Economic Nexus Thresholds by State in 2026: Sales Tax Guide for Online Businesses
Rick Patel
on
Introduction
An online store can owe sales tax in a state it has never visited, simply because its orders shipped there crossed a line. Economic nexus thresholds by state set that line, and most states use the same dollar figure. The details differ enough that a seller can be registered in one state and still out of compliance in another.
The guide gives the 2026 thresholds for every state with a sales tax, the recent changes, a worked five-state example and the steps after crossing. It is general information as of October 2026, not tax or legal advice.
Key Takeaways
- Most states set economic nexus at $100,000 in sales; Alabama and Mississippi use $250,000, and California, New York and Texas use $500,000.
- Fifteen jurisdictions still count 200 transactions as a separate trigger, while Connecticut and New York require both a sales and a transaction test.
- Illinois dropped its transaction test on January 1, 2026, and Kentucky dropped its test on August 1, 2026.
- States measure the period differently, so one seller can cross in different states at different times.
- Once a threshold is crossed, the seller must register, collect and file in that state on the state's timeline.
What Is Economic Nexus for Sales Tax?
Economic nexus is the connection a state creates with a seller based on sales into the state, without any office, staff or warehouse there. Once a seller's sales or orders into a state pass the state's threshold, the seller must register, collect sales tax from customers and file returns, the same as a local business.
The rule traces to the Supreme Court's Wayfair decision, decided June 21, 2018, which held that South Dakota's law reaching sellers that deliver more than $100,000 of goods or services into the state, or make 200 or more separate transactions there each year, met the substantial nexus requirement. The Court overruled the physical presence rule that had protected remote sellers.
As of October 2026, every state with a statewide sales tax has an economic nexus rule. Delaware, Montana, New Hampshire and Oregon have no statewide sales tax, and Alaska has local sales taxes only.
Economic Nexus Thresholds by State in 2026
Economic nexus thresholds by state cluster around one hundred thousand dollars in annual sales, with a handful of higher limits and a shrinking group of states that also count transactions. The test column shows whether a seller crosses by meeting either measure or must meet both.
The table follows the Streamlined Sales Tax Governing Board remote seller chart as of October 2026, whose state notes also date the repeals for South Dakota, Indiana, North Carolina, Wyoming, Alaska and Utah.
| State | Sales Threshold | Transactions | Test |
|---|---|---|---|
| Alabama | $250,000 | None | Sales only |
| Alaska (local taxes only) | $100,000 | None | Sales only |
| Arizona | $100,000 | None | Sales only |
| Arkansas | $100,000 | 200 | Either |
| California | $500,000 | None | Sales only |
| Colorado | $100,000 | None | Sales only |
| Connecticut | $100,000 | 200 | Both |
| District of Columbia | $100,000 | 200 | Either |
| Florida | $100,000 | None | Sales only |
| Georgia | $100,000 | 200 | Either |
| Hawaii | $100,000 | 200 | Either |
| Idaho | $100,000 | None | Sales only |
| Illinois | $100,000 | None | Sales only |
| Indiana | $100,000 | None | Sales only |
| Iowa | $100,000 | None | Sales only |
| Kansas | $100,000 | None | Sales only |
| Kentucky | $100,000 | None | Sales only |
| Louisiana | $100,000 | None | Sales only |
| Maine | $100,000 | None | Sales only |
| Maryland | $100,000 | 200 | Either |
| Massachusetts | $100,000 | None | Sales only |
| Michigan | $100,000 | 200 | Either |
| Minnesota | $100,000 | 200 | Either |
| Mississippi | $250,000 | None | Sales only |
| Missouri | $100,000 | None | Sales only |
| Nebraska | $100,000 | 200 | Either |
| Nevada | $100,000 | 200 | Either |
| New Jersey | $100,000 | 200 | Either |
| New Mexico | $100,000 | None | Sales only |
| New York | $500,000 | 100 | Both |
| North Carolina | $100,000 | None | Sales only |
| North Dakota | $100,000 | None | Sales only |
| Ohio | $100,000 | 200 | Either |
| Oklahoma | $100,000 | None | Sales only |
| Pennsylvania | $100,000 | None | Sales only |
| Rhode Island | $100,000 | 200 | Either |
| South Carolina | $100,000 | None | Sales only |
| South Dakota | $100,000 | None | Sales only |
| Tennessee | $100,000 | None | Sales only |
| Texas | $500,000 | None | Sales only |
| Utah | $100,000 | None | Sales only |
| Vermont | $100,000 | 200 | Either |
| Virginia | $100,000 | 200 | Either |
| Washington | $100,000 | None | Sales only |
| West Virginia | $100,000 | 200 | Either |
| Wisconsin | $100,000 | None | Sales only |
| Wyoming | $100,000 | None | Sales only |
Some states set the line at more than the amount and others at the amount or more, so a seller close to a threshold should read the state's own rule. Alaska's threshold applies to local taxes in the boroughs and cities that belong to its remote seller commission.
