Sales Tax by State: Economic Nexus State Guide

If you sell products or services online, you’re likely familiar with the term Economic Nexus.

And if not – don’t worry, “economic nexus” is essentially just a fancy way of saying that:

A business must have a presence in a state in order to collect sales tax there.

What Is an Economic Nexus?

The term was first defined after the Quill v. North Dakota supreme court case but was overturned after the supreme court ruling in the South Dakota vs. Wayfair court case.

So now, a business must have a significant economic presence in a state to collect sales tax.

That means, they do not necessarily have to have a physical presence there. They just need to make a certain amount of money from customers in that state to have a significant “economic presence”.

While it may sound straightforward, it isn’t always. The latter court ruling now means that every state can create its own thresholds for what economic nexus is.

While one state may say that you only need to make $10,000 in sales in their state to have economic nexus, another may set theirs at $500,000, and another may not have one.

And it’s equally important for business owners to understand how to fill out the Uniform Sales & Use Tax Resale Certificate.

So how are you supposed to know? We’ve laid everything out in the list below, so make sure you bookmark this page!

To find a specific state, just press Ctrl/Command + F and type in the state you need.

(All information is correct as of November 2024)

Economic Nexus State Guide

Alabama 

If you’re planning to form your LLC in Alabama, understanding the state’s economic nexus rules is a must to stay on top of your tax obligations.

Threshold	Measured From
$250,000 + some specified activities	Previous calendar year

Includable Sales: All retail sales, not including Marketplace sales.

When To Register: By January 1 of the year after you reach the threshold.

Alaska

Thinking about starting your LLC in Alaska? Get familiar with the state’s economic nexus rules to stay compliant.

Threshold	Measured From
$100,000 or 200 transactions	Previous calendar year

Includable Sales: Gross sales, not including Marketplace sales.

When To Register: The first day of the month after 30 days of being adopted by a city or borough.

Arizona 

Before you form your LLC in Arizona, make sure you’re clear on its tax obligations.

Threshold	Measured From
$100,000	Previous or current calendar year

Includable Sales: Gross sales, not including Marketplace sales.

When To Register: When you meet the threshold you must obtain a TPT license.

Arkansas 

If you’re planning to create your LLC in Arkansas, understanding the state’s economic nexus rules is the first big step.

Threshold	Measured From
$100,000 or 200 transactions	Previous or current calendar year

Includable Sales: Taxable sales, not including Marketplace sales.

When To Register: The next transaction (so as soon as possible).

California 

Thinking of launching your LLC in California? Take stock of the state’s economic nexus information first.

Threshold	Measured From
$500,000	Previous or current calendar year

Includable Sales: Gross sales of tangible personal property, including Marketplace sales.

When To Register: The same day you exceed the threshold.

Colorado 

Business owners looking to form an LLC in Colorado should get familiar with the state’s economic nexus rules.

Threshold	Measured From
$100,000	Previous or current calendar year

Includable Sales: Retail sales, not including Marketplace sales.

When To Register: Within 90 days.

Connecticut 

About to start your LLC in Connecticut? Here’s what you need to know about economic nexus and taxes.

Threshold	Measured From
$100,000 and 200 transactions	12 month period to 30 September

Includable Sales: Retail sales, including Marketplace sales.

When To Register: By October 1 of the year you cross the threshold.

Delaware 

Before you form your LLC in Delaware, let’s simplify the state’s economic nexus guidelines.

Threshold	Measured From
No sales tax	N/A

Includable Sales: N/A

When To Register: N/A

District of Columbia 

Here are the state economic nexus guidelines for the District of Columbia.

Threshold	Measured From
$100,000 or 200 transactions	Previous or current calendar year

Includable Sales: Retail sales, including Marketplace sales

When To Register: Next transaction

Florida 

If you’re looking to start an LLC in Florida, consider the following economic nexus rules to ensure compliance.

Threshold	Measured From
$100,000	Previous calendar year

Includable Sales: Taxable sales, not including Marketplace sales

When To Register: Next transaction

Georgia 

Small business owners eyeing Georgia for LLC formation need to stay informed of the following guidelines:

Threshold	Measured From
$100,000 or 200 transactions	Previous or current calendar year

Includable Sales: Retail sales, not including Marketplace sales

When To Register: Next transaction

Hawaii 

Before you form your LLC in Hawaii, make sure you’re clear on its tax obligations.

