Economic Nexus by State in 2026: Thresholds, Recent Changes and When You Must Collect

If you sell online or ship to customers in other states, you may have to collect those states' sales tax even if you have never set foot there. The trigger is economic nexus: once your sales into a state pass its threshold, you must register, collect and file. This guide is for e-commerce sellers, wholesalers, software and subscription businesses and their bookkeepers. It explains what Wayfair changed, how thresholds are measured, which states dropped the 200-transaction test between 2023 and 2026, how marketplace sales count, and every state's threshold in one table, with worked examples. Thresholds were checked against state revenue departments in October 2026.

Quick answer

Economic nexus means a state can make you collect its sales tax because of your sales into it, with no physical presence. Since South Dakota v. Wayfair (2018), all 45 sales tax states and DC have a threshold. Most use $100,000 of sales a year; California and Texas use $500,000, Alabama and Mississippi $250,000, and New York $500,000 plus more than 100 sales.

• 16 states plus DC still count transactions (usually 200) as an alternative trigger

• Illinois dropped its transaction test on January 1, 2026; Kentucky on August 1, 2026

• Marketplaces such as Amazon and Etsy collect on the sales they facilitate in every sales tax state

• Once over a threshold, register before you collect; late registration means paying the tax yourself

What economic nexus means

"Nexus" is the connection between a business and a state that lets the state require the business to collect its tax. For decades the only kind that counted for sales tax was physical nexus: an office, a shop, employees, a warehouse or inventory in the state. A seller with none of those could sell into the state freely, and the customer was supposed to pay use tax instead, which almost no consumers did.

Economic nexus adds a second test. If your sales into a state, measured in dollars and sometimes in the number of transactions, pass the threshold the state has set, you have nexus there even with no physical presence. You then have to register for a sales tax permit, charge tax on taxable sales into the state, and file returns.

Physical nexus still applies alongside it. A seller with inventory in a state, including stock held in a marketplace's fulfilment warehouse, may have nexus from the first sale, whatever the threshold. Trade shows, remote employees and contractors who install or repair goods can also create physical nexus. Economic nexus is the extra rule that catches sellers with none of these.

South Dakota v. Wayfair: what the Supreme Court decided

The old physical presence rule came from two Supreme Court cases: National Bellas Hess v. Department of Revenue (1967) and Quill Corp. v. North Dakota (1992). Both held that a state couldn't make a seller collect sales tax unless the seller was physically present in the state.

South Dakota set out to challenge that. In 2016 it passed a law requiring sellers with more than $100,000 of annual sales delivered into the state, or 200 or more separate transactions, to collect its sales tax. It sued Wayfair, Overstock and Newegg to test the law. On June 21, 2018, in South Dakota v. Wayfair, the Court ruled 5–4 that the physical presence rule was "unsound and incorrect" and overruled Quill and Bellas Hess.

The Court pointed to features of the South Dakota law that protected small sellers: a safe harbor for sellers with limited business in the state, no retroactive collection, and South Dakota's membership of the Streamlined Sales and Use Tax Agreement, which standardizes definitions and offers state-paid software. Within a few years, every state with a sales tax had passed its own economic nexus law. Most copied South Dakota's $100,000 or 200 transaction test. Missouri was the last, from January 1, 2023.

How economic nexus thresholds work

A threshold looks simple, but four details decide whether you have crossed it.

What counts toward it. States measure different sales. Some count gross sales, including exempt sales and sales for resale: Texas counts all revenue from Texas sales, taxable or not, including shipping. Others count only retail sales, which excludes sales to resellers, and a few count only taxable sales: Florida, North Dakota and Oklahoma among them. A wholesaler selling only to retailers with resale certificates can have nexus in a gross-sales state but not in a taxable-sales state.

The measurement period. Most states look at the current or previous calendar year. Others use a rolling window: Texas looks at the preceding twelve calendar months, New York the immediately preceding four sales tax quarters, Connecticut the twelve months ending September 30, Mississippi the prior twelve months. Illinois tests a rolling twelve months at the end of each quarter.

When you must start collecting. Some states require collection from the next transaction after you cross. Others give you time: Texas from the first day of the fourth month after you cross, Michigan and Rhode Island from January 1 of the following year, Florida from the following calendar year.

And or or. Where a state has two tests, most trigger on either one. Connecticut ($100,000 and 200 sales) and New York ($500,000 and more than 100 sales) need both.

