U.S. Sales Tax for Foreign & Local Businesses — 2026 Guide

Introduction

In how many U.S. states does your business have a sales tax collection obligation today — and how many of those states have you actually registered in?

That is the single question that defines U.S. sales tax compliance for every business — foreign or domestic, large or small, with U.S. customers or without. The answer is rarely the same number on both sides of the “and”. A typical mid-sized European or Asian exporter into the U.S. market has economic nexus in eight to fifteen states by the time they engage tax counsel; they are typically registered in zero to three. The gap is where the audit risk lives.

Unlike every other major economy covered in this content programme, the United States does not operate a federal value-added tax or goods-and-services tax. Sales tax is administered at the state level by 45 of the 50 states (plus the District of Columbia and certain U.S. territories) and overlaid by tens of thousands of local jurisdictions — counties, cities, transit districts, special-purpose districts — that levy their own rates within the state framework. Combined state-plus-local rates range from 0% (in the five “NOMAD” states with no state sales tax: New Hampshire, Oregon, Montana, Alaska, Delaware) to over 11% (in certain Louisiana parishes and parts of Alabama, Illinois, and Washington). And since the U.S. Supreme Court’s June 2018 decision in South Dakota v. Wayfair, Inc., physical presence is no longer required for a state to impose sales tax collection obligations on out-of-state sellers — economic nexus standards based on sales volume or transaction count now apply across every state with a sales tax.

This guide is the operator’s view of how U.S. sales tax actually works in 2026 — eight years after Wayfair, with marketplace facilitator laws now in all 50 states, with SaaS and digital service taxation expanding in roughly one new state per year, and with state revenue departments running increasingly sophisticated cross-matching against marketplace and payment-processor data. We cover what foreign vendors selling into the U.S. need to do, what U.S.-resident businesses face when selling across state lines, how the major state regimes (California, New York, Texas, Florida, Illinois, Washington) actually behave, and how the Streamlined Sales Tax (SST) compact reduces compliance burden in 24 member states.

What this guide covers

01  Snapshot — U.S. sales tax at a glance

02  60-second self-check — does this guide apply to you?

03  Track 1 — Foreign vendor with U.S. physical presence (office, inventory, employees, contractors)

04  Track 2 — Foreign vendor with no U.S. physical presence (economic nexus only)

05  Track 3 — The major state regimes — California, New York, Texas, Florida, Illinois, Washington

06  Track 4 — U.S.-resident business — multi-state compliance from day one

07  Cross-track essentials — Marketplace Facilitator laws, resale certificates, SaaS, SST

08  Common questions answered properly

09  Recent changes and the road ahead

10  Primary sources & official references

01 · Snapshot — U.S. sales tax at a glance

Everything you need to orient before reading the persona tracks. Every figure here is restated and sourced inside the relevant track.

02 · 60-second self-check — does this guide apply to you?

Six questions. If any answer is yes, the corresponding track is mandatory reading before you transact.

03 · Track 1 — Foreign vendor with U.S. physical presence

You are established outside the U.S. and you have some form of physical presence in one or more U.S. states — a sales office, an employee or W-2 contractor, inventory in a third-party warehouse, an Amazon FBA fulfilment relationship that places your goods in specific state warehouses, a U.S. subsidiary, or trade-show attendance pattern that triggers state physical-presence rules. Physical presence triggers state nexus from day one — there is no threshold.

3.1  What constitutes “physical presence”

State definitions of physical presence vary but typically include:

• Owned or leased office, warehouse, or other facility within the state.
• Employees, agents, or representatives operating within the state — even a single remote-working employee in a state can create nexus.
• Independent contractors performing services on the foreign vendor’s behalf within the state (varies by state — Texas, Massachusetts, and several others apply broad agency rules).
• Inventory held by a third-party warehouse, fulfilment service, or Amazon FBA fulfilment centre located within the state.
• Trade-show attendance above a threshold (typically 7–15 days per year — varies by state).
• Affiliated entities (“click-through nexus”, “affiliate nexus”) where related parties or affiliates in the state generate referrals or business — narrower since Wayfair but still relevant in some states.