Threshold	Measured From
$100,000 or 200 transactions	Current calendar year

Includable Sales: Gross sales, including Marketplace sales

When To Register: The month following when you meet the threshold

Idaho 

Looking to start an LLC in Idaho? Prioritize the tax and compliance aspects first.

Threshold	Measured From
$100,000	Previous or current calendar year

Includable Sales: Gross sales, including Marketplace sales

When To Register: Next transaction

Illinois 

Are you launching an LLC in Illinois? Understanding economic nexus is your first big step toward compliance.

Threshold	Measured From
$100,000 or 200 transactions	12-month preceding period

Includable Sales: Retail sales, not including Marketplace sales

When To Register: When you believe you meet the criteria for the past 12 months

Indiana 

Starting an LLC in Indiana? Economic nexus regulations are your roadmap to accurate tax filing.

Threshold	Measured From
$100,000 or 200 transactions	Previous or current calendar year

Includable Sales: Gross sales, not including Marketplace sales

When To Register: As soon as possible

Iowa 

Here’s what you need to consider before planning to launch your LLC in Iowa.

Threshold	Measured From
$100,000	Previous or current calendar year

Includable Sales: Gross sales, including Marketplace sales

When To Register: Within 30 days

Kansas 

Setting up an LLC in Kansas? Make sure you’re aware of the latest economic nexus regulations first.

Threshold	Measured From
$100,000	Previous or current calendar year

Includable Sales: Gross sales, including Marketplace sales (latter is gross sales)

When To Register: Next transaction

Kentucky 

If you’re a small business owner thinking of forming an LLC in Kentucky, now’s the time to learn everything about the economic nexus regulations in the state.

Threshold	Measured From
$100,000 or 200 transactions	Previous or current calendar year

Includable Sales: Gross sales, including Marketplace sales

When To Register: Within 60 days

Louisiana 

Starting an LLC in Louisiana gets easier if you stay current with the latest regulations.

Threshold	Measured From
$100,000 or 200 transactions	Previous or current calendar year

Includable Sales: Gross sales, not including Marketplace sales

When To Register: Within 30 days

Maine 

Launching an LLC in Maine? Here’s what you need to know first.

Threshold	Measured From
$100,000	Previous or current calendar year

Includable Sales: Gross sales, not including Marketplace sales

When To Register: Next transaction

Maryland 

If you’re planning to form your LLC in Maryland, understanding the state’s economic nexus rules is a must to stay on top of your tax obligations.

Threshold	Measured From
$100,000 or 200 transactions	Previous or current calendar year

Includable Sales: Gross sales, including Marketplace sales

When To Register: First day of next month

Massachusetts

Thinking of launching your LLC in Massachusetts? Ensure compliance as you get started.

Threshold	Measured From
$100,000	Previous or current calendar year

Includable Sales: Gross sales, not including Marketplace sales

When To Register: By 1 January of the following year, though you have an additional 2 months if you exceed it between November and December

Minnesota 

Before forming your LLC in Minnesota, consider the following compliance aspects:

Threshold	Measured From
$100,000 or 200 transactions	12-month period ending ending on the last day of the previous quarter

Includable Sales: Retail sales, including Marketplace sales

When To Register: Within 60 days

Mississippi 

Are you launching an LLC in Mississippi? Understanding economic nexus is your first big step toward compliance.

Threshold	Measured From
$250,000	Previous 12 month period

Includable Sales: Gross sales, not including Marketplace sales

When To Register: As soon as possible

Missouri 

If you’re interested in starting an LLC in Missouri, let’s get you started with the basics of economic nexus and regulations.

Threshold	Measured From
$100,000	Previous 12 month period

Includable Sales: Taxable sales

When To Register: Within 90 days of the preceding quarter ending

Montana

LLC formation in Montana is relatively simpler and here’s what you should know:

Threshold	Measured From
No sales tax	N/A

Includable Sales: n/a

When To Register: n/a

Nebraska 

Want to launch an LLC in Nebraska? Understanding economic nexus is your first big step.

Threshold	Measured From
$100,000 or 200 transactions	Previous or current calendar year

Includable Sales: Retail sales, including Marketplace sales

When To Register: By the end of the calendar month

Nevada

Get started with an LLC in Nevada today and learn more about the state’s regulations.

Threshold	Measured From
$100,000 or 200 transactions	Previous or current calendar year

Includable Sales: Retail sales, including Marketplace sales

When To Register: within 30 days

New Hampshire 

If you want to form an LLC in New Hampshire, here’s what you should know.