Economic nexus at a glance (2026)

$100,000

Most common sales threshold

used by most states

16 + DC

States still counting transactions

usually 200

$500,000

Highest: California, Texas

New York $500,000 and 100 sales

5

States with no statewide sales tax

AK, DE, MT, NH, OR

2023–2026: the states that dropped the 200-transaction test

The transaction count was always the part of the Wayfair model that hit small sellers hardest. A seller of $20 phone cases could cross 200 orders in a state with only $4,000 of sales, then face monthly or quarterly returns for a few hundred dollars of tax. States have been removing it, partly at the urging of the Streamlined Sales Tax Governing Board.

Transaction thresholds removed

July 1, 2023

South Dakota, the Wayfair state, drops 200 transactions

August 1, 2023

Louisiana drops 200 transactions

January 1, 2024

Indiana drops 200 transactions

July 1, 2024

Wyoming and North Carolina drop 200 transactions

January 1, 2025

Alaska Remote Seller Sales Tax Commission drops its transaction test

July 1, 2025

Utah drops 200 transactions

January 1, 2026

Illinois drops 200 transactions

August 1, 2026

Kentucky drops 200 transactions (HB 757)

Earlier, California, Colorado, Iowa, Maine, Massachusetts, North Dakota, Washington and Wisconsin had already dropped transaction counts, and Alabama, Arizona, Florida, Idaho, Kansas, Mississippi, Missouri, New Mexico, Oklahoma, Pennsylvania, South Carolina, Tennessee and Texas never had one.

Illinois. The Department of Revenue's bulletin FY 2026-12 confirms that from January 1, 2026 the only test for remote retailers and marketplace facilitators is $100,000 or more of gross receipts from Illinois sales of tangible goods in a twelve-month lookback period, checked quarterly. Sellers that were registered only because of the old 200-transaction test were moved to "voluntary use tax" status and had to check whether they met the dollar test for the twelve months to December 31, 2025. Those that didn't had to stop collecting Illinois retailers' occupation tax on remote sales. Our Illinois sales tax guide has the detail.

Kentucky. House Bill 757 of the 2026 session removed the 200-transaction standard for remote retailers and marketplace providers from August 1, 2026, leaving $100,000 of gross receipts. The same bill brought data brokering services into the sales tax. Note that some Kentucky Department of Revenue web pages still show the old two-part test; the enacted bill and the department's July 2026 letter to the Streamlined board confirm the change. See our Kentucky sales tax guide.

New Jersey is the one to watch. Bills in the 2026–2027 session (S711 in the Senate, A3419 in the Assembly) would remove its 200-transaction test, and the Senate Budget Committee approved S711. As of October 2026 it had not become law, and the Division of Taxation still applies more than $100,000 or 200 or more separate transactions.

If you registered in a state only because of transactions, dropping below the dollar threshold doesn't end your registration automatically. Check the state's guidance before you close the account: most expect you to keep collecting until you file a final return, and some require you to stay registered for the rest of the year.

Economic nexus thresholds by state

The table covers all 45 states with a sales tax plus the District of Columbia. "Or" means either test triggers nexus. Check the state's own page before registering, because states measure sales and periods differently.

Alaska, Delaware, Montana, New Hampshire and Oregon have no statewide sales tax. In Alaska, local governments that joined the Alaska Remote Seller Sales Tax Commission require registration once statewide sales into Alaska exceed $100,000 in the previous calendar year.

Marketplace facilitator laws

Most economic nexus laws came with a second rule for marketplace facilitators: platforms such as Amazon, Etsy, eBay and Walmart Marketplace that list other sellers' goods and process payment. Every state with a sales tax now makes these platforms collect and remit tax on the sales they facilitate once the platform's own total, including third-party sales, passes the state threshold. Missouri, the last state, began on January 1, 2023.

For a seller, this has three consequences. First, you don't collect tax yourself on marketplace orders; the platform does. Second, those sales may still count toward your threshold for sales on your own website. California, Texas and New York include marketplace sales in the seller's count; Florida, Arizona and Illinois exclude them. Third, if you also sell through your own site, you need to register in states where your combined count, by that state's rules, passes the threshold.

Selling only through a collecting marketplace usually means you don't need to register in a state on economic nexus grounds, but not always. Some states ask sellers over the threshold to register anyway and file zero or informational returns, and storing inventory in a marketplace's warehouse can create physical nexus regardless. Read each state's marketplace guidance, such as the Texas sales tax guide section on marketplaces.