3.2  Worked example — Munich Precision Tools GmbH

Munich Precision Tools GmbH is a German precision-engineering company manufacturing CNC machining tools (cutting heads, indexable inserts, custom tooling) for the U.S. industrial market. Their U.S. footprint:

• A two-person U.S. sales office in Detroit, Michigan, serving the Midwest automotive market.
• Consigned inventory at a third-party warehouse in Greenville, South Carolina, for distribution to BMW Spartanburg and other Southeast U.S. customers.
• Amazon FBA inventory at Amazon fulfilment centres (Munich Precision sells a consumer-grade product line of DIY machinist tools through Amazon).
• Five U.S. employees across Michigan, South Carolina, Texas, and California (one each in each state) working from home offices.
• Direct B2B sales nationwide to roughly 600 U.S. industrial customers.

Their nexus map looks like this:

• Michigan — physical nexus (sales office + employee). Registration mandatory.
• South Carolina — physical nexus (consigned inventory + employee). Registration mandatory.
• Texas, California — physical nexus (remote-working employees). Registration mandatory.
• Amazon FBA states — Amazon’s fulfilment network spans ~25 states; FBA inventory triggers nexus in each. However, marketplace facilitator laws now mean Amazon collects and remits sales tax on the FBA marketplace sales — but the underlying nexus still exists and may trigger registration requirements depending on each state’s rules for direct-channel sales by FBA-using sellers.
• Economic nexus states — based on direct B2B sales volumes, Munich Precision exceeds $100,000 (or applicable threshold) in approximately 12–15 additional states.

Realistic registration count for Munich Precision: 18–25 states. Realistic ongoing compliance burden without automation: 18–25 separate state filings monthly or quarterly, with separate rate-and-rule logic per state. With automation through a Certified Service Provider (CSP) or commercial tax-engine like Avalara, Vertex, TaxJar, or Sovos: dramatically reduced — typically a single platform handles all states with automated rate lookup, return preparation, and filing.

3.3  Registration mechanics

State sales tax registration is filed with each state revenue department through state-specific online portals. Streamlined Sales Tax (SST) member states accept a single SST registration that covers all 24 SST states simultaneously. Non-SST states require state-by-state registration through individual portals. Each registration requires:

• Federal Employer Identification Number (FEIN) — issued by the IRS via Form SS-4. Foreign businesses without prior U.S. presence must obtain a FEIN before any state registration. Processing time is typically 4–6 weeks for foreign applicants without a U.S. tax preparer.
• Description of business activity and projected U.S. sales by state.
• Information on physical presence (offices, employees, inventory) by state.
• U.S. mailing address (third-party registered agent acceptable for non-U.S. businesses).
• Banking information for refunds and electronic payments.

Processing times vary: SST single registration typically 5–10 business days; individual state registrations 2–8 weeks. California and New York are notably slower than average. Plan for 3 months from start of registration project to active collection in all relevant states.

04 · Track 2 — Foreign vendor with no U.S. physical presence (economic nexus only)

You are established outside the U.S. and you have no physical presence in any U.S. state — no office, no employees, no inventory, no contractors. Your nexus arises entirely from economic activity. Until June 2018, this meant no state could impose sales tax collection obligations on you (Quill Corp. v. North Dakota physical-presence rule). After Wayfair, every state with a sales tax has adopted economic nexus standards.

4.1  Economic nexus thresholds — the patchwork

The Wayfair decision validated South Dakota’s specific threshold of $100,000 in sales OR 200 transactions per year. Most states followed with similar or modified thresholds:

• Most common: $100,000 in annual sales (calendar year or any 12 consecutive months) OR 200 separate transactions per year.
• Larger states with higher thresholds: California ($500,000), Texas ($500,000), New York ($500,000 AND 100 transactions), Massachusetts ($100,000).
• Removed transaction-count prong: Several states (including South Carolina, Wisconsin, Iowa) have removed the 200-transaction trigger since 2023, leaving only the dollar threshold. The trend is towards dollar-only thresholds because low-value high-volume sellers (e.g. $0.99 in-app purchases) were being caught by transaction-count rules in a way states found administratively unproductive.
• Some states apply gross sales (including exempt sales like resale); others apply taxable sales only. Read each state’s rule carefully.

