Economic Nexus: State-by-State Handbook for 2026
Economic Nexus: State-by-State Handbook for 2026
Learn how economic nexus works, which states require remote sellers to collect sales tax, and the thresholds that trigger registration and compliance.
Published: July 7, 2026
Since the landmark 2018 Supreme Court case South Dakota v. Wayfair, Inc., nearly every state that imposes sales tax has adopted economic nexus laws. These laws are primarily enacted and enforced at the state level, but in some home rule states, certain counties, cities, and other local jurisdictions also have their own economic nexus thresholds and requirements.
If you sell a product or service — online, from a brick-and-mortar store, or some combination of both — sales tax compliance has far-reaching consequences for your business. Failing to collect and remit sales tax where and when you’re legally required to do so can result in significant fines and penalties, reputational damage, and even legal trouble.
What is economic nexus?
If a business has economic nexus in a particular state, it means that it conducts enough business there that it’s legally obligated to collect state sales tax.
Each state sets its own threshold for what constitutes “enough business,” which can make sales tax compliance tricky for e-commerce brands, online sellers, and companie that provide software as a service (SaaS).
How economic nexus works
States typically use one or both of two thresholds when determining economic nexus:
- Transaction volume: A company surpasses a certain threshold of annual transactions in a state — the most common is 200 retail sales.
- Annual revenue: A company takes in more than a certain amount of annual revenue in a state — the most common threshold is $100,000.
It’s important to note that economic nexus is not retroactive. In other words, once you’ve established economic nexus in a state, you have to collect sales tax only on retail sales made from that point forward. (However, if you fail to collect and remit taxes you are obliged to, states can require payment of those back taxes, along with interest and penalties.)
Why threshold monitoring is critical for businesses
States are highly motivated to adopt and enforce economic nexus laws, which came into place because states wanted to ensure that businesses contributed their fair share to local economies.
If your business is found to be in violation of sales tax laws, you could face a number of consequences, including:
- Penalties and interest charges: Depending on the severity of the violation, you could be subjected to significant fines and interest on unpaid taxes.
- Having to pay back taxes: You’ll have to pay back taxes, which can be a sizable financial burden and limit your free cash flow.
- A tax authority lawsuit: You could become embroiled in a state-level legal dispute, or even be sued by a state tax authority.
How to determine whether you have economic nexus
For e-commerce businesses and remote sellers, tracking economic nexus can be challenging. With each state setting its own requirements, it’s often hard to know where you’re about to establish nexus, and even harder to factor that into your financial planning.
| State | Threshold | Do Exempt Sales Count in Establishing Nexus? | Do Marketplace Sales Count Toward Marketplace Facilitator Calculation? | Evaluation Period |
|---|---|---|---|---|
| Alabama | $250,000 in sales | Yes | Yes | Previous calendar year |
| Alaska | No statewide sales tax (though some Alaskan jurisdictions do have sales tax) | N/A | N/A | N/A |
| Arizona | $100,000 in sales | Yes | Yes | Current or previous calendar year |
| Arkansas | $100,000 or 200 transactions | Yes | Yes | Current or previous calendar year |
| California | $500,000 in sales | Yes | Yes | Current or previous calendar year |
| Colorado | $100,000 in sales | Yes | Yes | Current or previous calendar year |
| Connecticut | $100,000 in sales and 200 transactions | Yes | Yes | The 12 months preceding September 30 each year |
| Delaware | No sales tax | N/A | N/A | N/A |
| Florida | $100,000 in sales | Yes | Yes | Previous calendar year |
| Georgia | $100,000 in sales or 200 transactions | Yes | Yes | Current or previous calendar year |
| Hawaii | $100,000 in sales or 200 transactions | Yes | Yes | Current or previous calendar year |
| Idaho | $100,000 in sales | Yes | Yes | Current or previous calendar year |
| Illinois | $100,000 in sales (transaction-based threshold eliminated on Jan. 1, 2026) | Yes | Yes | Preceding 12 months |
| Indiana | $100,000 in sales | Yes | Yes | Current or previous calendar year |
| Iowa | $100,000 in sales | Yes | Yes | Current or previous calendar year |
| Kansas | $100,000 in sales | Yes | Yes | Current or previous calendar year |
| Kentucky | $100,000 in sales or 200 transactions | Yes | Yes | Current or previous calendar year |
| Louisiana | $100,000 in sales | Yes | Yes | Current or previous calendar year |
| Maine | $100,000 in sales | Yes | Yes | Current or previous calendar year |
| Maryland | $100,000 in sales or 200 transactions | Yes | Yes | Current or previous calendar year |
| Massachusetts | $100,000 in sales | Yes | Yes | Previous calendar year |
| Michigan | $100,000 in sales or 200 transactions | Yes | Yes | Current or previous calendar year |
| Minnesota | $100,000 in sales or 200 transactions | Yes | Yes | Preceding 12-month period |
| Mississippi | $250,000 in sales | Yes | Yes | Preceding 12-month period |
| Missouri | $100,000 in sales | Yes | Yes | Current or previous calendar year |
| Nebraska | $100,000 in sales or 200 transactions | Yes | Yes | Current or previous calendar year |
| Nevada | $100,000 in sales or 200 transactions | Yes | Yes | Current or previous calendar year |
| New Jersey | $100,000 in sales or 200 transactions | Yes | Yes | Current or previous calendar year |
| New Mexico | $100,000 in sales | Yes | Yes | Current or previous calendar year |
| New York | $500,000 in sales and 100 transactions | Yes | Yes | Preceding four tax-year quarters |
| North Carolina | $100,000 in sales | Yes | Yes | Current or previous calendar year |
| North Dakota | $100,000 in sales | Yes | Yes | Current or previous calendar year |
| Ohio | $100,000 in sales or 200 transactions | Yes | Yes | Previous calendar year |
| Oklahoma | $100,000 in sales | Yes | Yes | Current or previous calendar year |
| Pennsylvania | $100,000 in sales | Yes | Yes | Previous calendar year |
| Rhode Island | $100,000 in sales or 200 transactions | Yes | Yes | Previous calendar year |
| South Carolina | $100,000 in sales | Yes | Yes | Current or previous calendar year |
| South Dakota | $100,000 in sales | Yes | Yes | Current or previous calendar year |
| Tennessee | $100,000 in sales | Yes | Yes | Preceding 12-month period |
| Texas | $500,000 in sales | Yes | Yes | Preceding 12-month period |
| Utah | $100,000 in sales | Yes | Yes | Current or previous calendar year |
| Vermont | $100,000 or 200 transactions | Yes | Yes | Preceding 12-month period |
| Virginia | $100,000 in sales or 200 transactions | Yes | Yes | Current or previous calendar year |
| Washington | $100,000 in sales | Yes | Yes | Current or previous calendar year |
| West Virginia | $100,000 in sales or 200 transactions | Yes | Yes | Current or previous calendar year |
| Wisconsin | $100,000 in sales | Yes | Yes | Current or previous calendar year |
| Wyoming | $100,000 in sales | Yes | Yes | Current or previous calendar year |
Final thoughts
Understanding, tracking, and proactively managing economic nexus is essential for businesses. States are deeply invested in enforcing these laws, and violations can result in steep penalties, reputational damage, and even legal action.
As a business owner, you need to monitor your tax obligations proactively, and that means selecting the right tools.