Economic Nexus Thresholds: When a Remote Seller Must Register for US Sales Tax

Selling products to customers across the United States can create sales tax responsibilities even when your business has no office, employees, or warehouse in the states where your customers live. Under economic nexus laws, a state may require an out-of-state seller to register, collect sales tax, and file returns after the seller reaches a specified level of sales or transactions.

For ecommerce businesses, SaaS companies selling taxable products or services, and international entrepreneurs operating US businesses, understanding these rules is an important part of staying compliant. The requirements differ by state, and reaching a threshold does not always trigger registration on the same date everywhere.

This guide explains how economic nexus works, highlights important state thresholds for 2026, and outlines practical steps for deciding when your business may need a sales tax permit. You can also explore James Baker & Associates for help understanding how state sales tax obligations fit into your broader US business tax responsibilities.

What Is Economic Nexus?

Economic nexus is a connection between a business and a state created by its economic activity, usually the amount or volume of sales delivered into that state. Unlike traditional physical nexus, economic nexus can apply even when a seller has no physical location there.

The modern framework developed following the US Supreme Court’s 2018 decision in South Dakota v. Wayfair, Inc. The decision allowed states to require qualifying remote sellers to collect and remit sales tax without requiring the seller to have a physical presence in the state.

For example, imagine an online retailer based outside the United States that sells $130,000 worth of products to customers in a state with a $100,000 economic nexus threshold. Depending on that state’s measurement period, sales definitions, and other rules, the retailer may have to register and collect tax even though it has no local office or staff.

Important: Economic nexus thresholds are not the only way to create a sales tax obligation. A business with inventory, employees, offices, or other qualifying activities in a state may have physical nexus before it reaches the state’s sales threshold.

Economic Nexus Thresholds by State in 2026

Many states use a $100,000 sales threshold, but several apply higher dollar amounts or retain transaction-count tests. The measurement period and types of sales counted can also differ.

The following table summarizes selected major state rules for remote sellers. It is a practical overview, not a complete substitute for each state’s current guidance.

Thresholds, included sales, and registration timing can change. Before acting, confirm the current rules with the relevant state tax agency. The examples below explain several important differences.

How Do Economic Nexus Rules Differ by State?

Although the $100,000 threshold is common, sellers should pay close attention to the details. States may use different measurement periods, count different categories of sales, and set different deadlines for registration and collection.

California: $500,000 in Sales

California generally applies a $500,000 economic nexus threshold to combined sales into the state. This higher threshold does not mean every seller can ignore California until reaching that amount: physical presence and other applicable rules may create an obligation earlier.

Businesses with large average order values should monitor California revenue regularly. A relatively small number of high-value transactions can bring a seller close to the threshold.

Texas: $500,000 in Texas Revenue

Texas provides a safe harbor for remote sellers whose total revenue from sales into Texas is less than $500,000 during the preceding 12 calendar months. The state’s calculation can include taxable and nontaxable sales, so the amount may be different from the seller’s taxable revenue alone.

Once your business no longer qualifies for the safe harbor, review Texas registration, collection, and filing requirements. Texas also has specific rules for sourcing local sales tax, which can affect how a remote seller calculates what to collect.

Florida: $100,000 in Remote Sales

Florida generally uses a $100,000 threshold for remote retail sales. Sellers should monitor sales delivered to Florida customers and separately assess whether their products are taxable. Reaching an economic nexus threshold and determining the tax treatment of an individual product are two different steps.

New York: Two Conditions Must Be Met

New York generally requires a remote seller to meet both of these conditions under its economic nexus test for sales of tangible personal property:

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  More than $500,000 in qualifying sales delivered into New York.

  
  


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  More than 100 qualifying sales during the immediately preceding four sales tax quarters.

  
  

Meeting only one condition does not satisfy this particular two-part test. Sellers should review New York’s current rules and registration timing before determining whether they must collect tax.

