Sales Tax Economic Nexus

In the post-Wayfair era, where physical presence is no longer required to be subject to a state’s sales tax, states continue to enact sales tax economic nexus provisions for remote sellers. If you are a business selling goods into multiple states, it is important for you to keep track of your sales and transactions by state, so that once you exceed a state’s annual economic nexus threshold, you can timely register and begin to collect and remit sales tax.

Economic Nexus Requirements by State

NOTE: Though we believe this information to be correct as of November 15, 2020, we do not guarantee its accuracy. Check with a tax professional before taking action.
StateAnnual Sales ThresholdAnd/OrAnnual Transaction # Threshold
Alabama$250,000  
Alaska (local jurisdictions only)$100,000Or200
Arizona$150,000 for 2020
$100,000 for 2021
  
Arkansas$100,000Or200
California$500,000  
Colorado$100,000  
Connecticut$100,000And200
Georgia$100,000Or200
Hawaii$100,000Or200
Idaho$100,000  
Illinois$100,000Or200
Indiana$100,000Or200
Iowa$100,000  
Kansas1   
Kentucky$100,000Or200
Louisiana$100,000Or200
Maine$100,000Or200
Massachusetts$100,000  
Maryland$100,000Or200
Michigan$100,000Or200
Minnesota$100,000Or200
Mississippi$250,000  
Nebraska$100,000Or200
Nevada$100,000Or200
New Jersey$100,000Or200
New Mexico$100,000  
New York$500,000And100
North Carolina$100,000Or200
North Dakota$100,000  
Ohio$100,000Or200
Oklahoma$100,000  
Pennsylvania$100,000  
Puerto Rico$50,000Or200
Rhode Island$100,000Or200
South Carolina$100,000  
South Dakota$100,000Or200
Tennessee$100,000  
Texas$500,000  
Utah$100,000Or200
Vermont$100,000Or200
Virginia$100,000Or200
Washington$100,000  
Washington, D.C.$100,000Or200
West Virginia$100,000Or200
Wisconsin$100,000Or200
Wyoming$100,000Or200

To learn more about the tax implications of the South Dakota v. Wayfair Inc. decision, you can read Supreme Court Decision Allows States to Impose Sales Tax on Online Retailers.

If you have any questions regarding sales tax exposure or multistate economic nexus rules, our state and local tax team would be glad to help you.

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Footnotes
  1. Kansas has not adopted a sales/use tax economic nexus provision. However, the Kansas Department of Revenue takes the position that a remote seller with no physical presence in Kansas is required to collect and remit applicable sales/use tax on sales delivered to Kansas, as provided under the Constitution and the laws of the United States. A conservative approach is to apply the Wayfair economic nexus standard to determine Kansas nexus, following the $100,000 annual revenue or 200 annual transactions thresholds.
Melody Haddad
Melody Haddad

Melody Haddad is a Tax Manager for BeachFleischman PC. She specializes in state and local sales and income tax planning and represents clients in state and local tax audits and protests.