Short answer
Economic nexus means a state can require you to collect its sales tax based on your sales volume alone, with no physical presence, a rule the 2018 South Dakota v. Wayfair decision allowed. A common threshold is 100,000 dollars in sales or 200 transactions, but many states have moved off that, so you check each state where you sell.
Key takeaways
- Economic nexus lets a state require sales tax collection based on sales volume alone, with no office or inventory in the state, under the 2018 South Dakota v. Wayfair decision.
- A common baseline is 100,000 dollars in sales or 200 transactions in a state, but many states have raised the dollar figure or dropped the transaction count, so the baseline is a starting point, not a rule.
- Five states have no statewide sales tax, but Alaska is a trap, because local jurisdictions there can still impose economic nexus even though the state does not.
- States measure the threshold differently, on gross versus taxable sales and on a calendar year versus a rolling 12 months, so the same revenue can cross in one state and not another.
Before you start
- Pull your sales by state for the last year or so, since thresholds are measured per state.
- Note whether your sales are direct or through a marketplace, because marketplace sales are counted differently in many states.
- Treat any specific dollar figure as something to confirm with that state's department of revenue, since these change often.
Who this is for
- Remote and online sellers shipping to customers in multiple states.
- Founders deciding where they now have to register and collect sales tax.
- Sellers using fulfillment networks that place inventory in several states.
Economic nexus means a state can require you to collect its sales tax based on your sales volume alone, with no physical presence there. The 2018 South Dakota v. Wayfair decision allowed it, and a widely copied threshold is 100,000 dollars in sales or 200 transactions in a state.
What Economic Nexus Means, After Wayfair
For a long time, a state could only make you collect its sales tax if you had a physical presence there, such as an office, employees, or inventory. That is physical nexus. In 2018 the Supreme Court decided South Dakota v. Wayfair, and it changed the rule. States can now require sales tax collection based on economic activity alone, meaning your sales into the state, even if you never set foot in it. That is economic nexus.
For a remote seller, this is the shift that matters. You can owe sales tax collection duties in a state you have never visited, simply because enough of your customers live there. Almost every state with a sales tax adopted an economic nexus rule in the couple of years after Wayfair.
The Common Threshold, and Why It Is Only a Starting Point
South Dakota's law set the pattern that many states copied at first: 100,000 dollars in sales or 200 separate transactions into the state in a year. For a while, quoting that pair was a decent shortcut. It is now a starting point rather than an answer, because states have moved in two directions.
| Pattern | What it looks like | Notes |
|---|---|---|
| The common baseline | 100,000 dollars or 200 transactions | The original Wayfair pattern, still used by many states |
| Higher dollar figure | Some large states use 500,000 dollars | Often paired with no transaction count |
| No transaction count | Dollar threshold only | A growing number of states dropped the 200-transaction test |
| Different measure | Gross vs taxable sales, calendar vs rolling 12 months | Changes which of your sales count toward the number |
Directional patterns, not a current per-state list. Specific dollar figures, transaction tests, and effective dates change often, so confirm each state with its department of revenue.
Do not trust a single number across states
The 100,000 dollar or 200-transaction figure is a pattern, not a guarantee. Several states have raised the dollar amount or removed the transaction count entirely. Verify each state where you approach a threshold with that state's department of revenue.
Ready to set up your business address?
See which US cities fit — about a minute, no card needed.
The No-Sales-Tax States, and the Alaska Trap
Five states have no statewide sales tax at all. A common way to remember them is the word NOMAD: New Hampshire, Oregon, Montana, Alaska, and Delaware. In four of those five, there is no statewide sales tax and no statewide economic nexus to worry about.
Alaska is the exception
Alaska has no statewide sales tax, but many local jurisdictions in Alaska do impose one, and they have banded together to apply economic nexus at the local level. So a remote seller can have collection duties in parts of Alaska even though the state itself has no sales tax. Do not treat NOMAD as five clean passes.
Why the Same Revenue Crosses in One State and Not Another
Two states can list the same dollar threshold and still reach different answers on the same business, because the measurement differs. A few variables do most of the work.
- Gross versus taxable sales: some states count all your sales into the state, others only the taxable ones, which changes the total that gets measured.
- Marketplace sales: many states let you exclude sales made through a marketplace that collects tax for you, since the marketplace already handles those, while others count them.
- The time window: some states measure the calendar year, others a rolling 12 months, so the point at which you cross moves depending on how the state counts.
The practical takeaway is to measure per state, using that state's definition, rather than applying one number everywhere.
What Happens After You Cross a Threshold
Crossing an economic nexus threshold does not bill you for tax directly. It creates an obligation to register with the state, collect its sales tax from customers going forward, and remit it on a schedule. The registration step is where a lot of remote sellers stall, because it asks for details a purely online business has not always set up, including a business address.
Every state's sales tax registration asks for the address of your business, and states generally want a real, deliverable commercial address rather than a box that will not qualify. For a seller registering in several states at once, keeping one consistent commercial address across those registrations, matching your EIN and formation records, keeps the filings aligned. Our guides on registering for a sales tax permit and on using a resale certificate cover the steps that follow once you know where you have nexus.
Not legal or tax advice. Sales tax thresholds and rules change frequently and vary by state. Confirm current requirements with each state's department of revenue or a qualified professional.
Frequently Asked Questions
save office
Published July 9, 2026
I'm Henry, a hedgehog in a bow tie who explains the dull, scary parts of building and running a U.S. business.