Worked example: a small online seller in 2026

An Oregon business sells candles at an average of $35 per order through its own website. Oregon has no sales tax, so it has never collected any. It has no staff or stock outside Oregon. Its sales in the twelve months to September 2026 look like this.

California is clear: $520,000 is above $500,000, so the business must register with the CDTFA and collect from the day it crossed. New Jersey is the surprise. $40,000 of sales is far below more than $100,000, but 1,140 orders is well over 200, so it has nexus there and must collect New Jersey's 6.625%. Before 2026 it would also have had nexus in Illinois (1,710 orders) and Kentucky (257 orders). Under the 2026 rules it doesn't, because both states now look only at dollars.

Texas and New York need watching. Texas sales are $190,000 below the line. If the business grows 40% next year, it crosses. New York needs both tests, and $120,000 is well under $500,000.

What does the New Jersey registration cost in tax? Candles are taxable in New Jersey, so once registered the business adds 6.625% to each order delivered there. On the same volume next year, that is about $40,000 × 0.06625 = $2,650 collected from customers and passed to the state, plus the time to file returns. The tax itself isn't a cost to the business as long as it is charged at checkout. It becomes a cost only when a seller registers late and has to pay tax it never collected.

That is the real risk in California. If the business crossed $500,000 in May and only notices in December, every taxable California order in between was undercharged. At a typical combined rate of around 8% to 10%, a few hundred thousand dollars of sales means tens of thousands of dollars of tax the business must now pay from its own margin. Checking each quarter, rather than once a year at tax time, keeps that gap small.

Now suppose the business also sells $200,000 a year through Amazon, $45,000 of it to Texas customers. Texas counts marketplace sales toward the seller's threshold, so the Texas total is $355,000, still under $500,000. In a state that counts marketplace sales and uses a $100,000 threshold, the same marketplace sales could push it over.

What to do once you cross a threshold

After you cross a state's threshold

1. 1

   Note the date you crossed

   Your start date for collecting depends on it. Some states require collection from the next sale; others give you until the first day of a later month.

2. 2

   Register before you collect

   Apply for a sales tax permit on the state's portal, or through the Streamlined Sales Tax registration system for member states. Registration is free in most states.

   Tip: Collecting tax without a permit is illegal in most states. Register first.

3. 3

   Set up tax at checkout

   Charge the combined state and local rate for the delivery address in destination states, and apply each state's rules on shipping and exemptions.

   How to calculate sales tax
4. 4

   Collect certificates from tax-exempt buyers

   Business customers buying to resell, or exempt organizations, need a resale or exemption certificate on file.

5. 5

   File on time, even when you owe nothing

   States assign monthly, quarterly or annual filing. Most require a return for every period once you are registered.

Streamlined member states offer one more option. Remote sellers that qualify can use a certified service provider, paid by the states, to calculate, collect and file in all 24 member states. The Streamlined Sales Tax Governing Board website explains who qualifies and links to the central registration system.

If you crossed a threshold in the past and didn't register, don't just start collecting quietly. The tax you should have collected is still owed, and the state can assess it from you. Most states run voluntary disclosure programmes that cap the lookback, usually at three or four years, and waive penalties if you come forward first. The Multistate Tax Commission runs a multistate voluntary disclosure programme that lets you approach several states anonymously at once.

Common mistakes

Using an old threshold table. Many published tables still list Illinois and Kentucky with 200 transactions, or show New Jersey's pending bill as law. Check the state's own page or our table before deciding.

Counting only taxable sales. In gross-sales states such as Texas, exempt and wholesale sales count too.

Forgetting marketplace sales. In states that count them toward your threshold, your website sales alone can understate your position.

Assuming nexus ends when sales fall. Most states expect you to stay registered at least through the end of the year, and many until you formally close the account.

Ignoring physical nexus. A single employee working from home in another state, or inventory in a third-party warehouse, can create nexus with no threshold at all.

Charging tax before registering. Tax collected without a permit still has to be paid to the state, and you may face penalties for collecting without authority.