The Streamlined chart still shows a transaction test for Maine. Maine dropped that test on January 1, 2022, according to Maine Revenue Services Bulletin No. 111, and its nexus statute measures gross sales into Maine of more than $100,000 in the previous or current calendar year.
Which States Changed Their Thresholds Since 2023?
Since July 2023, nine states, starting with South Dakota itself, have dropped their transaction test, leaving a dollar test alone. The trend helps low-price sellers with many small orders, who often crossed on order count long before reaching the dollar line. Sellers who registered only because of order counts should check whether they still need to file.
Louisiana Act 15 of 2023 repealed its 200-transaction test effective August 1, 2023, keeping a test of more than $100,000 in gross revenue from sales delivered into Louisiana. Illinois Informational Bulletin FY 2026-12 confirms that from January 1, 2026, the only Illinois test is $100,000 or more in gross receipts, checked on a rolling quarterly basis.
A Kentucky Department of Revenue letter confirms that House Bill 757 removed the 200-transaction standard effective August 1, 2026.
| State | Change | Effective |
|---|---|---|
| South Dakota | 200-transaction test removed | July 1, 2023 |
| Louisiana | 200-transaction test removed | August 1, 2023 |
| Indiana | 200-transaction test removed | January 1, 2024 |
| North Carolina | 200-transaction test removed | July 1, 2024 |
| Wyoming | 200-transaction test removed | July 1, 2024 |
| Alaska | 200-transaction test removed | January 1, 2025 |
| Utah | 200-transaction test removed | July 1, 2025 |
| Illinois | 200-transaction test removed | January 1, 2026 |
| Kentucky | 200-transaction test removed | August 1, 2026 |
A seller registered in one of these states should close its account through the state's own process rather than simply stop filing.
How Do States Measure the Threshold Period?
States measure the threshold over different periods. Most look at the previous or current calendar year. New York uses the preceding four sales tax quarters, and Connecticut uses a twelve-month period ending each September. Illinois checks at the end of each calendar quarter. The period decides the date a seller crosses.
Connecticut law requires both $100,000 in gross receipts and 200 retail sales during the twelve-month period ended September 30. A seller with high sales but fewer orders, or many orders but low sales, does not cross in Connecticut.
Calendar-year states such as Georgia count sales in the previous or current calendar year. A seller can cross partway through a year, so monthly or quarterly tracking catches the crossing sooner than an annual review.
How Does One Online Seller Test Nexus in Five States?
One online seller can cross the threshold in some states and not others in the same year. The dollar levels, transaction tests and periods differ from state to state. Testing each state on its own rule, with sales tracked by ship-to state, is the only reliable way to know where registration is due.
The example uses a calendar-year online seller in mid-2026 and applies New York's four-quarter test from Technical Memorandum TSB-M-19(4)S, with the other states' rules from the sections above.
| State | Rule Applied | Sample Sales | Result |
|---|---|---|---|
| New York | Over $500,000 and over 100 sales, four preceding quarters | $520,000 and 140 sales | Crossed |
| Connecticut | $100,000 and 200 retail sales, 12 months ended September 30 | $140,000 and 180 sales | Not crossed |
| Illinois | $100,000 gross receipts, rolling quarterly test | $115,000 | Crossed |
| Texas | $500,000, preceding 12 months | $300,000 | Not crossed |
| Georgia | $100,000 or 200 sales, current or previous calendar year | $60,000 and 230 sales | Crossed on orders |
New York's result turns on both measures, since the seller passes the dollar line and the order count. Connecticut shows the reverse pattern, with sales well above its dollar line but too few retail orders for its combined test. Illinois applies its dollar test alone, which the seller passes.
Georgia catches the seller on order count alone, even though dollar sales sit well below its sales line. Texas sits under its higher dollar line, so no registration is due there yet.
The sample seller registers in New York, Illinois and Georgia, and keeps monitoring Connecticut and Texas. Connecticut would apply once retail orders in the twelve months ending the next September 30 reach two hundred, so the seller should check it each quarter.
What Counts Toward an Economic Nexus Threshold?
What counts toward a threshold depends on the state. Some states count gross sales, including exempt and resale sales, while others count only retail or taxable sales. States also differ on whether sales made through a marketplace such as Amazon count toward the seller's own threshold.