Threshold	Measured From
No sales tax	N/A

Includable Sales: N/A

When To Register: N/A

New Jersey 

Setting up an LLC in New Jersey? Make sure you’re aware of the latest economic nexus regulations from day one.

Threshold	Measured From
$100,000 or 200 transactions	Previous or current calendar year

Includable Sales: Gross sales, including Marketplace sales

When To Register: As soon as possible

New Mexico 

Forming an LLC in New Mexico gets convenient if you’re compliant from the beginning.

Threshold	Measured From
$100,000	Previous calendar year

Includable Sales: Taxable sales, not including Marketplace sales.

When To Register: By January 1st of following year.

New York

If you want to form an LLC in New York, here’s what you should know first.

Threshold	Measured From
$500,000 of tangible personal goods and 100 transactions	12 months previous

Includable Sales: Gross sales, including Marketplace sales

When To Register: Register within 30 days, start collecting tax within 20 days thereafter

North Carolina 

Small business owners eyeing North Carolina for LLC formation should know the following:

Threshold	Measured From
$500,000 or 200 transactions	Previous or current calendar year

Includable Sales: Gross sales, including Marketplace sales

When To Register: Within 60 days

North Dakota 

Simplify your North Dakota LLC formation with a clear overview of the state’s economic nexus regulations.

Threshold	Measured From
$100,000	Previous or current calendar year

Includable Sales: Taxable sales, not including Marketplace sales

When To Register: Within 60 days or the end of the calendar year

Ohio

Looking to form an LLC in Ohio? Get started right here.

Threshold	Measured From
$500,000	Previous or current calendar year

Includable Sales: Retail sales, including Marketplace sales

When To Register: As soon as possible

Oklahoma 

Setting up an LLC in Oklahoma? Stay informed about the state’s economic nexus rules.

Threshold	Measured From
$100,000 in aggregate sales of TPP	Previous or current calendar year

Includable Sales: Taxable sales, not including Marketplace sales

When To Register: By the first of the following month

Oregon 

Thinking about starting your LLC in Oregon? Get familiar with the state’s economic nexus rules to stay compliant.

Threshold	Measured From
No sales tax	N/A

Includable Sales: n/a

When To Register: n/a

Pennsylvania

Building an LLC in Pennsylvania? Don’t overlook the state’s crucial tax rules.

Threshold	Measured From
$100,000	Previous financial year

Includable Sales: Gross sales, including Marketplace sales

When To Register: By April 1 of following year

Rhode Island 

Starting an LLC in Rhode Island? Tax compliance begins with understanding nexus rules.

Threshold	Measured From
$100,000 or 200 transactions	Previous financial year

Includable Sales: Gross sales, including Marketplace sales

When To Register: By January 1 of following year

South Carolina 

LLC formation in South Carolina comes with responsibilities—economic nexus is one of them.

Threshold	Measured From
$100,000	Previous or current calendar year

Includable Sales: Gross sales, including Marketplace sales

When To Register: Within 30 days

South Dakota 

Looking to form an LLC in South Dakota? Get started right here.

Threshold	Measured From
$100,000 or 200 transactions	Previous or current calendar year

Includable Sales: Gross sales, including Marketplace sales

When To Register: As soon as possible

Tennessee 

Ready to set up your LLC in Tennessee? Your tax preparation starts with economic nexus.

Threshold	Measured From
$100,000	Previous 12 month period

Includable Sales: Retail sales, not including Marketplace sales

When To Register: Within 90 days

Texas

Looking to form an LLC in Texas? Get started right here.

Threshold	Measured From
$500,000	Previous 12 month period

Includable Sales: Gross revenue, including Marketplace sales

When To Register: Within 120 days

Utah

Planning your LLC in Utah? Let’s make sense of the state’s tax requirements.

Threshold	Measured From
$100,000 or 200 transactions	Previous or current calendar year

Includable Sales: Gross sales, not including Marketplace sales

When To Register: As soon as possible

Vermont 

LLC formation in Vermont comes with responsibilities—economic nexus is one of them.

Threshold	Measured From
$100,000 or 200 transactions	Previous 12 month period

Includable Sales: Gross sales, including Marketplace sales

When To Register: Within 30 days of the end of the quarter you exceed the threshold

Virginia 

Planning your LLC in Virginia? Let’s make sense of the state’s tax requirements.

Threshold	Measured From
$100,000 or 200 transactions	Previous or current calendar year

Includable Sales: Retail sales, not including Marketplace sales

When To Register: As soon as possible

Washington 

Launching an LLC in Washington? Tackling tax rules early ensures smooth operations down the line.

