This website uses cookies. We use cookies to personalize content and ads, to provide social media
features and to analyze our traffic. We also share information about your use of our site with our
social media, advertising and analytics partners who may combine it with other information that
you've provided to them or that they've collected from your use of their services. You consent to
our cookies if you continue to use our website.
Economic Nexus by State: When Multistate Sellers Must Register
If you run an online store or a B2B company in one state and sell to customers in 20 others, one of those states can eventually require you to collect its sales tax, even though you have no office or staff there.
When your sales alone create that requirement, it’s called economic nexus.
Each state sets its own dollar threshold and its own period for counting sales.
If your company’s sales to Texas customers top $500,000 over 12 months, for example, you need a Texas sales tax permit.
In Illinois, the threshold is $100,000.
Crossing a threshold can also mean registering your company with that state’s Secretary of State, depending on the state and on what else your company does there.
Below, you’ll find each state’s threshold and the filings that follow, in the order they must occur.
At a Glance
Economic nexus: A state can require you to collect its sales tax once your sales there pass a set figure, even if you have no office or staff in the state.
Every state sets its own number: Each state with a sales tax sets its own threshold and its own measurement period. Illinois uses $100,000, Alabama uses $250,000, and California, New York, and Texas use $500,000.
Marketplace sales can still count: Sales you make through an online marketplace may still count toward your threshold, even when the marketplace collects the tax for you.
A threshold doesn’t always mean company registration: Crossing a sales tax threshold doesn’t by itself require you to register your company with the state. Where a state does require it, you register first, apply for the permit second, and name a registered agent there.
Registering starts recurring filings: An annual report in most states, and a sales tax return on the schedule the state assigns you.
Economic Nexus for Multistate Sellers
Economic nexus works like a running tally.
Once your sales in a state reach a set dollar amount or number of orders, that state can require you to collect and remit its sales tax.
Before 2018, states could only require that of sellers with a physical presence there, such as an office, a warehouse, or employees.
That changed on June 21, 2018, when the Supreme Court decided South Dakota v. Wayfair.
The Court upheld a South Dakota law that applied to sellers who delivered more than $100,000 of goods or services into the state each year or made 200 or more separate sales there.
In the same decision, it threw out the old physical presence rule.
Today, 45 states have a statewide sales tax, according to Tax Foundation data, and only Alaska, Delaware, Montana, New Hampshire, and Oregon don’t.
If you sell nationwide, that’s a lot of thresholds to keep an eye on.
For a primer on how physical presence and economic nexus differ, see our guide to sales tax nexus basics.
How to Determine Your Economic Nexus by State
If your company is already registered with a state’s Secretary of State, you’re in good shape: the sales tax permit is the only new sales tax filing once you cross the threshold.
If it isn’t registered yet, that state may want the registration first.
For each state where you sell, you need to answer two questions: have you crossed that state’s threshold, and if so, which filings do you owe and in what order?
The order matters because some states won’t open a tax account until your company is registered with the Secretary of State.
Work through these steps:
Separate your sales out by state, including any sales you make through an online marketplace.
Compare each state’s figure against its threshold over the period the state measures. Some states use the previous calendar year, others use a rolling 12-month period, or the current year to date.
Check the state revenue department’s registration instructions to see whether it will open a tax account for a company that isn’t registered there. Alabama’s, for example, says it won’t.
If the state won’t, register with the Secretary of State before you apply for the permit.
Apply for the sales tax permit with the state’s revenue department, and start collecting tax on taxable sales.
Compare the same sales against the state’s income or franchise tax threshold, which is a separate figure from the sales tax one.
Economic Nexus Thresholds by State
Every state works from the same basic idea, but the numbers and timing differ.
Some count sales over a calendar year, and others use a rolling 12-month window.
The table below shows the sales threshold, transaction count, and measurement period for every state and the District of Columbia.
Click any state name to see that state’s own guidance.
Sales ThresholdSales Threshold:
Over $100,000 in gross revenue
Transaction CountTransaction Count:
None (the 200-transaction test ended July 1, 2024)
Measurement PeriodMeasurement Period:
Previous or current calendar year
Say your company ships $300,000 of goods each into Alabama, Illinois, and California in one calendar year.
You’ve crossed the threshold in Alabama and Illinois, so you need a permit in both.
California’s threshold is $500,000, so you don’t owe anything there yet.
Now add $600,000 in sales to Texas customers.
That puts you over the $500,000 Texas threshold, so you need permits in three states.
In Alabama, you also have to register with the Secretary of State first, because the Alabama Department of Revenue won’t open a tax account without a charter number.
How Marketplace Facilitator Laws Affect Your Threshold
If you sell through an online marketplace, that platform is a marketplace facilitator, meaning it processes sales for third-party sellers.
Many states require the facilitator, rather than the seller, to collect and remit sales tax on the orders it processes.
That moves the collection work off your plate, but those sales may still count toward your own threshold.
The California Department of Tax and Fee Administration, for example, counts sales made through a marketplace toward a seller’s $500,000 threshold.
If every California sale you make goes through a facilitator registered with the state, you generally don’t need your own seller’s permit.
Once you also sell directly, such as through your own website, registration is required in most cases.
In Texas, a remote seller whose only Texas sales are made through a marketplace provider that collects payment on its behalf doesn’t need a permit, though that seller must keep records of those sales for at least 4 years.
In a January 2026 letter ruling, the Oklahoma Tax Commission said marketplace sales stay out of your threshold count when the marketplace collects Oklahoma tax for you, and count toward it when the marketplace doesn’t.
