Four states do not levy sales tax: Delaware, Montana, New Hampshire, and Oregon. Kansas has no threshold; every sale counts immediately there. Data current as of March 2025.
What is economic nexus
Economic nexus is the tax connection between you and a state. It arises from your sales, not your address.
If you exceed a threshold, you must collect and remit sales tax there, even without an office, warehouse, or staff.
For online stores, this happens quickly. You deliver nationwide and cross thresholds without ever having a physical presence.
Not your location, but your activity
Previously, only physical presence mattered. A store, staff, or property in a state. Since 2018, that has changed. In South Dakota v. Wayfair, the U.S. Supreme Court eliminated that requirement. Now, your economic activity counts. Almost every state with sales tax has since implemented its own thresholds. No two states do it the same way.
This is how you stay compliant
Register
Apply for a permit in every state where you are required to. You'll need your EIN and business details. The application goes through the Department of Revenue, under Sales and Use Tax. Usually free, sometimes under 20 dollars. Expect two to six weeks.
Collect and remit
Apply the correct rate per sale. That depends on your customer's location, often by zip code, and what you sell. Each state has its own exemptions. Classify your product correctly. Remit according to the state's schedule.
Record keeping
Document everything. Collected tax, product classifications, and proof of remittance. You'll need it for your filing and during an audit. Track your sales per state and your position relative to each threshold.
What if you do nothing
Non-compliance costs more than setting it up correctly.
Back taxes with interest.
Accumulating fines.
Audits that cost time and money.
Reputational damage if it gets out.
Ultimately, loss of permits.
Manual tracking is not an option
Dozens of states, varying thresholds, changing laws. Tax software monitors your thresholds, calculates rates, prepares returns, and stores your records for an audit. If you sell across state lines, automation is not a luxury.
Many states require large platforms to collect sales tax on behalf of their sellers. If you sell through such a platform, some of this may already be taken care of for you.
Questions?
We'll answer them.
What is economic nexus?
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When is it established?
What is the difference compared to physical nexus?
Does this apply in all states?
What happens if I ignore it?
How do you keep track of this across multiple states?