Quarterly nexus review

0/7

• Export sales and order counts by state for the state's measurement period
• Include marketplace sales where the state counts them
• Compare against each threshold, including transaction tests in the 16 states that keep them
• Check for physical presence: staff, contractors, inventory, events
• Register before the state's collection start date
• Diary New Jersey's pending change and other bills in your states
• Use voluntary disclosure for any past exposure

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Official economic nexus pages

• Illinois — Bulletin FY 2026-12 (transactions removed)
• Kentucky — HB 757 recertification letter
• Texas — Remote sellers
• New York — Do I need to register?
• New Jersey — Remote sellers
• South Dakota — 2023 legislative updates
• Streamlined Sales Tax — Registration and member states

What to do next

Pull your sales and order counts by state for the last twelve months and the current year, and run them against the table. Register where you've crossed, set a quarterly reminder to repeat the check, and watch New Jersey's bill. Then set up correct rates at checkout with our guide to how to calculate sales tax, and read the state guides for California, Texas and New York. The sales tax calculator checks any rate.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

What is economic nexus?

Economic nexus is a state's power to make an out-of-state seller collect its sales tax because of how much the seller sells into the state, even with no office, staff or inventory there. Since South Dakota v. Wayfair in 2018, every state with a sales tax has set a threshold, most often $100,000 of sales a year, above which remote sellers must register and collect.

Which states still use the 200-transaction threshold?

As of October 2026, 16 states still count transactions as well as dollars: Arkansas, Connecticut, Georgia, Hawaii, Maryland, Michigan, Minnesota, Nebraska, Nevada, New Jersey, New York (100 sales, with $500,000), Ohio, Rhode Island, Vermont, Virginia and West Virginia, plus the District of Columbia. Connecticut and New York require both tests to be met; the others trigger on either.

Which states dropped the transaction threshold recently?

Wyoming and North Carolina dropped theirs on July 1, 2024, Utah on July 1, 2025, Illinois on January 1, 2026 and Kentucky on August 1, 2026. Indiana dropped its test on January 1, 2024, South Dakota on July 1, 2023 and Louisiana on August 1, 2023. New Jersey has a bill pending to do the same but had not enacted it by October 2026.

Do sales through Amazon or Etsy count toward economic nexus?

Every state with a sales tax makes marketplaces like Amazon and Etsy collect tax on the sales they facilitate. Whether those sales also count toward your own threshold depends on the state. California, Texas and New York count them; Florida, Arizona and Illinois exclude them. If you sell only through collecting marketplaces, most states won't require you to register, but check each state.

What happens if I cross a state's threshold and don't register?

You become liable for the tax you should have collected, from your own pocket, plus interest and penalties, and the exposure grows every month. Most states offer voluntary disclosure agreements that limit the lookback period, often to three or four years, and waive penalties if you come forward before the state contacts you.

Do I need to collect sales tax in a state with no sales tax?

No. Alaska, Delaware, Montana, New Hampshire and Oregon have no statewide sales tax. Alaska is the exception to watch: many Alaska boroughs and cities have local sales taxes, and those that joined the Alaska Remote Seller Sales Tax Commission require remote sellers above $100,000 of statewide sales to register and collect.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 9 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.South Dakota v. Wayfair, Inc., 585 U.S. 162 (2018) — syllabus and opinion — Legal Information Institute (U.S. Supreme Court opinion) · accessed 9 October 2026
2. 2.FY 2026-12, Destination-Based Retailers' Occupation Tax Changes — Illinois Department of Revenue · accessed 9 October 2026
3. 3.Kentucky SSUTA recertification letter (July 29, 2026) — Kentucky Department of Revenue · accessed 9 October 2026
4. 4.Remote Sellers — Texas Comptroller of Public Accounts · accessed 9 October 2026
5. 5.Do I need to register for sales tax? — New York State Department of Taxation and Finance · accessed 9 October 2026
6. 6.Remote sellers — New Jersey Division of Taxation · accessed 9 October 2026
7. 7.2023 Legislative Updates — Sales and Use Tax — South Dakota Department of Revenue · accessed 9 October 2026
8. 8.W.S. 39-15-501 (Title 39) — Wyoming Legislature · accessed 9 October 2026
9. 9.Remote Sellers — Arkansas Department of Finance and Administration · accessed 9 October 2026
10. 10.Registering with DRS — Connecticut Department of Revenue Services · accessed 9 October 2026
11. 11.Streamlined Sales Tax Governing Board — home and member states — Streamlined Sales Tax Governing Board · accessed 9 October 2026
12. 12.Economic Nexus State Guide — Sales Tax Institute · accessed 9 October 2026
13. 13.States eliminating economic nexus transaction thresholds — Avalara · accessed 9 October 2026