Michigan: Track Sales and Transactions

Michigan generally uses a $100,000 sales threshold or more than 200 transactions under its remote seller test. That means a business with many low-value orders could face a different result from a seller with fewer, higher-value orders.

Sellers operating in Michigan should monitor both measures rather than relying on revenue alone.

Washington: Pay Attention to Gross Receipts

Washington generally uses a threshold of more than $100,000 in relevant gross receipts. Marketplace transactions may also matter when determining whether a seller meets the state’s requirements. Washington’s tax system includes state and local considerations, so registration and reporting should be evaluated under the state’s current guidance.

Which Sales Count Toward an Economic Nexus Threshold?

One of the most common mistakes is assuming that only taxable sales count toward a state’s threshold. The answer depends on the state.

A state may use gross sales, retail sales, taxable sales, or another defined measure. Some states include exempt sales or sales for resale, while others apply a narrower calculation. Marketplace sales may also be included, excluded, or treated differently under specific rules.

Sales Tax Institute+1

When calculating your sales by state, review these categories:

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  Direct website sales: Orders completed through your own ecommerce store.

  
  


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  Marketplace sales: Orders processed through platforms such as Amazon, Etsy, or Walmart.

  
  


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  Exempt transactions: Sales that qualify for an exemption under state law.

  
  


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  Wholesale or resale transactions: Sales to buyers purchasing for resale, subject to applicable documentation and state definitions.

  
  


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  Refunds and adjustments: How returns, cancellations, and credits are treated in the threshold calculation.

  
  


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  Shipping and related charges: Whether these amounts are included depends on the relevant state rules.

  
  

Keep transaction-level records instead of relying only on the final taxable-sales total in your accounting software. This makes it easier to recalculate nexus if a state uses a broader measure of revenue.

Do Marketplace Sales Count Toward Economic Nexus?

Sometimes, yes. Marketplace facilitator laws generally make qualifying platforms responsible for collecting and remitting sales tax on covered marketplace transactions. However, the seller may still need to include marketplace sales when evaluating its own economic nexus status, depending on the state.

For example, a retailer may sell $65,000 through its own website and $50,000 through a marketplace in a state with a $100,000 threshold. If that state requires both categories to be included, the retailer could exceed the threshold even though its direct sales remain below $100,000.

This is why sellers should not assume that a marketplace’s tax collection removes the need to monitor total sales. The platform’s collection responsibilities and the seller’s nexus calculation are related but separate questions.

What Happens When You Cross an Economic Nexus Threshold?

Crossing a state’s threshold can create several compliance steps. The exact timing depends on that state’s law, so do not assume that every state requires registration immediately upon the transaction that pushes you over the limit.

A typical process includes:

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   Confirm the threshold. Verify the relevant sales amount, measurement period, and types of transactions included.

   
   


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   Determine the effective date. Check when the state requires you to register and begin collecting tax.

   
   


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   Apply for a sales tax permit. Complete registration with the appropriate state tax agency before collecting tax where required.

   
   


4. 
   

   Configure tax collection. Update your ecommerce platform or accounting system for the relevant destination and taxable products.

   
   


5. 
   

   File returns and remit tax. Follow the assigned filing frequency and payment deadlines.

   
   


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   Keep supporting records. Save sales reports, exemption certificates, marketplace reports, returns, and payment confirmations.

   
   

If you discover that your business crossed a threshold in a prior period, review the situation promptly. Registration timing, prior-period liability, and potential penalties depend on the state and the facts involved.

Physical Nexus Can Apply Before You Reach the Sales Threshold

Economic nexus is only one part of a state sales tax analysis. Physical presence or certain business activities can create nexus even when sales are relatively low.

Examples may include:

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  Storing inventory in a state, including through a third-party fulfillment provider.

  
  


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  Maintaining an office, shop, or other business location.

  
  


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  Having employees or representatives conducting qualifying activities in the state.

