What is Economic Nexus?
Since the landmark South Dakota v. Wayfair decision in 2018, states have expanded their sales tax laws to require remote sellers to collect and remit sales tax even without a physical presence. Instead, economic nexus laws establish tax obligations based on a seller’s total sales revenue or transaction volume within a state. you can find out nexus threshold details for every state by checking our U.S. Sales and Use Tax Guide page.
For e-commerce, SAAS and Digital businesses, understanding economic nexus is crucial to ensuring compliance. However, a common question arises: Which sales count toward economic nexus thresholds?
The answer depends on the state. Some states include gross sales, while others exclude wholesale or marketplace transactions. Below, we provide a state-by-state breakdown of what sales count toward economic nexus thresholds.
State-by-State Economic Nexus Sales Thresholds
Key Definitions
- Gross Sales: Total sales before exemptions.
- Taxable Sales: Transactions subject to sales tax.
- Exempt Sales: Sales exempt from sales tax, including wholesale and resale transactions.
- Marketplace Sales: Sales made through platforms like Amazon, eBay, or Etsy.
Sales Included in Economic Nexus Thresholds by State
Alabama includes exempt tangible personal property sales but excludes services, wholesale sales, and marketplace sales.
Alaska includes gross sales and marketplace sales.
Arizona includes exempt tangible personal property, wholesale sales, and taxable/exempt services but excludes marketplace sales.
Arkansas includes only taxable sales and excludes non-taxable, wholesale, and marketplace sales.
California includes tangible personal property, wholesale, and marketplace sales but excludes services.
Colorado includes retail sales and services but excludes wholesale and marketplace sales.
Connecticut requires businesses to meet both revenue and transaction thresholds, including gross sales and marketplace sales.
Florida includes only taxable sales and excludes non-taxable, wholesale, and marketplace sales.
Georgia includes exempt tangible personal property sales but excludes wholesale, service, and marketplace sales.
Hawaii includes exempt tangible property, wholesale, and service sales, as well as marketplace sales.
Illinois includes exempt tangible property but excludes wholesale, services, marketplace sales, and certain registered sales.
Indiana includes gross sales but excludes marketplace sales.
Iowa includes gross sales and marketplace sales.
Kansas includes exempt tangible property, taxable services, wholesale sales, and marketplace sales but excludes non-taxable services.
Kentucky includes exempt tangible property, wholesale sales, and marketplace sales.
Louisiana includes gross sales but excludes marketplace sales.
Maine includes tangible property, taxable services, and wholesale sales but excludes non-taxable services and marketplace sales.
Michigan includes gross sales and marketplace sales.
Minnesota includes exempt tangible property, taxable services, and marketplace sales but excludes resale and exempt services.
Missouri includes only taxable tangible property but excludes services, non-taxable goods, wholesale, and marketplace sales.
Nebraska includes retail, marketplace, and service sales but excludes wholesale sales.
New York applies economic nexus to gross receipts exceeding $500,000 and more than 100 transactions within the preceding four sales tax quarters.
Texas requires total Texas revenue of $500,000 or more in the preceding 12 months to establish economic nexus.
Washington applies economic nexus to all revenue, including retail, wholesale, and service sales.
Wisconsin includes exempt tangible property, wholesale sales, taxable services, and marketplace sales.
How to Track and Manage Economic Nexus
Monitoring sales thresholds across multiple states is challenging. If your business exceeds economic nexus thresholds, you must register, collect, and remit sales tax in those states. Failure to comply can lead to penalties and back taxes.
How TaxDo Can Help
TaxDo Nexus Tracker automates economic nexus monitoring, ensuring your business stays compliant. Our real-time dashboard tracks all eligible sales, subtracts exempt transactions, and alerts you when you approach state thresholds.
Key Benefits of TaxDo Nexus Tracker:
- Automated monitoring without the need for manual tracking.
- Accurate nexus determination by including and excluding sales based on state rules.
- Real-time notifications when approaching nexus thresholds.
- Seamless tax compliance with integration into sales tax reporting and filing solutions.
Don’t risk non-compliance—streamline your sales tax obligations with TaxDo.
Ready to simplify economic nexus tracking? Get started today!