Economic nexus thresholds: when you owe a state
Most states require sales tax registration once your sales into the state pass $100,000 in a year. A few set the line higher, and some still count 200 transactions too, though many dropped that test. What counts and which year you measure varies, so check each state's revenue site.
Updated November 2026 · By Pankil Kumar, Managing Partner
Quick facts
- Common line. About $100,000 of sales into the state
- Falling away. Many states have dropped the 200-transaction test
- Measured over. Often the current or previous calendar year
What does the threshold usually look like?
The most common rule is $100,000 in sales into the state during the current or previous calendar year. Some states used to add "or 200 separate transactions", which meant a $20 subscription business could trigger nexus with just $4,000 in sales.
That test is fading. Around 16 states had removed it by the start of 2026, including California, Colorado, Illinois, Massachusetts, North Carolina and Washington. A handful of states still apply it, and a few set the dollar line higher. Alabama, for example, uses $250,000. These rules keep changing, so treat any list as a starting point.
What counts toward the threshold?
This is where states differ.
- Some count all sales, including exempt and wholesale sales
- Some count only taxable sales
- Some exclude sales made through a marketplace
- Some count gross sales before returns
So you could cross the line in one state, and not in another with the same sales figure.
When do you have to start collecting?
Many states want you registered soon after you cross the threshold, some from the next transaction and others from the start of the following month or period. Don't wait until year end. A January check of last year's sales is too late if you crossed in June.
How do you track this?
Export sales by state for the current year and the two before it, including order counts. Keep it in a simple spreadsheet, and review it every quarter. Apps like TaxJar and Avalara can watch this for you, and your ecommerce platform may show it too. If you're near a line in a state, plan for it now.
What should you do when you cross one?
Confirm your products are taxable there, then register and start collecting. If you've already been over the line for a while, read what to do if you never collected first. Registering can draw attention to past periods, so sort out the order before you apply.
Sales through marketplaces like Amazon and Etsy follow their own rules, covered in sales tax for online sellers.
Sources
- Avalara: States eliminating economic nexus transaction thresholds
- Federation of Tax Administrators: State tax agencies
General information, not tax advice for your situation.
Selling in more than one state?
We check where you owe and file the returns.
See our sales tax serviceIs the $100,000 threshold the same in every state?
No. It's the most common, but some states set it higher and the details vary, so check each state you sell into.
Do I count sales tax-exempt orders toward nexus?
In some states, yes. Exempt and wholesale sales often count, so check the state's rule.
How often do thresholds change?
Regularly. Several states changed their rules in 2025 and 2026, so review them at least once a year.
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