4.2  Worked example — Munich Precision Tools GmbH if it had no U.S. physical presence

Suppose Munich Precision Tools sold $2.4 million annually into the U.S. but with no U.S. physical presence at all — pure exports from Germany to U.S. customers. Their economic nexus would arise on a state-by-state basis based on sales volume into each state:

• California — $480,000 annual sales: above the $500,000 threshold? No, just below. Nexus depends on the trend (rising sales projection may trigger nexus prospectively).
• Texas — $320,000 annual sales: below the $500,000 threshold. No nexus.
• New York — $380,000 sales but only 80 transactions (high-value B2B): below both prongs of $500,000 AND 100. No nexus.
• Michigan — $180,000 sales: above the $100,000 threshold. Nexus.
• Ohio — $145,000 sales: above the $100,000 threshold. Nexus.
• South Carolina — $95,000 sales: below the $100,000 threshold. No nexus.

Even without physical presence, Munich Precision would have economic nexus in 8–12 states. Each state requires registration, collection of the state and applicable local rates from in-state customers, monthly or quarterly filing, and remittance of collected tax.

4.3  Trailing nexus — the year after you fall below

If you cross an economic nexus threshold and then fall below it in a subsequent year, most states require you to remain registered and collecting for a defined trailing period — typically one full calendar year of being below the threshold, sometimes two. This prevents “in-and-out” gaming of the threshold by businesses with seasonal or cyclical patterns. Plan compliance budgets on the assumption that once you hit a state’s threshold, you are in for at least 2–3 years of compliance even if sales decline.

4.4  Sales tax registration without U.S. presence

Foreign vendors without U.S. presence can register for state sales tax through:

• The Streamlined Sales Tax (SST) compact — a single SST registration covers all 24 SST member states. Free Certified Service Provider (CSP) compliance is available for non-resident sellers — the CSP handles all SST-state filings at no charge to the seller (the SST states pay the CSP from collected revenue). This is the highest-value compliance pathway for foreign sellers.
• Individual state registration for non-SST states (California, New York, Texas, Florida, Illinois, Pennsylvania, and others) — typically requires a federal EIN, a state-specific application form, and sometimes a U.S. mailing address or registered agent.
• Multi-state tax automation through commercial platforms — Avalara, Vertex, TaxJar (by Stripe), Sovos, and others handle registration, rate calculation, and filing across all 45 sales tax states for a per-state monthly fee.

05 · Track 3 — The major state regimes — California, New York, Texas, Florida, Illinois, Washington

U.S. sales tax is 50 jurisdictions, but most foreign vendors’ compliance effort concentrates in roughly a dozen states — the largest by economic activity, sales tax complexity, or audit intensity. Brief operational profiles of the six most consequential.

5.1  California

Administering authority: California Department of Tax and Fee Administration (CDTFA). State rate: 7.25%. Total combined rates (state + local) range from 7.25% to 10.75%. Economic nexus threshold: $500,000 in California sales annually (no transaction-count prong).

Distinctive features:

• CDTFA operates one of the most audit-active state revenue departments in the country, with particular focus on out-of-state sellers.
• California taxes most tangible personal property and a narrow set of services. SaaS is generally not taxable; cloud-based software with significant downloaded components may be partially taxable.
• California has expansive use-tax enforcement on consumer purchases from out-of-state sellers — businesses making sales in California should expect customers to ask for compliant invoicing.
• Drop-shipping rules in California are particularly complex — a foreign vendor drop-shipping into California via a U.S. fulfilment partner may have nexus through the partner’s inventory.

5.2  New York

Administering authority: New York State Department of Taxation and Finance. State rate: 4%. Combined state + New York City rate: 8.875%. Total combined rates vary by county and city, generally 7%–8.875%. Economic nexus threshold: $500,000 AND 100 transactions.

Distinctive features:

• New York is one of the states that taxes SaaS — a meaningful operational consideration for foreign SaaS businesses with New York customers.
• Information products, digital downloads, and certain professional services are taxable in New York where exempt in most other states.
• New York applies aggressive marketplace facilitator rules — the marketplace is liable for sales tax on third-party seller transactions.
• New York’s high state-and-city combined rate and the strong audit focus make accurate New York compliance commercially important for any business above the threshold.

5.3  Texas

Administering authority: Texas Comptroller of Public Accounts. State rate: 6.25%. Total combined rates (state + local) range from 6.25% to 8.25%. Economic nexus threshold: $500,000 in Texas sales annually (no transaction-count prong).

