How Sales Tax Nexus Works for Online Sellers
Sam's List Editorial | 2026-06-27
How Sales Tax Nexus Works for Online Sellers Sales tax nexus is a connection between your business and a state that is strong enough to require you to collect and remit that state's sales tax. For online sellers, nexus can come from a physical presence like inventory or employees, or purely from economic activity, exceeding a state's sales threshold. Here is how nexus works, what creates it, and what to do when it applies to you. This is the concept that catches online sellers off guard, because it means you can owe sales tax obligations in states you have never visited. Rules vary by state and change often, so treat this as a map, not a substitute for checking each state's current rules. What Nexus Means Nexus is simply the legal threshold at which a state can require your business to collect its sales tax. Cross that threshold and you generally must register with the state, collect the right amount of tax from customers there, and remit it on a schedule. Below it, you generally have no such obligation in that state. For decades, nexus required a physical presence. That changed in 2018. Physical Nexus A physical presence in a state still creates nexus. For online sellers, this commonly shows up as: An office, store, or warehouse in the state. Employees or, in some cases, contractors located there. Inventory stored in the state, including in a marketplace's fulfillment warehouse. This one surprises many sellers, because your goods can sit in a state you have never set foot in. Economic Nexus After Wayfair The 2018 South Dakota v. Wayfair decision allowed states to base nexus on economic activity alone. Now most states impose economic nexus once your sales into the state exceed a threshold, commonly defined by a dollar amount of sales, a number of transactions, or both, within a period. Exceed it, and you generally must register and collect, even with no physical presence. Thresholds and definitions vary by state, so the same sales volume can create nexus in one state and not another. This is the change that turned sales tax into a multistate puzzle for online sellers. Marketplace Facilitator Rules Many states now require marketplaces like Amazon to collect and remit sales tax on sales made through their platform. That helps, but it does not always cover everything: sales through your own website or other channels may still create obligations, and you may still need to register or file in some states. Do not assume the marketplace handles all of it. What to Do When Nexus Applies When you suspect you have nexus in a state, the usual steps are to confirm...
