Sales tax nexus for online sellers: do you need to register in other states?
Before 2018, a seller with no store or staff in a state could ignore its sales tax. Today, a few thousand orders can make you a sales-tax collector in a state you have never visited. Here is how nexus works, where the thresholds sit in 11 major states, and a checker to see where you stand.
Sales tax is a state-and-local tax. There is no federal sales tax, no single national rulebook, and no “USA sales tax number”. Each state decides whether you must collect tax from its customers, and each decides on its own terms. The legal word for the connection that gives a state that power is nexus.
If you sell online — from your own website, Shopify, Amazon, Etsy, eBay or all of them — this is one of the few tax questions where growth itself creates the obligation. It is written on November 4, 2026, which matters: the holiday rush is exactly when sellers quietly cross thresholds.
2. Economic presence. No physical footprint, but your sales into the state pass a dollar and/or transaction threshold.
How we got here: Wayfair
For 26 years, Quill Corp. v. North Dakota (1992) said a state could make a business collect its sales tax only if the business had a physical presence there. In South Dakota v. Wayfair, Inc. (June 21, 2018; 585 U.S. 162), the Supreme Court held that “the physical presence rule of Quill is unsound and incorrect,” and overruled it.
The case involved a South Dakota law that applied to sellers delivering more than $100,000 of goods or services into the state or engaging in 200 or more separate transactions a year. The Court pointed to features that made the law reasonable: a safe harbour for sellers with limited South Dakota business, no retroactive application, and South Dakota’s membership of the Streamlined Sales and Use Tax Agreement. It also said that other Commerce Clause questions “have not yet been litigated or briefed.” In short: states may require out-of-state sellers to collect tax, but the Court did not publish a national threshold. States copied the South Dakota model, then adjusted it.
Wayfair didn’t remove physical nexus; it added to it. Where a business has a physical presence, it generally has to register and collect regardless of sales volume (Ohio’s Department of Taxation says so in terms). State lists differ, but they typically include:
- an office, store, warehouse, distribution site or other place of business — permanent or temporary;
- employees, agents, independent contractors or other representatives working in the state;
- owning, renting or leasing real or tangible property there;
- assembling, installing, servicing or repairing products in the state, or delivering goods in your own vehicle.
Florida’s and Illinois’s guidance both contain lists of this kind, and Illinois adds referral and commission contracts with Illinois residents that produced more than $10,000 of income in the prior year.
Economic nexus is created by sales alone. The thresholds, the measurement period and what counts as a “sale” all vary by state. Here are 11 large states as published by their revenue departments in November 2026:
| State | Threshold | Period |
|---|---|---|
| California | Over $500,000 (no transaction test) | Current or preceding calendar year |
| Texas | $500,000 in Texas revenue | Preceding 12 calendar months |
| New York | Over $500,000 and more than 100 sales | Preceding four sales tax quarters |
| Florida | Over $100,000 of taxable remote sales | Previous calendar year |
| Washington | More than $100,000 in gross receipts | Current or previous calendar year |
| Illinois | $100,000 or more (200-transaction test removed from Jan 1, 2026) | 12-month lookback |
| Pennsylvania | $100,000 in gross sales | Prior calendar year |
| Ohio | Over $100,000 or 200+ sales | Current or previous calendar year |
| New Jersey | Over $100,000 or 200+ transactions | Current or prior calendar year |
| Massachusetts | $100,000 (no transaction test) | Calendar year |
| Virginia | Over $100,000 or 200+ transactions | Previous or current calendar year |
Three things trip up sellers. First, the transaction tests are going away in many places: Illinois dropped its 200-transaction test on January 1, 2026, and California, Texas, Florida, Pennsylvania, Washington and Massachusetts use dollar tests only today. Second, what counts differs: Washington counts all gross receipts sourced there, including exempt sales; Texas counts taxable and nontaxable sales, including shipping and sales for resale; Florida counts taxable remote sales only. Third, the “current year” wording in several states means you can cross mid-year, not just at year-end.
Most states now have marketplace facilitator laws: the platform that processes the order (Amazon, Etsy, eBay and others) collects and remits the sales tax on sales it facilitates. In California, for instance, the facilitator is treated as the retailer for each facilitated sale. That is a relief, but not a complete exit:
- Sales through marketplaces often still count toward your threshold. California requires sellers to include marketplace-facilitated sales when testing the $500,000 threshold; New York and Washington count them too. Pennsylvania counts them differently depending on whether the seller or the facilitator has a physical presence.
- Direct sales are still yours. A California seller with sales outside a marketplace, or over the threshold, generally has to register, even if the marketplace collects on some of its sales. Texas, by contrast, says a remote seller whose only sales go through a marketplace that collects and reports the tax doesn’t need a Texas permit.
- Registered sellers still report all sales, marketplace ones included, usually deducting the facilitated sales as a separate line.
The safe summary: marketplace laws reduce what you collect, not what you have to know. If you sell on your own site as well, the direct sales need to be tracked by state.
When you cross a threshold, the clock starts. Some states publish a start date: in Washington, if you didn’t meet the threshold in the prior year, you must collect from the first day of the month that begins at least 30 days after you met it; in Texas, no later than the first day of the fourth month after the month in which you exceeded it. Check your state’s own rule.
- Register with the state’s revenue department (or through the Streamlined Sales Tax system where it applies).
- Collect the right rate. Many states also have local rates; Illinois, for example, taxes many remote sales by the buyer’s location and, from January 1, 2026, will assess 15% on destination-based sales where you don’t supply enough location information.
- File and remit on the schedule the state gives you — including nil returns where required.
- Handle exemptions properly. Keep exemption and resale certificates, or expect to owe tax on those sales.
What about sales you made after crossing but before registering? That is a liability, and states generally can pursue it. Many states offer voluntary disclosure programmes for exactly this situation, often with reduced penalties; the details vary and you should check before you register or contact the state.
Try it: the nexus checker
Pick a state, then enter your sales into it for the period the state measures. The checker compares them with that state’s published threshold and flags physical presence separately.
A practical plan for online sellers
I only sell on Amazon or Etsy. Do I need to do anything?
Possibly not for collection, because the marketplace collects and remits on facilitated sales. But sellers can still have registration and reporting duties: in California, sales through a marketplace count toward the $500,000 threshold, and sellers with direct sales or over the threshold generally need to register unless every California delivery is handled by a facilitator acting as the retailer. Check each state where you hold inventory or have direct sales.
What if I sell in a state without sales tax?
Delaware, Montana, New Hampshire and Oregon have no state sales tax, and Alaska has none at state level, though many Alaska localities levy their own. Those states don’t generate collection duties of the kind discussed here, but each state’s other business taxes are a separate question.
My customer didn’t pay tax to me. Do they owe it?
Usually, yes: where a seller doesn’t collect, the buyer generally owes use tax to the state. Massachusetts, for example, tells residents their online seller not collecting doesn’t mean they owe nothing. That doesn’t relieve a seller who should have collected, though.
Common mistakes
- Treating one threshold as national. $100,000 and 200 transactions was South Dakota’s law, not everyone’s. California and Texas are at $500,000, New York needs both $500,000 and 100 sales, and Illinois no longer has a transaction test.
- Forgetting physical presence. A few cartons in a state-based warehouse can create nexus at $0 of sales.
- Checking only last year. Several states test the current year as well.
- Assuming the marketplace has you covered. Direct sales are yours, and marketplace sales may count toward the threshold.
- Collecting without registering. Tax collected without a permit is a problem; register first, then collect.
- Ignoring the quiet months. A Q4 spike is the most common way sellers cross a threshold without noticing.