Distinctive features:

• Texas taxes SaaS — but at a reduced effective rate under the “data processing services” framework which applies sales tax to 80% of the SaaS revenue (an effective ~5% rate on a $100 SaaS subscription rather than the full 6.25%).
• Texas is a strong manufacturing state with a robust manufacturing exemption that takes meaningful input cost off the sales tax base for in-state manufacturers.
• Texas Comptroller maintains detailed online resources and is relatively responsive to written inquiries.
• Texas’s no-state-income-tax model and pro-business orientation make it operationally friendly to foreign businesses.

5.4  Florida

Administering authority: Florida Department of Revenue. State rate: 6%. Total combined rates (state + county “discretionary sales surtax”) generally 6.5%–8.5%. Economic nexus threshold: $100,000 in Florida sales annually (no transaction-count prong, enacted 2021).

Distinctive features:

• Florida does not tax SaaS — among the largest U.S. states that do not.
• Florida’s tourism-driven economy creates specific rules for transient accommodation, vehicle rentals, and event admissions.
• Florida applies marketplace facilitator rules (from 2021); collection obligation shifts to platforms for in-scope transactions.

5.5  Illinois

Administering authority: Illinois Department of Revenue. State rate: 6.25%. Combined rates with Chicago add up to 10.25% in some Chicago districts. Economic nexus threshold: $100,000 OR 200 transactions.

Distinctive features:

• Illinois operates a Retailers’ Occupation Tax framework distinct from typical sales tax — though operationally similar for sellers, the legal framework places the tax on the retailer rather than on the customer purchase.
• Chicago applies a distinctive set of additional local taxes (Lease Transaction Tax, Cloud Computing Tax) on top of general sales tax — particularly relevant for SaaS and cloud-services businesses with Chicago customers.
• Illinois taxes a narrow range of services compared to neighbouring states.

5.6  Washington

Administering authority: Washington State Department of Revenue. State rate: 6.5%. Combined rates (state + local) generally 7%–10.5% — Seattle area reaches the upper end. Economic nexus threshold: $100,000 in Washington sales annually.

Distinctive features:

• Washington’s Business & Occupation (B&O) tax operates alongside sales tax as a gross-receipts tax — out-of-state businesses meeting nexus may have both sales tax and B&O tax obligations. The B&O tax is small (0.471% retail rate typically) but is separately filed.
• Washington taxes SaaS (“prewritten computer software including pre-defined cloud-based services”).
• Seattle area’s high combined rates and presence of major technology customers make Washington a frequent compliance focus for foreign SaaS and tech vendors.

06 · Track 4 — U.S.-resident business — multi-state compliance from day one

If you operate a U.S.-resident business — a Delaware C-corp, an LLC formed in any state, an S-corp, a single-member LLC sole proprietorship, or any other U.S. legal entity — your sales tax obligations begin with your home state and expand state-by-state as your customer base grows.

6.1  Home-state registration

If your business has a physical presence in any state (your office, your employees, your inventory), that state requires sales tax registration from day one regardless of sales volume. There is no home-state threshold.

6.2  Multi-state nexus expansion

As your business grows beyond the home state, three types of nexus expansion are typical:

• Physical-presence expansion — opening a sales office, hiring a remote employee, storing inventory in a new state. Each new state creates immediate nexus.
• Economic nexus expansion — sales into a state exceeding the state’s threshold (typically $100,000 or 200 transactions). Each crossing creates nexus prospectively.
• Marketplace-related nexus — using Amazon FBA, Walmart Fulfilment Services, eBay International Shipping, or other fulfilment-by-marketplace arrangements that place your inventory in third-party warehouses in multiple states. Each warehouse location can create nexus.

6.3  Multi-state compliance approaches

U.S.-resident businesses typically follow one of three compliance approaches by stage:

• Manual single-state compliance (early stage) — file directly with state revenue departments through individual state portals. Workable for 1–3 states; rapidly impractical above that.
• Streamlined Sales Tax (SST) participation (mid-stage) — register once through SST and operate across 24 member states with a Certified Service Provider handling rate calculations and filings. Free for qualifying remote sellers; modest cost for SST participants with in-state presence.
• Commercial tax-engine integration (late stage) — Avalara, Vertex, TaxJar (Stripe), Sovos, and similar platforms integrate with ERP/e-commerce platforms to automate rate determination, collection, return preparation, and filing across all 45 sales tax states. Cost scales with volume; reduces internal compliance overhead significantly.

