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Practical guide to sales tax nexus thresholds: formulas, workflow, implementation pitfalls, and a direct execution playbook with Sales Tax Calculator.
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Nexus is the legal connection between a business and a state that triggers sales tax collection obligations. Before 2018, you only had nexus where you had physical presence (office, warehouse, employees). Then everything changed.
The Supreme Court ruled that states can require remote sellers to collect sales tax based on economic activity alone — no physical presence needed. This created "economic nexus."
The standard threshold set by South Dakota (and adopted by most states):
Once you cross either threshold, you must register, collect, and remit sales tax in that state.
| State | Revenue Threshold | Transaction Threshold | State Tax Rate |
|---|---|---|---|
| California | $500,000 | None | 7.25% |
| Texas | $500,000 | None | 6.25% |
| New York | $500,000 | 100 transactions | 4.0% |
| Florida | $100,000 | None | 6.0% |
| Illinois | $100,000 | 200 transactions | 6.25% |
| Pennsylvania | $100,000 | None | 6.0% |
| Ohio | $100,000 | 200 transactions | 5.75% |
| Georgia | $100,000 | 200 transactions | 4.0% |
| Washington | $100,000 | None | 6.5% |
| Colorado | $100,000 | None | 2.9% |
Note: local taxes add 1-5% on top of state rates. California total can reach 10.75%.
SaaS is taxable in some states and exempt in others:
Always check state-specific guidance for digital products.
Calculate state-specific sales tax with the Sales Tax Calculator. Related: Inclusive vs Exclusive Sales Tax.
This material is for informational purposes only. Results from this article and tool are approximate estimates, not financial, tax, legal, or investment advice. Actual payments, APR, taxes, fees, and eligibility depend on your lender, jurisdiction, and personal profile. Confirm key decisions with official disclosures and a licensed professional.
This article is reviewed by the Tools Hub editorial team for factual accuracy, practical relevance, and consistency with current product workflows.
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