Sales Tax Nexus Checker by State

Physical nexus, and economic nexus

Nexus is the connection to a state that obliges a business to register, collect its sales tax and file returns there. For decades it meant physical presence: an office, an employee, inventory, property. That is still true, and physical presence on its own creates nexus whatever your sales.

In 2018 the Supreme Court decided South Dakota v. Wayfair and allowed states to impose collection duties on sellers with no physical presence at all, based on how much they sell into the state. Every state with a sales tax has since adopted an economic nexus rule. The rules share a shape and differ in every detail.

The four things that differ

The amount. Most states use $100,000 of sales into the state. A handful use more. The tool holds each state's figure in a dated table rather than in this paragraph, because the figures change.

The transaction count, and "or" versus "and". Many states originally added a second test of 200 separate sales, met by either test alone. Several have since dropped it, leaving a dollars-only rule. A few that keep a count require both tests together. The difference matters most to business-to-business sellers: a few large orders can clear a dollar threshold without coming near a count.

The period. States measure over the current or previous calendar year, the preceding twelve months, or the preceding four quarters. The same sales can be over the line in one state's period and under it in another's. The tool shows each state's period beside its result.

What counts. Some states count gross sales into the state, including exempt sales and sales for resale. Some count only retail sales, or only taxable sales. Many exclude sales made through a marketplace that already collects the tax. A wholesaler selling mostly for resale can be well under a threshold that counts only taxable sales and well over one that counts gross.

States with no sales tax

A small number of states have no statewide sales tax, and nothing to register for at state level. One of them allows local jurisdictions to impose sales tax, and its local governments have their own remote seller rules, which this tool does not assess.

Once you are over

Crossing a threshold usually means registering with the state's revenue department and starting to collect, on a timetable the state sets: some from the next transaction, some from the following month or quarter. Sales made before you register can create exposure for tax you did not collect, which is why nexus is a standard question in an acquirer's due diligence. If you are already over in a state you have not registered in, the conversation to have is with a tax adviser about voluntary disclosure, not with this page.

Why "approaching" matters

The useful answer is often not "over" but "close". A state at 90% of its threshold with the year's busiest quarter still ahead is a registration to plan, not a surprise to discover. The tool flags anything at 80% or more.

The sample the tool loads. Invented. The thresholds named here are those in the tool's table as of its verification date, and are restated on the page from that table, not from this paragraph.

Halvorsen Instruments makes laboratory measurement equipment in Minnesota, where it is registered, and sells to universities, hospitals and distributors across the country. A buyer's due diligence questionnaire has just asked where else it should be collecting.

Their sales into six states, each over that state's own measurement period:

What the checker said, and why:

• California: over. $640,000 against a $500,000 threshold on sales. Register.
• Colorado: physical nexus. The sales are far under any threshold, and it does not matter: an employee working in the state is physical presence. Register. This is the one most companies miss, because nobody thinks of a remote hire as a tax event.
• Texas: approaching, at 91%. $455,000 against $500,000, and Texas counts gross revenue, including the exempt university sales. Another $45,000 in the next twelve months and it is over, because Texas counts $500,000 or more, not more than $500,000.
• New York: under, despite $720,000 of sales. New York requires both more than $500,000 and more than 100 sales. Halvorsen made 42 large sales. This is exactly the business-to-business pattern the "both" test produces, and it can change with one new customer who orders often.
• Florida: under, despite $310,000 of sales. Florida counts only taxable sales, and $240,000 of Halvorsen's Florida sales went to distributors for resale. Taxable sales of $70,000 are under its $100,000 threshold.
• Oregon: no state sales tax. Nothing to register.

The memo for the due diligence file: two new registrations, California and Colorado; Texas to watch quarterly; New York to re-check whenever the number of orders rises; Florida resale certificates to keep on file, because the exemption is what keeps it under.

This checks state sales tax economic nexus thresholds and the physical presence you tick, against the figures you enter. It is not tax advice. It does not assess local jurisdictions' own rules, income or franchise tax nexus, which follow different tests, use tax, or the taxability of what you sell. It does not register you anywhere or file anything. Thresholds change: each state's rule is shown with the date it was last verified, and a rule newer than that date is not reflected. Confirm any registration decision with a tax adviser.