus Apply to Shopify Stores

Yes, an economic nexus can apply to Shopify stores. Since Shopify stores can facilitate significant sales in various states, they can trigger an economic nexus in those states if they exceed the sales threshold.

How to Find Your Economic Nexus Threshold

You can find your specific state’s economic nexus threshold by searching online for “[your state] + economic nexus threshold” or checking resources from the Streamlined Sales Tax Governing Board (SSTG) at https://www.streamlinedsalestax.org/. Economic nexus thresholds vary by state. Some states base it on total sales in a year, while others consider the number of transactions. 

What is Streamlined Sales Tax (SST)

The SST is a cooperative effort between states and the private sector to establish uniformity and simplify sales and use tax administration across the US. It achieves this through the Streamlined Sales and Use Tax Agreement (SSUTA), a set of guidelines member states agree to follow.

How Does Streamlined Sales Tax (SST) Work

Here’s how SST streamlines sales tax for businesses:

• State-Level Administration: SST eliminates the need to register and file returns with multiple local jurisdictions within a member state. Businesses only need to register with a single state agency, reducing administrative headaches.
• Uniform Tax Base: Member states strive to have consistent definitions for taxable goods and services, minimizing confusion for businesses operating in multiple states.
• Simplified Rates: Ideally, SST member states aim for one or two statewide sales tax rates, with some allowing a separate rate for specific items like food or medication. This reduces the number of rates a business needs to track and apply.
• Uniform Sourcing Rules: SST establishes consistent rules for determining where sales tax is owed, eliminating the complexities of navigating different state regulations.
• Centralized Registration System: A central registration system allows businesses to register for sales tax collection in all member states at once, saving time and effort.

Benefits of SST for Businesses:

• Reduced Compliance Burden: SST simplifies sales tax administration, saving businesses time and resources.
• Lower Costs: Less time spent on compliance translates to lower accounting and tax preparation costs.
• Increased Efficiency: Streamlined processes allow businesses to focus on core operations and growth.
• Improved Accuracy: Uniformity in rules reduces the risk of errors and potential penalties.

Is SST Right for Your Business

If you sell across state lines, especially in SST member states, then SST can significantly benefit your business. It simplifies compliance, reduces costs, and allows you to focus on growing your sales.

Do I Need to Collect Sales Tax in All 50 States across the US

No, you only need to collect sales tax in states where you have a nexus, either physical or economic.

How to Determine Sales Tax Nexus

Determining sales tax nexus can be complex, but here’s a general approach:

1. Identify your physical presence: Do you have any physical presence in any state (store, warehouse, employees)
2. Research economic nexus thresholds: Check each state you sell to and see if you exceed their economic nexus threshold.
3. Consult a tax professional: Sales tax laws can be intricate, and a tax professional can help you determine your specific nexus obligations and ensure compliance. (Keywords: sales tax nexus determination, sales tax compliance)

By understanding economic nexus and physical nexus, you can confidently manage your sales tax obligations and avoid any potential issues down the road. 

Remote Seller Nexus Laws (What does this mean)

Remote seller nexus laws are all about determining when an out-of-state seller (one without a physical presence in a state) needs to collect and remit sales tax for that state. Basically, it boils down to this: if you make enough sales in a state, even without a physical store there, you’re on the hook for collecting that state’s sales tax.

Here’s a breakdown:

• Remote seller: This is a business that sells products or services online or by mail order, and doesn’t have a physical location (store, office, warehouse) in the state where the customer is.
• Nexus: This is the legal connection a seller has with a state, determining whether they need to collect sales tax there.
• Economic nexus: This is a specific type of nexus established by many states in recent years. It basically says that even without a physical presence, if your sales exceed a certain threshold (amount or number of transactions) in that state, you’re considered to have economic nexus and need to collect sales tax.