What is sales tax nexus, and do you have it?
Sales tax nexus is a connection with a state strong enough that you have to register, collect and file sales tax there. You can create it with a physical presence, like an office, staff or inventory, or with economic activity, usually $100,000 of sales into the state.
Updated November 2026 · By Pankil Kumar, Managing Partner
Quick facts
- Physical nexus. Office, employees, inventory or a warehouse
- Economic nexus. Sales into a state above its threshold
- Since. South Dakota v. Wayfair allowed economic nexus
What creates physical nexus?
Having something in a state usually does it. Common triggers include an office or store, employees, inventory in a warehouse, and sometimes contractors or traveling salespeople. Inventory is the one that catches online sellers, because a fulfillment center can store your goods in a state you've never visited.
What is economic nexus?
Since the Supreme Court's 2018 South Dakota v. Wayfair decision, states can require remote sellers to collect sales tax based on sales alone. Almost every state with a sales tax now does this. The usual trigger is $100,000 in sales into the state over a year, and some states use a higher number. Here's how the thresholds work.
What happens once you have nexus?
- Check whether what you sell is taxable there.
- Register for a sales tax permit with the state.
- Start charging the right rate on taxable sales.
- File returns on the schedule the state assigns you.
- Keep exemption certificates for any tax-exempt sales.
Don't start collecting before you're registered. Charging sales tax without a permit causes its own problems.
How do you check if you have nexus?
Pull a report of your sales by state for the last two calendar years, showing both dollars and order counts. Then list everywhere you've got people, property or inventory. Compare the two lists to each state's rules on its revenue department's website. Check at least once a quarter if your online sales are growing.
What if you've had nexus for a while without knowing?
It's common. The exposure can go back years, and you might owe tax you never collected. Many states offer voluntary disclosure programs that limit how far back you pay and reduce penalties. Read what to do if you never collected sales tax.
Nexus for sales tax isn't the same as nexus for income tax, so crossing one line doesn't always mean crossing the other. Our sales tax service starts with a nexus check across your states.
Sources
- Supreme Court: South Dakota v. Wayfair
- Streamlined Sales Tax Governing Board
- 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 serviceDoes selling on Amazon create nexus?
Inventory in an Amazon warehouse can create physical nexus, though marketplace rules often make Amazon collect the tax on those sales.
Do I have nexus in a state if I just have a remote employee there?
Usually yes. A remote employee is a physical presence in most states.
Does nexus apply if I sell services?
It can, but many states don't tax most services, so check whether what you sell is taxable first.
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