U.S. Sales Tax Nexus: Which States You Actually Owe

Physical Nexus vs Economic Nexus: Two Different Triggers

Nexus can be triggered two ways, and they operate independently. Satisfy either one and the state can expect you to register, collect, and remit.

Physical nexus: a foothold in the state

Any physical tie to a state creates nexus, regardless of how much you sell there. Common examples:

• An office, store, or warehouse located in the state
• Inventory stored in an Amazon FBA warehouse in the state (FBA stock is often spread across several states)
• Employees or contractors working in the state
• Attending a trade show, pop-up, or event inside the state, which can create nexus even for short stays in some states

Economic nexus: sales volume alone

Since the 2018 Supreme Court case South Dakota v. Wayfair, states can require remote sellers with no physical footprint to collect sales tax once they cross a volume threshold. Each state sets its own line. Most fall into one of these ranges.

* Alaska has no state-level sales tax but many boroughs and cities do. Figures current as of April 2026; states adjust thresholds over time, so verify before registering.

A Decision Tree for Remote Sellers

If you run the business from Korea or Canada and ship across the U.S. online, walk each state through this sequence.

1. Does the state have sales tax? If you ship only to Oregon, Montana, Delaware, or New Hampshire, stop here.
2. Do you have physical nexus? Check whether FBA stock sits in a warehouse there or a remote worker lives there. If yes, proceed regardless of volume.
3. Have you crossed the economic threshold? Measure sales to that state over the trailing 12 months or previous calendar year. Under the line, no obligation today. Over or approaching, start the registration clock.
4. Is a marketplace collecting for you? Amazon, Etsy, eBay, and similar marketplaces usually collect and remit. Only direct-website sales or invoiced sales remain on you.
5. Register with the state's Department of Revenue Register online, start collecting under the assigned sales tax permit, and file on the state's cadence: monthly, quarterly, or annually.

Marketplace Facilitator Laws: Why the Burden Is Smaller in Practice

Since 2018, nearly every state has passed a Marketplace Facilitator law, shifting the collection duty onto the platform. For a seller shipping exclusively through Amazon, the practical registration burden in many states falls to zero. A few caveats.

• Your own website is separate: Shopify is treated differently by state. In some states Shopify collects, in others the seller is responsible. Check your Shopify Tax Settings panel for your exposure.
• Registration may still be required: Even when the platform collects, some states still require the seller to register and file zero-dollar returns on their own account.
• Split-channel sellers track separately: If you sell on Amazon and your own site, track each channel separately. Economic nexus must be calculated on the seller-responsible portion, not the combined figure.

Common Traps: SaaS, Digital Goods, and Services

Tangible goods are not the whole picture. Each state draws its own line on software, digital products, and services, and the differences are often surprising.

• SaaS: Taxable in about 20 states including Texas, New York, Washington, Pennsylvania, Massachusetts, and Connecticut. Not taxable in California, Virginia, or Oregon, among others.
• Downloadable digital goods: Ebooks, music, and photo files turn on whether the state lists "digital products" as taxable. Over 30 states do.
• Professional services: Consulting, marketing, and design services are non-taxable in most states, but Hawaii, New Mexico, South Dakota, and West Virginia tax them.
• Bundled transactions: If a single invoice bundles a taxable product with a non-taxable service, some states tax the whole line. Splitting the invoice line by line is the safer habit.

After You Register: Collect, File, Remit

Once you have registered in a state, the ongoing rhythm looks the same everywhere, even if the specifics vary.

1. Collect: Charge the combined state and local rate at checkout. Rates differ within the same state by city. Shopify Tax, Stripe Tax, and TaxJar can calculate automatically.
2. File: File on the cadence the state assigned: monthly, quarterly, or annually. Most states require a zero return even in months with no sales.
3. Remit: Pay the collected tax along with the return. Treat it as money you hold in trust for the state, not revenue. Keeping it in a separate account prevents accidentally spending it.
4. Use automation early: Three to four state obligations tend to be the point where manual filing stops being worth the time. TaxJar (from $19/month), Avalara, and Stripe Tax automate multi-state filings.

If You've Already Crossed the Line

It is common to discover that you passed a state's threshold months or years ago without registering. Two things to check first.

• If a marketplace has been collecting on your platform sales under the state's Facilitator law, your direct exposure shrinks to the self-channel portion.
• Coming forward through a Voluntary Disclosure Agreement before the state contacts you often caps the look-back period at three or four years and waives penalties.

When the numbers get complicated, a U.S. tax specialist can line up the VDA strategy and the forward-looking registrations in one pass.

Frequently Asked Questions