Threshold	Measured From
$100,000	Previous or current calendar year

Includable Sales: Gross sales, including Marketplace sales

When To Register: Within 30 days

West Virginia 

If you want to form an LLC in West Virginia, here’s what you should know first.

Threshold	Measured From
$100,000 or 200 transactions	Previous or current calendar year

Includable Sales: Gross sales, including Marketplace sales

When To Register: As soon as possible

Wisconsin 

Have you been eyeing Wisconsin for LLC formation? The state’s economic nexus regulations are essential for tax compliance.

Threshold	Measured From
$100,000	Previous or current calendar year

Includable Sales: Gross sales, including Marketplace sales (not for individual sellers)

When To Register: As soon as possible

Wyoming

Launching an LLC in Washington? Here’s what you should know first.

Threshold	Measured From
$100,000 or 200 transactions	Previous or current calendar year

Includable Sales: Gross sales, not including Marketplace sales for individual sellers

When To Register: As soon as possible

What Are the Different Types of Sales Tax Nexus?

Sales tax nexus refers to the connection between a business and a state that creates an obligation to collect and remit sales tax. Here’s a breakdown of the main types:

1. Physical Nexus

This applies when a business has a physical presence in a state—like a store, office, warehouse, or employees.

For example, if your business stores inventory in a state’s warehouse, you’re likely required to collect sales tax there.

2. Economic Nexus

Economic nexus results from significant economic activity in a state, even without a physical presence.

Post the South Dakota v. Wayfair decision, states enforce thresholds like $100,000 in sales or 200 transactions annually to meet tax obligations.

3. Affiliate Nexus

If your business has an affiliate or subsidiary operating in a state—sharing ownership or branding—you may need to collect sales tax under affiliate nexus rules.

4. Click-Through Nexus

This applies when a business pays commissions to third-party referrers, like websites or influencers, within a state. If these agents have a physical presence there, it establishes a nexus.

Understanding these nexus types ensures compliance and smooth business operations across states.

Which US States do not Have Sales Tax?

Five states in the US, known as the NOMAD states, do not impose a statewide sales tax. These states are:

• Alaska

• Delaware

• Montana

• New Hampshire

• Oregon

📌 Note:

While these states don’t have comprehensive sales tax, specific transactions may still be taxed.

For instance, some NOMAD states have local sales taxes or apply taxes on particular goods or services, such as alcohol or fuel.

What is the Impact of Sales Tax Nexus on Businesses?

Sales tax nexus can significantly affect businesses, particularly in states or jurisdictions with varying requirements.

The key areas impacted include:

1. Compliance Costs:

Businesses with nexus in multiple states must navigate registrations, collect and remit taxes, file returns, and maintain accurate records. These administrative tasks can drive up operational costs.

2. Penalties and Interest:

Non-compliance can result in steep penalties and interest on late or incorrect filings, leading to financial strain.

3. Competitive Limitations:

Non-compliant businesses may struggle to compete with tax-compliant peers who have a clear understanding of costs across jurisdictions.

4. Reputational Risks:

Tax compliance issues can damage a company’s reputation, repelling customers and inviting negative attention or legal challenges.

Understanding and managing sales tax nexus is essential to avoid these challenges and maintain operational efficiency.

📌 Note:

To get started, it is important for you to understand how to fill out the Streamlined Sales Tax Certificate of Exemption.

How to Comply With Sales Tax Rules and Regulations

If you’ve confirmed nexus in a state, follow these simple steps to stay compliant:

1. Register for a Sales Tax Permit

Apply for each state’s sales tax permit individually. Use resources like state tax registration guides or visit the Department of Revenue’s website for instructions.

For streamlined states, simplify the process with the Streamlined Sales Tax Registration System (SSTRS)—a free online tool covering 24 states at once.

2. Charge the Appropriate Sales Tax

Sales tax rates depend on customer location (destination-based tax) or your business location (origin-based tax, used in a few states).

The rate often includes state, county, district, and city taxes, so ensure you calculate accurately based on what you’re selling and where your customers are located.

3. File Sales Tax Returns

Always file returns based on your assigned frequency—monthly, quarterly, or annually—determined during registration.

Larger businesses typically file more frequently. Use state-specific filing guides to streamline the process.

📌 Note:

Always monitor local policies in states where you don’t collect taxes to ensure timely registration if sales activity triggers nexus. Stay proactive to avoid penalties!

‍Get Started With doola

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