Ecommerce Sales Tax: Economic Nexus by State

By December 6, 2018 May 15th, 2019 Ecommerce Accounting, Small Business

Economic Nexus by StateEconomic Nexus Defined

Ecommerce sales tax is a BEAST. A beast with a mean growl, sharp claws, and putrid breath…yeah, it’s scary. Facing the beast of ecommerce sales tax is so challenging that many small- to medium-sized businesses run or hide (we don’t blame you). Avoiding sales tax can threaten business survival and success. One of the most difficult aspects of ecommerce sales tax to understand is economic nexus. Once you understand economic nexus, you are well on their way to overcoming the beast.

Previous to the South Dakota v. Wayfair ruling (June 2018), states were only able to tax ecommerce businesses based on old nexus laws (and a few less common laws). Old nexus laws required businesses to remit sales tax to states in which they had “physical presence”. “Physical presence” could be in the form of locations, employees, warehouses, etc.

You are still required to collect and remit sales tax based on old nexus laws. But because of the South Dakota v. Wayfair ruling, states can also tax businesses based on “economic activity”. “Economic activity” refers to the amount of annual revenue and/or transactions that a business has within a state. When you reach a certain threshold of sales and/or transactions within a state, your business is said to have economic nexus. You are then required to collect and remit sales tax to that state.

Economic Nexus by State

Each state sets their own laws on economic nexus thresholds. For example, South Dakota taxes your business when you have annual sales in their state of more than $100K OR annual transactions in their state of more than 200.

Not all states have economic nexus laws. Those that do have differing thresholds, which makes ecommerce sales tax really fun. To see where you might have economic nexus, check our map (above) for states with economic nexus laws. Does your business have significant sales volumes in any of these states? If so, refer to our table (below) for thresholds and other important info in those states.

This is a great starting point for navigating the world of ecommerce sales tax and especially economic nexus.

Important Note: This post is for informational purposes. Laws continue to change, and laws other than economic nexus may also require you to pay sales tax, including old nexus laws, click-through nexus laws, and affiliate nexus laws. Always contact the state if any questions remain.

Table updated March 15, 2019
State Threshold (revenue and/or number of separate transactions within a state. Based on 12-month period determined by state) Other requirements or info Effective Date Reference and details
Alabama $250K None 10/01/18 Click here
Arkansas $100K OR 200 transactions None 07/01/19 Click here
California $100K OR 200 transactions None 04/01/19
Click here
Colorado $100K OR 200 transactions None 12/01/18 Click here
Connecticut $250K AND 200 transactions AND regular or systemic solicitation 12/01/18 Click here
Georgia $250K OR 200 transactions None 01/01/19 Click here
Hawaii $100K OR 200 transactions None 07/01/18 Click here
Idaho $100K None 06/01/19 Click here
Illinois $100K OR 200 transactions None 10/01/18 Click here
Indiana $100K OR 200 transactions None 10/01/18 Click here
Iowa $100K OR 200 transactions None 01/01/19 Click here
Kentucky $100K OR 200 transactions None 07/01/18 Click here
Louisiana $100K OR 200 transactions None 01/01/19 Click here
Maine $100K OR 200 transactions None 07/01/18 Click here
Maryland $100K OR 200 transactions None 10/01/18 Click here
Massachusetts $500K AND 100 transactions See exceptions here 10/01/17 Click here
Michigan $100 OR 200 transactions None 10/01/18 Click here
Minnesota 100 transactions OR 10 or more transactions totaling more than $100K 10/01/18 Click here
Mississippi $250K None 09/01/18 Click here
Nebraska $100K OR 200 transactions None 01/01/19 Click here
Nevada $100K OR 200 transactions None 10/01/18 Click here
New Jersey $100K OR 200 transactions None 11/01/18 Click here
New Mexico $100K None 07/01/19 Click here
New York $300K AND 100 transactions None 06/18/18 Click here
North Carolina $100K OR 200 transactions None 11/01/18 Click here
North Dakota $100K OR 200 transactions None 10/01/18 Click here
Ohio $500K AND Software or Network Nexus 01/01/18 Click here
Oklahoma $10K This is a “notice & report law” already in effect. Must collect sales tax OR comply with notice and reporting requirements 07/01/18 Click here
Pennsylvania $100K None 07/01/19 Click here
Rhode Island $100K OR 200 transactions This is a “notice & report law” already in effect. Must collect sales tax OR comply with notice and reporting requirements 08/17/17 Click here
South Carolina $100K None 11/01/18 Click here
South Dakota $100K OR 200 transactions None 11/01/18 Click here
Tennessee $500K None TBD (pending litigation) Click here
Texas $500K None 10/01/19 Click here
Utah $100K OR 200 transactions None 01/01/19 Click here
Vermont $100K OR 200 transactions AND regular, systemic, or seasonal solicitation 07/01/18 Click here
Virginia $100K OR 200 transactions None 07/01/19 Click here
Washington $100K OR 200 transactions None 10/01/18 Click here
West Virginia $100K OR 200 transactions None 01/01/19 Click here
Wisconsin $100K OR 200 transactions None 10/01/18 Click here
Wyoming $100K OR 200 transactions None 02/01/19 Click here