6.4  Sales tax exemption certificates

U.S.-resident B2B sellers must collect and maintain sales tax exemption certificates from customers claiming exemption:

• Resale certificates — for goods purchased for resale. Most states accept the SST Uniform Sales & Use Tax Exemption Certificate.
• Manufacturing certificates — for goods used in manufacturing. State-specific forms.
• Non-profit certificates — for sales to qualifying non-profit organisations. State-specific forms.
• Government certificates — for sales to federal, state, or local government entities. Generally exempt by operation of law but documentation required.

Exemption certificates are state-specific and must be valid in the customer’s state. A California resale certificate does not exempt a sale in Texas. Multi-state B2B sellers must operate state-by-state certificate management — most ERP and tax-engine platforms include certificate management modules. Failure to retain valid certificates exposes the seller to liability for the uncollected sales tax in subsequent audit.

07 · Cross-track essentials — Marketplace Facilitator laws, resale certificates, SaaS, SST

7.1  Marketplace Facilitator laws

Marketplace Facilitator laws are now in force in all 50 states as of 2026. These laws shift sales tax collection responsibility from third-party sellers to the marketplace platform. Coverage:

• Amazon, eBay, Etsy, Walmart Marketplace, Wayfair, Best Buy Marketplace, Target Plus, and dozens of other marketplaces all qualify as facilitators.
• The marketplace registers, collects, and remits sales tax for in-scope transactions across all states where it has nexus (effectively all 45 sales tax states for any major U.S. marketplace).
• The third-party seller’s role on the marketplace becomes a wholesale supplier role; the marketplace becomes the retail seller for sales tax purposes.

Operational implications for foreign vendors selling through marketplaces:

• Sales tax on marketplace transactions is handled by the marketplace — no third-party-seller sales tax registration or filing is required for those specific transactions in most states.
• Underlying nexus may still exist (FBA inventory in a state creates nexus even though the marketplace handles sales tax). Some states require sellers to register even when the marketplace remits, for use-tax reporting or directly-channel sales.
• Direct-channel sales (your own website, your own catalogue sales) remain the seller’s responsibility — the marketplace facilitator law covers only marketplace-facilitated transactions.

7.2  SaaS and digital services — state-by-state taxability

U.S. sales tax taxability of SaaS, downloaded software, digital services, and electronic content varies materially by state. Approximate 2026 landscape:

• States that tax SaaS broadly: Texas, New York, Washington, Connecticut, Pennsylvania, Arizona, Ohio, Massachusetts, Tennessee, South Carolina, Iowa, South Dakota, Utah, Hawaii, New Mexico, Rhode Island, West Virginia, and roughly 8 others.
• States that do not tax SaaS: California, Florida, Illinois, Georgia, Virginia, New Jersey, North Carolina, Maryland, Oregon (no state sales tax), and approximately 12 others.
• States with partial or conditional SaaS taxability: Indiana (taxable if certain access conditions), Louisiana, Minnesota (taxable for personal use, exempt for business use), and others.

The boundary between taxable “prewritten software” and exempt “custom software” is a frequent area of audit dispute. The boundary between taxable “information services” and exempt “consulting services” similarly. Foreign SaaS vendors should map their offering against each state’s published guidance and revisit annually.

7.3  Streamlined Sales Tax (SST) — the compliance simplifier

Streamlined Sales Tax is a multi-state compact established in 2000 to simplify sales tax compliance for multi-state sellers. SST has 24 full-member states and 1 associate-member state. Benefits to participating sellers:

• Single registration covers all SST member states.
• Free Certified Service Provider (CSP) compliance for qualifying non-resident sellers — the CSP (typically Avalara, TaxConnex, Sovos, or others) handles all SST-state filings, and the SST states pay the CSP from collected revenue.
• Uniform definitions of taxability across SST states reduce state-by-state interpretation work.
• Streamlined Sales and Use Tax Exemption Certificate accepted across all SST states.

SST is among the most operationally valuable U.S. sales tax compliance tools. For foreign vendors without prior U.S. operations, SST registration through a CSP is typically the first compliance step.

7.4  Drop-shipping and resale certificates

Drop-shipping — where a foreign vendor sells to a U.S. customer but ships from a U.S. wholesaler or distributor’s warehouse — creates complex sales tax mechanics. The two-tier transaction:

• Tier 1: U.S. wholesaler/distributor sells to foreign vendor (typically with foreign vendor’s resale certificate making the sale exempt).
• Tier 2: Foreign vendor sells to U.S. customer (subject to sales tax in customer’s state if nexus exists).

