Sales tax nexus by state in 2026: the complete threshold guide

Seven years after South Dakota v. Wayfair, sales tax nexus is not a grey area. It is a wall of separate thresholds, one per state, each measured against your sales into that state alone. Your national revenue number tells you nothing about where you owe.

This is the complete reference: how physical and economic nexus differ, every state's dollar test and transaction test, what actually counts toward the number, what a marketplace collecting on your behalf does and does not do for you, and what to do if you have already crossed a line and not registered.

Two kinds of nexus, and one of them overrides everything

That first column is the one that ambushes growing sellers. If Amazon moves your inventory into a fulfilment centre in a new state, or you switch 3PLs, you can acquire physical nexus in a state where you have sold almost nothing. No threshold protects you there.

The 2026 landscape in one number

Forty-five jurisdictions enforce economic nexus - the 45 states with a sales tax plus the District of Columbia. Four states have no statewide sales tax at all: New Hampshire, Oregon, Montana and Delaware. Alaska is the asterisk: no statewide tax, but local jurisdictions enforce against remote sellers through the Alaska Remote Seller Sales Tax Commission.

Note the logic column carefully in the full table. Almost every dual-test state uses OR, meaning either condition alone pulls you in. Only two states use AND: New York needs $500,000 and more than 100 transactions, and Connecticut needs $100,000 and 200 transactions. An AND test is far harder to trip, which is why the two are genuinely different from everyone else.

One federal statute is worth naming here precisely because sellers rely on it and it does not apply. Public Law 86-272, codified at 15 U.S.C. section 381, prevents a state from imposing a net income tax where the seller's only in-state activity is soliciting orders for tangible personal property that are approved and shipped from outside the state. It says nothing about sales tax. A seller can therefore be fully protected from a state's income tax and still owe that state's sales tax on the same transactions — and after Wayfair, on transactions with no physical presence behind them at all. Treating 86-272 as general protection is the single most common way a nexus review reaches the wrong answer.

The transaction test is the one that hurts

The dollar test is intuitive. The 200-transaction test is not, because it ignores revenue completely. In a state with a $100,000 or 200-transaction test, a seller with a $25 average order crosses into nexus at $5,000 of sales into that state. Not $100,000. Five thousand.

If you sell low-priced consumables, supplements, socks, prints or accessories, you almost certainly have nexus in more states than you think, and none of it shows up in a national revenue figure. A brand doing $2 million nationally at a $25 average order can have economic nexus in a dozen or more states purely on order count.

Every state's threshold

Compare your sales into each state against both tests. The logic column tells you whether crossing one is enough.

What actually counts toward the number

Three rules decide what you measure, and each of them varies by state.

• Gross, retail, or taxable? Some states count gross sales including exempt and wholesale transactions; others count only retail or only taxable sales. Illinois, for example, counts gross receipts, so exempt items still push you toward the line. Measuring against gross is the safe default.
• Which window? Most states look at the current or the immediately preceding calendar year. Some look only at the prior year (Alabama, Florida, Iowa, Pennsylvania, Rhode Island). A few use a rolling or unusual period - Illinois uses the preceding 12 months, Connecticut the 12 months ending 30 September, New York the preceding four tax quarters. A strong fourth quarter can create nexus that carries into the following year even after sales normalise.
• Do marketplace sales count? In most states, yes - your Amazon and Walmart sales count toward your own seller threshold even though the marketplace collects the tax. A minority exclude them, including Arizona, Alabama, Louisiana, Maine, Massachusetts, Mississippi and Oklahoma.

That last point produces the most common surprise in California. At $500,000 the threshold looks generous, but California counts marketplace-facilitated sales toward it. $300,000 through your own store plus $250,000 through Amazon puts you over, even though neither channel would on its own.

What a marketplace collecting actually does for you

Every state with a sales tax now has marketplace facilitator laws, which shift the duty to collect and remit onto Amazon, Walmart, Etsy or eBay for sales made through them. This is genuinely helpful and it is routinely over-read.

Several states still expect a registered seller to file a return reporting marketplace sales as exempt, even where nothing is owed. A zero return is still a return, and not filing it is still a failure to file.

The monthly review that keeps you ahead of it

This is a monitoring problem, not a one-off project. Thirty minutes a month prevents the entire failure mode.

Once you have crossed: what registration involves

Most states give you a window - commonly 30 to 90 days from crossing - before you must be collecting. Use it.

If you have already crossed and never registered

This is common and it is fixable, but the route you take matters enormously.

1. Quantify first. Work out, per state, when you crossed and roughly what tax would have been collected since. You cannot make a sensible decision without that number.
2. Consider a voluntary disclosure agreement. Most states offer one. A VDA typically caps the lookback period at three or four years and waives penalties, in exchange for coming forward before the state contacts you.
3. The timing is the whole point. A VDA is available before a state finds you, not after. Once a nexus questionnaire or assessment letter arrives, that door closes and the lookback can run to the day you first had nexus.
4. Register prospectively where exposure is small. For a state where you crossed last month, simply registering and starting to collect is usually proportionate.
5. Decide who absorbs the back tax. You cannot realistically go back to customers for tax you did not charge, so historic exposure comes out of your own margin. That is what makes early registration so much cheaper than late.

One further reason to clean this up while you are small: buyers re-run the nexus analysis in diligence. Unregistered states with years of unremitted tax come straight off the purchase price, and they are one of the most common findings in a quality-of-earnings review.

The mistakes that create liability

1. Thinking in national revenue. Nexus is measured per state. A $2 million business can owe in twenty states or two.
2. Watching only the dollar test. The transaction count catches low-price sellers years earlier.
3. Using billing address instead of ship-to. The thresholds key off where the goods went.
4. Assuming Amazon collecting means you are covered. It covers marketplace sales only, and in most states those sales still count toward your threshold.
5. Forgetting inventory. A 3PL or FBA warehouse creates physical nexus regardless of revenue.
6. Ignoring exemption certificates. Undocumented exempt sales get reclassified as taxable in an audit.
7. Skipping zero returns. Once registered, you file whether or not you owe.
8. Waiting for a letter. The letter is what closes the cheap route.

Related guides: Registering and filing sales tax returns, Inventory and cost of goods sold and Multi-currency bookkeeping.

Sources

This guide is written against the official and clearly labelled professional references below. Rates, thresholds and portal procedures change between reviews, so open the primary source before relying on a figure.

• Businesses (Internal Revenue Service)
• Recordkeeping (IRS)

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