What is sales tax nexus in the US? — Physical Nexus

Check if you have any physical presence in a state. FBA warehouses in a state create physical nexus. Having employees or property also creates nexus. Cost: —. Timeline: Immediate.

What is sales tax nexus in the US? — Economic Nexus

Track sales revenue and transaction count per state. Most states: $100K in sales OR 200 transactions. Some states have different thresholds. Must register and collect once threshold is exceeded. Cost: —. Timeline: Varies.

What is sales tax nexus in the US?

Last updated: 2026-08-17Method & sources

Sources:Multistate Tax Commission

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📋 Direct Answer

[Figure withdrawn] Check the official page: https://vat-one-stop-shop.ec.europa.eu/one-stop-shop_en. Public compilation, not tax advice.

Check the official page

[Unverified] Figures may be out of date. Queued 2026-08-21 (uvq-us-sales-tax-what-is-nexus-en-F0-05). Check the official page: https://www.mtc.gov/. Public compilation, not tax advice.

Check the official page

Nexus is the connection between a seller and a state that triggers a sales tax collection obligation. Two types: (1) Physical nexus — you have property, employees, or inventory in a state (e.g. Amazon FBA warehouse), (2) Economic nexus — you exceed a state's sales/revenue threshold (typically K in sales or 200 transactions). Since South Dakota v. Wayfair (2018), states can require remote sellers to collect sales tax based on economic nexus alone. 46 states + DC have economic nexus laws.

Requirements

Free (self-service)

Est. Total Cost

Varies by state

Timeline

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📝 Step-by-Step Guide

Total 3 steps·Est. 1-2 weeks

Prerequisites

•US sales data available
•Understanding of where you have physical/economic presence

1
Determine physical nexus
Physical nexus exists if you have: employees, inventory (FBA), office, or property in a state. Post-Wayfair, FBA inventory in a state creates nexus there.
2
Evaluate economic nexus thresholds
Each state sets its own economic nexus threshold (typically $100,000 in sales or 200 transactions per year). If you exceed a state's threshold, you must register and collect sales tax there.
3
Register for sales tax permits
Register in each state where you have nexus. Most states offer free online registration. Never collect sales tax without a valid permit — this is illegal in many states.

💰 Cost Breakdown

Item	Cost	Frequency
Marketplace facilitator collection	Included in platform fees	one-time
Direct registration + collection	$500-5,000/year per state for compliance software + filing	annual
Total Estimate	$500 – $5000	Per US filing

⚠️WARNING

Physical nexus can exist without you knowing — Amazon FBA inventory in a state creates nexus

Retroactive tax liability for all sales in that state, plus penalties and interest

🛡️ Prevention Steps

✓Check Amazon FBA Inventory Estimator for state-level stock
✓Review employee/contractor locations
✓Evaluate affiliate nexus in each state

Item by Item

RequiredPhysical Nexus

—Immediate

1Check if you have any physical presence in a state
2FBA warehouses in a state create physical nexus
3Having employees or property also creates nexus

Read full guide →Use tool →

If applicableEconomic Nexus

—Varies

1Track sales revenue and transaction count per state
2Most states: $100K in sales OR 200 transactions
3Some states have different thresholds
4Must register and collect once threshold is exceeded

Read full guide →Use tool →

Comparison

	Marketplace facilitator collection	Direct registration + collection
Pros	✓ Platform handles collection and remittance ✓ No separate registration needed ✓ Reduced compliance burden	✓ Full control over tax compliance ✓ Required for non-marketplace sales ✓ Can optimize nexus strategy
Cons	✗ Only covers marketplace sales ✗ Still need own collection for Shopify/direct sales ✗ Cannot adjust rates	✗ Must register in each nexus state ✗ Monthly/quarterly filings ✗ Rate changes tracking required
Best For	Sellers primarily on Amazon, Walmart, or other marketplaces	Sellers with significant direct-to-consumer sales
Est. Cost	Included in platform fees	$500-5,000/year per state for compliance software + filing

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Common Mistakes

❌ Confusing physical nexus with economic nexus

💥 Consequence: Missing registration in states where you have economic but not physical nexus

✅ Fix: Evaluate both types separately — physical nexus (office, employee, inventory) and economic nexus (sales/transaction thresholds)

❌ Thinking marketplace facilitator laws eliminate all nexus obligations

💥 Consequence: Still need to file returns even when platform collects; some states require seller registration regardless

✅ Fix: Check state-specific rules — many states still require registration even when Amazon collects

Seller Paths

Establish Nexus Analysis

1. Map physical nexus (office, warehouse, employees)
2. Calculate economic nexus per state thresholds
3. Track marketplace facilitator coverage
4. Document nexus determination for audit defense

💰 Free (analysis time)⏱ 1-3 days

Nexus Monitoring Setup

1. Set up sales tracking by state
2. Create threshold alerts per state
3. Review nexus quarterly as sales grow
4. Update registrations when nexus is triggered

💰 Free (manual) or $20-100/month (automated)⏱ 1 week setup

Next Steps

HighDetermine if you have physical nexus (warehouse, employee, inventory in state)1 week

HighCalculate economic nexus for each state using trailing 12-month data1-2 weeks

MediumDocument nexus determination for audit defense1 week

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