How economic nexus works after Wayfair
Since the Supreme Court's 2018 decision in South Dakota v. Wayfair, states can require a seller with no physical presence to collect sales tax once its sales into the state pass a threshold. Every state with a statewide sales tax now has an economic nexus rule. Alaska has no state sales tax, but many of its local jurisdictions enforce remote-seller rules through a shared commission. Delaware, Montana, New Hampshire and Oregon have no general sales tax.
The checker applies each state's threshold to the sales you enter, using that state's measurement period. It flags three outcomes: over the threshold, within 20% of it, and clearly under.
Thresholds the checker applies
Most states use $100,000 of sales in the current or prior calendar year. A few use higher dollar amounts, and a shrinking number also count transactions. Examples checked against state revenue departments on October 17, 2026:
| State | Threshold | Measurement period |
|---|---|---|
| California | $500,000 of tangible personal property sales | Current or prior calendar year |
| Texas | $500,000 of Texas revenue | Preceding 12 calendar months |
| New York | $500,000 and more than 100 sales | Preceding four sales tax quarters |
| Illinois | $100,000 (200-transaction test removed January 1, 2026) | 12-month lookback |
Utah also dropped its 200-transaction test, effective July 1, 2025, leaving $100,000 as its only trigger, and Alabama and Mississippi use $250,000. The trend is clear: transaction counts are being repealed because they forced small sellers with many low-value orders to register. The checker's state data is dated, and we update it when legislatures change thresholds.
What counts toward the threshold varies by state
Two sellers with identical revenue can have nexus in different states because states measure different things:
- Texas counts gross revenue from both taxable and nontaxable sales, including sales for resale and separately stated shipping and installation charges.
- California counts sales of tangible personal property for delivery into the state, including sales by related companies.
- New York requires both the dollar and the transaction test to be met.
- Some states count only retail sales and exclude exempt and wholesale sales; others count everything.
If you sell SaaS or digital products, also check taxability. A sale can count toward a threshold even in a state that does not tax the product, which can create a registration and filing requirement with little or no tax due.
Physical presence and marketplace sales
Economic nexus is in addition to physical presence, not a replacement. You have nexus in a state, regardless of sales volume, if you have:
- An office, warehouse or inventory there, including inventory held in a marketplace fulfillment center
- Employees working there, including remote employees
- Sales reps or contractors soliciting sales there in many states
Marketplace facilitator laws require platforms such as Amazon, Etsy and Walmart to collect tax on sales they facilitate. Whether those marketplace sales also count toward your own threshold depends on the state. Some exclude them, others include them, which means a seller with few direct sales can still need to register. The checker asks you to split direct and marketplace sales for that reason.
Worked example: an online seller in four states
A hypothetical seller of physical goods, with no employees or inventory outside its home state, has these sales for the past 12 months, all direct:
- Texas: $180,000. Under the $500,000 threshold. No Texas registration needed yet.
- Illinois: $120,000 across 150 orders. Over the $100,000 threshold. Register. (Before 2026, the 200-transaction test was an alternative trigger; now only dollars matter.)
- New York: $520,000 across 80 orders. Over $500,000 but not more than 100 sales, so both tests are not met and no registration is required.
- California: $460,000. Under $500,000, but within 20%, so the checker flags it to watch.
One state needs action now, one is close, and two do not. Add one Amazon FBA warehouse in California and the answer there changes immediately, because inventory is physical presence.
What to do once you cross a threshold
Register with the state's revenue department before you start collecting. Collecting tax without a permit is not allowed in most states. Texas, for example, requires remote sellers that pass $500,000 to obtain a permit and begin collecting no later than the first day of the fourth month after the month the threshold was crossed.
- Register for a sales tax permit and note your assigned filing frequency.
- Configure your checkout or billing system to collect the correct state and local rate.
- File returns on schedule, including zero returns.
- Review prior periods. If you crossed the threshold earlier and did not collect, ask about a voluntary disclosure agreement before the state contacts you.
The checker does not determine product taxability, local home-rule jurisdictions, or income tax nexus, which follows different rules. Use it as a first screen, not as tax advice for your specific facts.
Frequently asked questions
What triggers sales tax nexus?
Two things trigger sales tax nexus. Physical presence, such as an office, employees, or inventory in the state (including marketplace warehouses), creates nexus at any sales level. Economic nexus is triggered when your sales into a state pass its threshold, usually $100,000 a year, and $500,000 in states such as California, Texas and New York. Once triggered, you must register before collecting.
What are the economic nexus thresholds by state?
Most states set economic nexus at $100,000 of sales in the current or prior year. Alabama and Mississippi use $250,000. California and Texas use $500,000, and New York uses $500,000 plus more than 100 sales. Transaction-count tests are being repealed: Utah dropped its 200-transaction test in July 2025 and Illinois did so on January 1, 2026.
Do I need to collect sales tax in Illinois?
If you are a remote seller, you must register and collect Illinois tax once your cumulative gross receipts from sales of tangible personal property to Illinois purchasers reach $100,000 over the 12-month lookback period. Since January 1, 2026, the alternative 200-transaction test no longer applies. Sellers filling orders from Illinois inventory have nexus regardless of that threshold.
Do marketplace sales count toward economic nexus?
It depends on the state. Marketplace facilitators like Amazon collect and remit tax on the sales they facilitate, but some states still count those sales toward the seller's own threshold while others exclude them. If marketplace sales are included, you may need to register even when your direct sales are small. Check each state's rules or use a checker that separates direct from marketplace sales.
What happens if I passed a sales tax threshold and did not register?
You may owe the uncollected tax yourself, plus penalties and interest, for every period since you crossed the threshold. Most states offer voluntary disclosure agreements that limit the lookback period and waive some penalties if you come forward before the state contacts you. Register now, start collecting going forward, and quantify the back exposure before filing a disclosure.