Sales tax nexus is the connection between your business and a state that gives that state the authority to require you to register, collect sales tax and file returns. Without nexus, a state has no claim on you. With it, the obligation begins whether or not anyone tells you.
Most businesses have nexus in their home state from the day they start selling. What surprises people is how easily it extends to states they have never visited — through remote sales volume, inventory sitting in a warehouse, a single remote employee, or a run of orders through an online marketplace.
This page explains what creates nexus and how to work out where you have it. The detail sits on four companion pages linked throughout.
What Sales Tax Nexus Means
Nexus is a legal threshold, not a business decision. A state defines the conditions under which an out-of-state seller becomes subject to its sales tax rules, and once your activity meets those conditions the obligation attaches automatically. There is no application to opt in and no notification when you cross the line.
Until 2018, a state generally needed you to have a physical presence before it could require collection. The Supreme Court’s decision in South Dakota v. Wayfair removed that requirement, and every state with a general sales tax now applies some form of sales-based test to remote sellers alongside the older physical-presence rules.
The Two Ways Nexus Is Created
Physical nexus comes from something tangible in the state — an office, a store, a warehouse, stored inventory, an employee, a contractor, or in some states even a few days at a trade show. It is the older test, and it still applies in full. Physical nexus for sales tax covers which activities trigger it.
Economic nexus comes from sales volume alone. Sell enough into a state — commonly $100,000, though several states set the bar at $250,000 or $500,000 — and the obligation attaches with no physical connection at all. Some states also count transactions rather than dollars. Economic nexus for sales tax explains how the tests work, and economic nexus thresholds by state lists the current rule for all 50 states and DC.
The two are not alternatives. A business can have physical nexus in one state, economic nexus in six others, and both at once in a seventh. Each state is assessed on its own terms.
How to Work Out Where You Have Nexus
Work through this state by state rather than in the abstract. For each state you sell into, ask:
- Do we have anything physically there? An office, a location, stored inventory, an employee, a contractor, or regular in-person activity. If yes, you almost certainly have nexus — stop here and register.
- What did we sell into that state? Total your sales delivered into it. Compare against that state’s threshold, not a general figure, because the amounts and the measurement periods differ.
- Does that state count transactions too? Roughly a third still offer a transaction-count alternative. In those states, a high volume of low-value orders can trigger the obligation long before the dollar threshold.
- How much of it went through a marketplace? Marketplace sales are often counted toward your threshold even when the platform collected the tax. This is the step most sellers get wrong.
- Which period applies? Some states look at the previous calendar year, some at the current one, some at a rolling twelve months evaluated quarterly. The same sales can put you over in one state and under in another.
If the answer to step one or step two is yes for a state, treat registration there as the default and work out the timing from that state’s rules.
Selling Through Marketplaces
If you sell on Amazon, Etsy, eBay or Walmart Marketplace, the platform generally collects and remits sales tax on those orders under marketplace facilitator laws. That handles the tax on the transaction — but it does not reliably remove your own registration obligation, and in about half the states those sales still count toward your threshold.
Sellers running both a marketplace channel and their own website need to track the two separately, because states differ on whether they are added together. Marketplace facilitator laws and sales tax nexus works through each platform and the multi-channel case.
What to Have Ready Before You Register
- Legal business name, trade name and entity type
- Federal EIN, or Social Security number for a sole proprietor without one
- Business and mailing addresses, and any physical locations in the state
- Owner, officer or member details
- The date your activity in that state began, or the date you expect to cross the threshold
- A description of what you sell and the applicable business activity code
- Bank details, where the state requires them for filing and payment
You can start a sales tax registration for one or more states, or read the sales tax application overview for how the process runs.
What Happens After You Register
Registration starts an ongoing obligation. The state assigns a filing frequency, returns become due on that schedule — usually including periods with no sales — and permits may need renewal. Nexus itself keeps moving as your sales shift between states.
Businesses already registered somewhere can have deadlines, filing frequencies, renewals, state notices and threshold activity in additional states tracked through our sales tax compliance monitoring service.
Sales Tax Nexus Resources
- Economic nexus for sales tax — how sales-based tests work, what counts, and when the obligation starts
- Economic nexus thresholds by state — the current rule for all 50 states and DC, with state authority links
- Physical nexus for sales tax — inventory, employees, warehouses, trade shows and FBA
- Marketplace facilitator nexus — Amazon, Etsy, eBay, Walmart and multi-channel sellers
For state-level detail, see the state sales tax guides and the state sales and use tax directory. Registration pages for the largest markets: California, Texas, Florida and New York.
Frequently Asked Questions
Can I have nexus in a state without an office there?
Yes. Economic nexus is based on sales volume alone, and stored inventory or a remote employee can create physical nexus without any premises of your own.
Is there one threshold that applies everywhere?
No. $100,000 is the most common figure, but Alabama and Mississippi use $250,000 and California, New York and Texas use $500,000. Measurement periods and what counts as a qualifying sale also differ.
Do marketplace sales count toward my nexus?
In many states, yes — even where the marketplace collects the tax. Whether they count varies by state, so check the marketplace column on the thresholds page.
If my sales drop below a threshold, does nexus end?
Not automatically. The account generally stays open and returns keep coming due until you formally close the registration with that state.
Does an EIN create nexus or replace a sales tax permit?
Neither. A federal EIN is an identification number, not a state tax registration. Each state where you have nexus requires its own sales tax account.
SalesTaxApplication.net is a private filing service and is not a government agency. State agencies may allow businesses to handle these registrations directly. Rules vary and change — confirm your obligations with the state or a qualified professional, or contact us about your situation.