Sales Tax Nexus Guide 2026: When Must You Collect?

After the 2018 South Dakota v. Wayfair Supreme Court ruling, every state with a sales tax can require out-of-state sellers to collect and remit — even if you have no physical presence. This guide explains economic nexus thresholds, marketplace facilitator laws, and exactly when you need to register.

What Is Sales Tax Nexus?

Nexus means a connection between your business and a state that gives the state the right to require you to collect sales tax. There are two types:

• Physical nexus: You have a physical presence — office, warehouse, employees, inventory, or even a trade show booth in the state.
• Economic nexus: You exceed a state's sales or transaction threshold in that state, even with no physical presence. This was established by the Wayfair ruling.

The $100,000 / 200-Transaction Rule

Most states use a threshold of $100,000 in gross sales or 200 separate transactions into the state in a calendar year. If you exceed either threshold, you must register for a sales tax permit and begin collecting.

Important: Some states have different thresholds. For example:

• California: $500,000 in sales (no transaction threshold)
• New York: $500,000 in sales and 100 transactions
• Texas: $500,000 in sales (no transaction threshold)
• Massachusetts: $100,000 in sales (no transaction threshold)
• Alabama, Iowa, Pennsylvania: 200+ transactions only (no dollar minimum)

Marketplace Facilitator Laws

If you sell on Amazon, eBay, Etsy, Walmart Marketplace, or Poshmark, the marketplace is responsible for collecting and remitting sales tax on your behalf in most states. This means:

• You do not need to register for sales tax in states where all your sales go through the marketplace
• You do need to register for states where you sell directly (your own website, direct invoicing)
• Marketplace sales still count toward your economic nexus threshold for direct sales

Example: If you sell $80,000 on Amazon and $40,000 on your own website to California customers, your California sales total $120,000 — but you only need to collect on the $40,000 in direct sales (above the $100,000 threshold).

When You Must Register

Follow this decision tree:

1. Do you have physical nexus in the state (office, warehouse, employees)? → Register immediately
2. Do your direct sales (not through marketplaces) exceed $100,000 or 200 transactions in the state? → Register and collect
3. Do your marketplace-only sales exceed the threshold? → No registration needed (marketplace collects)
4. Below all thresholds? → No registration needed yet — monitor monthly

States With No Sales Tax

Five states have no state-level sales tax — you never need to collect there:

• Alaska (local municipalities may charge local sales tax)
• Delaware
• Montana
• New Hampshire
• Oregon

How to Register for Sales Tax

1. Identify all states where you have nexus
2. Register for a sales tax permit in each state (usually free, but some states charge a small fee)
3. Set up sales tax collection in your e-commerce platform (Shopify, WooCommerce, BigCommerce all support this)
4. File returns at the frequency required by each state (monthly, quarterly, or annually)
5. Remit collected tax to each state by the deadline

Note: Most states require you to file a return even if you collected $0 in tax that period. Filing frequency is determined by your sales volume.

Common Mistakes to Avoid

• Waiting too long to register: Once you hit the threshold, you must register retroactively in some states
• Collecting without registering: It is illegal to collect sales tax without a permit in most states
• Forgetting about use tax: If you buy inventory tax-free for resale but use it yourself, you owe use tax
• Not tracking sales by state: You need monthly tracking to know when you cross a threshold
• Missing filing deadlines: Late filing penalties can be 10-50% of the tax due

What This Means for You

If you sell through Amazon, eBay, and Etsy exclusively, you probably do not need to worry about sales tax registration at all — the marketplaces handle it. But the moment you launch your own Shopify store or invoice a client directly, you are on the hook. The $100,000 threshold sounds high until you realize it is gross sales, not profit. A reseller doing $120,000 in revenue with 10% margins is still over the threshold in most states.

The single best thing you can do: track sales by state from day one. Not when you think you might be getting close. From day one. Because states can audit going back several years, and if they find you should have been collecting and were not, you owe the tax plus penalties plus interest — out of your own pocket, because you cannot go back and ask customers for it retroactively.

Disclaimer: This guide is for informational purposes only and does not constitute legal or tax advice. Nexus thresholds and rules change frequently. Always verify current requirements with each state's Department of Revenue or a qualified tax professional.