State acceptance of foreign-vendor resale certificates varies. Some states (Texas, Florida) accept non-resident resale certificates issued by foreign vendors. Others (California historically, though softening) require the foreign vendor to register for California sales tax in order to issue valid California resale certificates. Drop-shipping into California from a German vendor often triggers California registration even when the German vendor would otherwise be below the $500,000 threshold.

08 · Common questions answered properly

Q. We’re a German company selling B2B industrial equipment to U.S. customers. How urgent is sales tax registration?

Depends on volumes and structure. Pure B2B sales where customers can provide resale or manufacturing exemption certificates may produce minimal collection obligation even where nexus exists — your customers provide certificates, you exempt the sale, no tax collected. But you still need to be registered to issue compliant exempt invoices and to maintain the certificates. Most foreign B2B industrial vendors register in their top 5–10 states by sales volume and operate exemption-certificate management for B2B customers in those states. Direct B2C sales or sales to non-exempt B2B customers (consumer-grade products, government end-users) trigger active collection obligations.

Q. We use Amazon FBA. Doesn’t that handle all the sales tax for us?

Amazon collects and remits sales tax on FBA marketplace transactions in all states where it has nexus — which is effectively all 45 sales tax states. So marketplace-channel sales tax is handled. However: (a) FBA inventory in a state creates underlying nexus for you in that state, even though Amazon collects on the marketplace sales; (b) some states (notably California, New York, Texas) require sellers with FBA-state nexus to register for sales tax even when the marketplace collects, primarily for reporting purposes and to handle any direct-channel sales; (c) if you have a direct sales channel (your own website outside the marketplace), Amazon’s collection doesn’t apply — you handle direct-channel sales tax yourself in states where you have nexus.

Q. We sell SaaS subscriptions to U.S. businesses. Which states do we need to worry about?

Approximately 25 states tax SaaS as of 2026. Map your U.S. customer base against the taxing-states list — the major ones to focus on are New York, Texas, Washington, Pennsylvania, Connecticut, Massachusetts, Ohio, and Tennessee. Where you exceed the state’s economic nexus threshold (typically $100,000–$500,000) AND the state taxes SaaS, you must register, collect, and remit. Where the state taxes SaaS but you’re under threshold, no obligation yet. Where the state doesn’t tax SaaS at all (California, Florida, Illinois, Georgia, Virginia, New Jersey, North Carolina, and others), no SaaS sales tax obligation regardless of volume — but you may still have nexus for other product lines.

Q. Wayfair was decided in 2018. Why is sales tax compliance still hard?

Wayfair gave states the authority to impose economic nexus. It did not harmonise the rules. Each of 45 sales tax states + DC + thousands of local jurisdictions still operates its own rates, rules, exemptions, filing schedules, and taxability decisions. The complexity isn’t the Wayfair rule itself — it’s the underlying fragmentation. SST and commercial tax-engine platforms reduce the operational burden but the substantive complexity remains.

Q. We made a sales tax mistake — undercollected in California for two years. What’s our exposure?

Significant. California’s statute of limitations is typically 3 years from filing date (open returns) or unlimited for unfiled periods. CDTFA can assess back taxes, interest, and penalties. Voluntary Disclosure Agreement (VDA) — a structured self-disclosure process — typically caps liability at 3 years’ look-back and waives or reduces penalties. VDA is the standard remediation pathway: file a VDA application before CDTFA initiates audit, agree to pay back tax and interest for the look-back period, get penalty waiver. Acting before audit is materially less expensive than being found in audit. California sales tax counsel typical fees: $25,000–$80,000 for a VDA engagement.

Q. Do we need a U.S. bank account?

Effectively yes for active operations. State revenue departments expect electronic payment (ACH) for sales tax remittances, which typically requires a U.S. bank account. Foreign businesses operating without a U.S. entity often use their U.S. registered agent’s account, work through a tax-engine provider with payment-facilitation services (Avalara Returns, TaxJar AutoFile), or open a U.S. business account through a U.S. fintech or U.S. branch of an international bank. The U.S. bank account requirement is operational rather than legal — payments could theoretically come from international wires but states are not set up to handle international wire-funded sales tax remittances efficiently.