  
  


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  Performing activities that state law treats as creating a sales tax connection.

  
  

The details vary by jurisdiction. A business that uses fulfillment centers across several states should map its inventory locations and review whether those locations create registration obligations.

A Practical Economic Nexus Compliance Checklist

Use this checklist to establish a repeatable process for monitoring state obligations.

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  Export sales data from every sales channel.

  
  


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  Organize sales by customer destination state.

  
  


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  Review each state’s dollar threshold and transaction-count test.

  
  


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  Confirm the measurement period for each state.

  
  


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  Identify which sales categories count toward the threshold.

  
  


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  Include marketplace sales where required.

  
  


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  Review inventory, employee, and other physical-presence connections.

  
  


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  Record the date each threshold is reached.

  
  


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  Confirm the state’s registration and collection deadline.

  
  


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  Calendar filing and payment deadlines after registration.

  
  


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  Reassess the process when your sales channels or fulfillment arrangements change.

  
  

A monthly review is a useful starting point for growing online businesses. Businesses with rapidly increasing sales may need to monitor their figures more frequently, particularly when they are approaching a threshold.

Common Economic Nexus Mistakes

Remote sellers often make avoidable mistakes when tracking state sales tax obligations.

Using one threshold for every state. The $100,000 figure is common, but some states use higher amounts or transaction-count tests. Measurement periods differ as well.

Tracking only taxable revenue. A state may use a broader sales measure that includes certain exempt or nontaxable transactions.

Ignoring marketplace transactions. Marketplace-collected tax and the seller’s nexus calculation are separate questions.

Assuming registration is the only requirement. Once registered, a business may need to collect tax, file returns, remit payments, and maintain records—even for periods with little or no taxable activity, if a return is required.

Overlooking physical presence. Inventory and other qualifying business activities may create nexus before a sales threshold is reached.

Waiting until year-end. If a state uses a current-year or rolling measurement period, a seller may need to act before the year closes.

Frequently Asked Questions

What is the most common US economic nexus threshold?

A $100,000 sales threshold is common among states with statewide sales tax. However, several states use higher thresholds, and some also retain transaction-count tests. Always check the specific state’s rules.

Does economic nexus apply to businesses outside the United States?

Yes, it can. A business does not necessarily need to be located in the United States to create an economic nexus obligation through sales delivered to US customers. International sellers should also consider their entity structure, inventory locations, and other US tax obligations.

Do I need a sales tax permit before reaching the threshold?

Not necessarily on the basis of economic nexus alone, but physical presence or another legal requirement may create an earlier obligation. Some states also specify when registration and collection must begin after a threshold is met. Check the applicable state’s rules rather than waiting for a notice.

Do exempt sales count toward the threshold?

It depends on the state. Some states use gross sales or other broad measures, while others focus on taxable sales or a narrower category. Review the definition used by the relevant state.

If Amazon collects sales tax, do I still need to monitor nexus?

Yes. Marketplace sales may count toward a seller’s economic nexus threshold even when the marketplace collects and remits tax on covered transactions. Your own website sales and other channels should be reviewed separately.

What should I do if I discover that I exceeded a threshold last year?

Identify the state, the period in which the threshold was crossed, and the applicable registration and collection rules. Then review whether prior-period returns or tax payments may be required. Because the effective date and available options vary by state, consider getting professional guidance before filing.

Conclusion

Economic nexus thresholds determine when many remote sellers may need to register for sales tax in states where they have customers. Although $100,000 is a common benchmark, states can use different dollar amounts, transaction tests, measurement periods, and rules for counting marketplace or exempt sales.

The most reliable approach is to track sales by state, monitor physical presence, confirm the rules with each state tax agency, and establish a regular review process. These steps can help your business identify potential obligations before deadlines are missed.

For ecommerce founders, foreign-owned US businesses, and growing remote sellers, James Baker & Associates can help clarify how state sales tax responsibilities fit into your wider US tax compliance planning.