Under Texas Comptroller remote seller guidance, Texas counts gross revenue from taxable and nontaxable sales into the state, including sales for resale and sales to exempt entities.
A marketplace facilitator is a platform, such as Amazon, that lists a third-party seller's products and processes the buyer's payment. The facilitator collects and remits the tax on those sales, but whether the same sales count toward the seller's own threshold is a separate question that each state answers in its own law.
Sellers should track three figures by ship-to state each month:
- Total sales, including exempt sales and sales for resale.
- Sales made through the seller's own website or channels.
- Sales made through marketplaces that collect tax for the seller.
With all three figures, a seller can apply any state's definition without rebuilding the data later. Virtue Advisors' Monthly Accounting Services features include sales and use tax returns, so filing can sit alongside the monthly books.
What Mistakes Do Online Sellers Make with Economic Nexus?
The costliest nexus mistakes come from checking too rarely or relying on a single figure. Sellers often test once a year, leave out marketplace sales, assume one registration covers other states, or stop filing after a state drops its transaction test without closing the account properly.
Common errors include:
- Testing once a year when a state such as Illinois tests each quarter, which can leave months of uncollected tax.
- Counting only taxable sales where the state counts gross sales, including exempt sales and sales for resale.
- Leaving marketplace orders out of the count without checking whether the state excludes them.
- Ignoring order counts in Connecticut and New York, where both tests must be met, or relying on them in states that dropped them.
- Stopping returns without closing the registration, which can lead to notices for missed filings.
- Waiting until a state sends a nexus questionnaire, since an inquiry from the state about sales tax can disqualify a seller from voluntary disclosure.
A short monthly review that applies each state's own definition and period avoids most of these errors.
What Should You Do After Crossing a Threshold?
After crossing a threshold, a seller registers with the state, starts collecting tax on taxable sales into the state and files returns on the schedule the state assigns. Each state sets its own deadline to register, so the date of crossing matters. Past years when the seller crossed but did not collect need a separate plan.
New York sets a clear timeline. Under its remote seller guidance, a business that meets both thresholds must file a certificate of registration within 30 days after the day it met them, and begin collecting sales tax 20 days after that.
Texas allows more time. Under Texas Administrative Code Rule 3.286, a remote seller that exceeds the $500,000 safe harbor has until the first day of the fourth month after the month it crossed to obtain a permit and begin collecting.
Sellers who crossed in earlier years without collecting can consider a voluntary disclosure agreement, which limits the lookback period and waives penalties for that period, though interest is generally still due. Prior contact from a state about the tax can disqualify a seller, so reviewing past years early keeps that option open.
How Long Does a Sales Tax Obligation Last After Crossing?
Crossing a threshold starts an obligation that lasts beyond the month of crossing. Some states hold a seller to a set collection period and then let it test again. Stopping returns without closing the registration can still lead to notices for missed filings. A seller whose sales fall back below a line should check the state's rule before stopping.
Illinois sets one of the clearest rules. Under the Illinois Retailers' Occupation Tax Act, a remote retailer that meets the $100,000 test over the preceding 12 months, checked at the end of each March, June, September and December, must collect and file returns for one year.
At the end of that year, the Illinois retailer tests again to decide whether the obligation continues. The Illinois statute also leaves marketplace sales out of the count once the marketplace facilitator certifies that it is responsible for the tax on those sales.
How Virtue Advisors Can Help
Virtue Advisors describes its tax and accounting work as more than compliance, aimed at creating clarity, driving strategy and fueling growth. Its state and local tax compliance services include Sales Tax Compliance, Sales And Use Tax Refund Study, State & Local Tax Controversy and State & Local Tax Minimization.
Owners comparing state taxes can also read Virtue Advisors' guide to PTET elections in 2026.
Buyers and valuers review sales tax compliance, so uncollected sales tax can reduce what an online business is worth. Virtue Advisors' valuation assignments are executed and reviewed by CVA and AICPA-qualified experts.
Crossed a Threshold in a Past Year? Get Clarity on Your Sales Tax Exposure Before a State Asks.
Conclusion
Economic nexus thresholds by state look similar on paper, but the period, the test and the definition of sales decide when an online seller must register. The recent repeals of transaction tests help small-order sellers, while both-test states and quarterly checks still need close tracking.
Track sales by ship-to state every month, test each state on its own rule, and act quickly once a threshold is crossed.
Want More Than Compliance? Get Clarity on Where You Owe Sales Tax.
Frequently Asked Questions