Q. The U.S. doesn’t have a federal VAT. Is that ever likely to change?

Politically very unlikely in any near-term horizon. Federal VAT proposals have surfaced periodically (notably during 1993 health-care reform debates and various budget discussions through the 2010s) but have never gathered meaningful bipartisan support. The U.S. tax system’s reliance on income tax at federal level and state-administered sales tax at state level is politically entrenched. Operational planning for foreign vendors should assume the current architecture remains in place through 2030 and beyond.

Q. Resale certificates — how do we manage them across multiple states?

Use a commercial certificate management system. Avalara CertCapture, Vertex Exemption Certificate Manager, TaxJar’s certificate features, or any major ERP-integrated tax-engine certificate module. The system collects certificates from B2B customers at first transaction, validates them against state-specific requirements, stores them with retention periods, and reminds you when certificates expire. Manual certificate management for any multi-state B2B operation above modest scale becomes the audit-failure mode within 12–24 months — every audited transaction without a valid certificate creates liability for the uncollected sales tax plus interest plus penalty.

09 · Recent changes and the road ahead

2018 — South Dakota v. Wayfair

On 21 June 2018, the U.S. Supreme Court decided South Dakota v. Wayfair, Inc., overturning the 1992 Quill physical-presence rule and validating economic-nexus standards. The decision transformed U.S. sales tax from a system that largely exempted out-of-state sellers into one that captures essentially every business with meaningful U.S. customer volume. Within 18 months of Wayfair, all 45 sales tax states had adopted economic nexus standards.

2019–2021 — Marketplace facilitator law rollout

Between 2018 and 2021, every state with a sales tax adopted marketplace facilitator laws shifting collection responsibility from third-party sellers to platforms. The combined effect of Wayfair + marketplace facilitator laws moved the U.S. sales tax framework into a substantially more enforceable state.

2022–2025 — SaaS taxability expansion

Approximately one new state per year has begun taxing SaaS through this period — among the most recent additions are West Virginia (2022), Kentucky (2023 narrow expansion), and several others. Major states still exempt as of 2026: California, Florida, Illinois, Georgia, Virginia, New Jersey, North Carolina. Watch for further additions through 2027–2028.

2023–2025 — Transaction-count threshold rollback

Several states have removed or proposed removing the 200-transactions prong from economic nexus tests, leaving only the dollar threshold. The change benefits high-volume low-value sellers (mobile games, micropayments) who were creating outsized compliance burden for minimal revenue under the transaction-count test.

Outlook 2026–2030

Three trends to monitor: (1) continued SaaS taxability expansion — expect 3–5 more states to begin taxing SaaS through 2028; (2) continued state-by-state alignment with SST principles, particularly on uniform definitions and exemption certificate acceptance; (3) potential federal preemption legislation — periodic Congressional proposals to set federal minimum standards for state sales tax (Marketplace Fairness Act, Remote Transactions Parity Act variants) have not advanced through 2026 but may resurface under specific political conditions.

10 · Primary sources & official references

Every fact in this guide is sourced. We list the primary references below. Where law changes between publication and your transaction date, the primary source governs.

• Streamlined Sales Tax Governing Board
• South Dakota v. Wayfair, Inc., 138 S. Ct. 2080 (2018) — Supreme Court opinion
• California Department of Tax and Fee Administration (CDTFA)
• New York State Department of Taxation and Finance
• Texas Comptroller of Public Accounts
• Florida Department of Revenue
• Illinois Department of Revenue
• Washington State Department of Revenue
• IRS Federal EIN application (Form SS-4)
• Multistate Tax Commission (MTC) — voluntary disclosure programs
• Federation of Tax Administrators — state tax authorities directory
• Sales Tax Institute — state-by-state taxability matrix
• Council on State Taxation (COST) — multi-state policy resources

Disclaimer & methodology

This guide was prepared by TaxDo’s editorial team in collaboration with practising U.S. state and local tax (SALT) advisors. Every numerical threshold, statutory citation, and procedural detail was verified against the primary sources listed in section 10 on the date of publication (27 May 2026). U.S. sales tax law operates at 45 state-level + thousands of local-level jurisdictions, each with its own rules. Rate changes, threshold adjustments, and taxability decisions occur regularly without federal coordination. Always confirm the position applicable to your specific transaction with a U.S.-qualified SALT advisor or directly with the relevant state revenue department. This guide is general information, not advice on any specific transaction. TaxDo accepts no liability for reliance on this guide in lieu of jurisdiction-specific professional advice.