Since Wayfair, one remote employee or one $100,000 sales month can make you a registered taxpayer in a state you have never visited. Enter your sales split and where your people actually sit to see how many states can come after you, what three years of unregistered collection would cost, and whether each state is worth the filing burden.
Situation: Situation: You sell $500,000 nationally from a home office in Oregon, with $200,000 in your home state and three remote staff in Texas, Colorado and New York.
Rate / rule: Rule: Oregon has no sales tax, so your home state is a non-issue. But employees working remotely create physical nexus in each state they work from - regardless of how little you sell there.
Calculation: Calculation: Physical nexus in 3 states. Economic nexus in the 4 states where you passed $100,000. Total 4-6 distinct states. Annual collection obligation on $300,000 of out-of-state sales at 7.2% is roughly $43,200 gross.
Situation: Situation: A $150,000 online store run solo from Florida, with $80,000 of Florida sales.
Rate / rule: Rule: $70,000 of out-of-state sales is below the $100,000 threshold in most states - but Ohio, Illinois and Pennsylvania use $100,000, and some states add a 200-transaction test that a low-price, high-volume store can trip with far less revenue.
Calculation: Calculation: Economic nexus likely in 0-2 states depending on transactions. Back-tax exposure on two years of unregistered collection is around $10,000.
Situation: Situation: You sell exclusively on a large marketplace that collects and remits tax on your behalf.
Rate / rule: Rule: Most marketplaces are the "marketplace facilitator" and carry the collection duty. But the revenue still counts toward your own economic nexus thresholds in many states.
Calculation: Calculation: If you also sell on your own site, you can be pushed over a threshold by marketplace revenue you never had to collect on.
Economic nexus = a state may require collection once you exceed a sales-dollar threshold (commonly $100,000) or a transaction-count threshold (commonly 200) in that state, measured over the previous or current calendar year depending on the state.
Physical nexus = the traditional rule. Property, inventory, employees, contractors or an office in a state creates collection duty from the first dollar, with no threshold at all.
Marketplace facilitator laws shift the collection duty for marketplace sales to the marketplace itself - but in many states the gross sales still count toward your own threshold.
Lookback period = how many prior years a state may assess. Most use three to four years; some use the period since the threshold was first crossed.
| State | Economic Threshold | Transaction Test | Notes |
|---|---|---|---|
| California | $500,000 | none | Highest dollar threshold; physical presence via inventory |
| Texas | $500,000 | none | Total Texas revenue, 12-month lookback |
| New York | $500,000 | 100 | Must exceed both, over four quarters |
| Illinois | $100,000 | 200 | Plus local district taxes |
| Pennsylvania | $100,000 | none | Marketplace inventory counts as presence |
| Ohio | $100,000 | 200 | Reduced from $500,000 |
| Georgia | $100,000 | 200 | Either test creates nexus |
| Alabama | $250,000 | none | Simplified Sellers Use Tax option |
| Mississippi | $250,000 | none | Prior 12 months |
| Oregon | no sales tax | — | No collection obligation at all |
| Montana | no sales tax | — | No state sales tax |
| New Hampshire | no sales tax | — | No state sales tax |
| Delaware | no sales tax | — | No state sales tax |
Thresholds and transaction tests change frequently, and several states use different measurement periods. Verify the current rule for each state before registering.
The dollar threshold is the number everyone remembers, but it is not the only way in. Three other triggers appear constantly in audit assessments:
Transaction count. A 200-transaction test can be crossed on very low revenue. A store selling a $9 accessory 30,000 times a year passes the unit test in nearly every state long before it reaches $100,000 in any one of them.
Remote employees and contractors. One person working from a home office in a state creates physical nexus there from their first day. Since 2020 this is the single most common accidental nexus trigger.
Inventory in a fulfilment network. Using a third-party logistics provider that spreads your inventory across multiple warehouses creates physical presence in every state where your goods sit.
Before 2018 a state could only require an out-of-state seller to collect tax if the seller had a physical presence there. South Dakota v. Wayfair removed that requirement, and within three years every state with a sales tax had adopted some form of economic nexus threshold.
| Trigger | Typical Threshold | Does It Require Physical Presence? | How Often It Is Missed |
|---|---|---|---|
| Home-state sales | First dollar | Implicit - you are there | Rarely missed |
| Economic - dollar test | $100,000 | No | Occasionally |
| Economic - transaction test | 200 transactions | No | Frequently |
| Remote employee or contractor | First day | Yes - the person is there | Very frequently |
| Third-party logistics inventory | First day | Yes - the goods are there | Frequently |
| Trade show or temporary booth | Varies by state | Sometimes - often a safe harbour | Occasionally |
The pattern in the fourth column is the important one. The two triggers that are easiest to compute are the two least likely to be missed; the two that require actually knowing where your people and inventory are the ones that generate assessments. A remote-first business can accumulate nexus in a dozen states without a single one of them generating $100,000 of revenue.
Registering is the beginning of an ongoing obligation, not the end of one. Each state brings its own filing frequency, its own form, and its own set of local rates that sit on top of the state rate.
Usually free or nominal, but each state requires a separate application, and some require a deposit or a registered agent. Expect a few hours per state for the first filing.
Low-volume sellers are often assigned quarterly or annual filing; higher volume moves to monthly. The higher the frequency, the higher the administrative cost per state.
Colorado, Illinois, Alabama and Louisiana have home-rule jurisdictions with their own registration, their own rates and their own returns. One state can mean several filings.
Resale and wholesale buyers must present valid certificates or you owe the tax yourself. Managing certificates is a recurring cost, not a one-time setup.
A reasonable planning figure is $400-600 per state per year for registration, filing software and the return itself, before the tax that is collected and remitted. That cost is what makes the economic-threshold analysis worth doing early rather than after the first registration: a state generating $3,000 of taxable sales at 7% produces $210 of tax against a compliance cost several times that.
The break-even calculation is simple: divide the annual compliance cost by the average rate to get the sales a state must generate to pay for its own filing burden. At $480 of cost and a 7.2% rate, that is roughly $6,700 of taxable sales per state — and any state below that line costs you more to serve than it collects.
Every state with an economic nexus regime also operates a voluntary disclosure agreement (VDA) programme. The trade is straightforward: you agree to register and collect going forward and to file a limited lookback period, and the state waives the rest of the back tax plus penalties and, usually, interest.
Typical VDA terms:
The asymmetry is the point: a VDA costs a limited lookback and your time. Being found costs the full lookback, penalties, interest and, in a bad case, an assessment on sales you already booked as revenue. For a business with meaningful out-of-state volume, the disclosure calculation is not close.
⚠ Important Disclaimer: Sales tax nexus rules change frequently and vary in detail by state, by measurement period and by whether marketplace sales count. The thresholds in this calculator are representative planning figures, not current legal advice, and the exposure estimate is a simplified model using an average rate. Consult a state tax professional or a compliance service before registering, filing under a voluntary disclosure agreement, or concluding that you have no obligation.