If you sell both on a marketplace and on your own site, check two things in each state: whether marketplace sales count toward your threshold, and whether your direct sales need their own permit.
That’s why the first step above has you include marketplace sales in your state-by-state totals.
Sales Tax Nexus vs. Doing Business in a State
Crossing a sales tax threshold means you have to collect a state’s sales tax.
Whether you have to register your company with the Secretary of State depends on a separate test: whether your company is “doing business” in that state.
What counts as doing business varies by state, and out-of-state sales alone usually don’t meet the test.
Delaware’s corporate code (8 Del. C. § 373), for example, says an out-of-state corporation isn’t doing business there just because it takes orders by mail, or because its work in the state is “wholly interstate in character”.
Sales Tax Nexus vs. Income and Franchise Tax Nexus
Sales tax nexus is about whether you collect a state’s sales tax from your customers.
The income and franchise tax nexus is about whether the state can tax your company’s earnings or charge it for the privilege of doing business there.
Each uses its own threshold, and the two figures can differ within a single state.
In California, the sales tax threshold for remote sellers is $500,000.
The Franchise Tax Board treats a company as doing business in California once its California sales exceed $757,070 or 25% of its total sales.
That dollar figure is for the 2025 tax year, and the Board updates it each year.
Public Law 86-272 applies only to net income taxes.
It prevents a state from taxing your net income if all you do there is take orders for physical goods shipped from outside the state.
It doesn’t protect companies that sell services, and it doesn’t affect whether you owe sales tax.
When Foreign Qualification Is Required
Foreign qualification is the filing that registers your company to do business in a state other than the one where it was formed.
Out-of-state sales on their own don’t require it, but either of the two conditions below can.
Check for both each time you cross a threshold in a new state:
The state requires a charter number first: Some states won’t open a tax account until your company is registered with the Secretary of State. The Alabama Department of Revenue, for example, requires corporations, partnerships, and LLCs to have a Secretary of State charter number before opening a tax account.
Income or franchise tax nexus: Most states won’t open an income or franchise tax account for an unregistered company. For an out-of-state company that crosses one of those thresholds, that means foreign qualifying.
When a Registered Agent Is Required
Once you qualify as a foreign entity, the state requires you to name a registered agent: the person or company that receives legal papers and official notices for your business in the state.
You name the agent in the qualification filing itself.
In Delaware, the paperwork has to list your registered agent’s name and address in the state (8 Del. C. § 371).
Registering also protects your ability to sue in that state’s courts.
In Delaware, an out-of-state corporation that did business there without qualifying cannot sue in a Delaware court until it qualifies and pays what it owes (8 Del. C. § 383).
Ongoing Filings
Every registration comes with filings that repeat, and each state you add has its own schedule.
Recurring Requirements
These filings recur on a predictable schedule to maintain compliance and good standing:
Annual report: Most states require a foreign-qualified company to file an annual report, or the state’s equivalent, on a recurring annual schedule.
Sales tax return: A state assigns you a filing frequency when it issues your permit. You file on that schedule.
DBAs: If your business operates under a fictitious business name, periodic renewals or ongoing maintenance may be required depending on the jurisdiction.
State-specific recurring requirements: Certain states mandate unique ongoing obligations, such as periodic newspaper publishing notices (e.g., Nevada).
Event-Driven Filings
Unlike recurring filings, these are not scheduled on a calendar; they are only required when specific business changes or actions occur:
Amendment: A change to your company name, address, or registered agent triggers the need for an amendment filing in each affected state.
Withdrawal: A filing executed only when you intentionally wind down and terminate your business operations within a specific state.
The Consequence of Neglect: Reinstatements
Reinstatement is not a recurring filing.
Rather, it is a corrective measure required only when ongoing obligations, such as filing annual reports, are neglected.
This can cause the entity to fall out of good standing and lose its authority to transact business.
Staying proactive with your ongoing filings ensures you won’t face the cost and administrative burden of a reinstatement.
If you crossed a state’s threshold in an earlier year but didn’t register, you may still owe tax for those missed periods.
The state’s revenue department decides the amount and how you bring the account current.
Work With Harbor Compliance on Multistate Registration
The sales tax permit is the filing most teams already track.
The company registration behind it is easier to miss, because only some states require it, and the sales tax rules don’t tell you when.
Through our Foreign Qualification Service, we register your entity in each new state and file the paperwork in the order that state requires.
Our Registered Agent Service places an agent on record the day each registration is filed.
Our Annual Report Service keeps the filings on schedule, and Entity Manager captures every state’s requirements and due dates in a single record.
Contact us to register in the states where you’ve already crossed the threshold.
Economic nexus - A tax obligation in a state based on how much you sell there or how many orders you ship there, with no physical presence required.
Physical presence nexus - The older standard, where a state could require you to collect its sales tax only if you had property, employees, or an office there.
Marketplace facilitator - An online platform that processes sales for third-party sellers and, in many states, collects and remits sales tax on those sales.
Foreign qualification - Registering your company with a state’s Secretary of State so it can do business outside the state where it was formed.
Registered agent - The person or company named in your state filings to receive legal papers and official notices for your business.
Doing business - The level of activity that requires a company to qualify as foreign under a state’s corporate code. It’s a separate test from sales tax nexus.
Public Law 86-272 - A federal law that limits state net income taxes on sellers of physical goods whose only activity in the state is taking orders.
Economic Nexus FAQs
Check first whether that state will open a tax account for a company that isn’t registered there. Where it won’t, as in Alabama, you register with the Secretary of State and then apply for the sales tax permit. Then compare the same sales against the state’s income or franchise tax threshold, since crossing that one also means foreign qualifying and naming a registered agent.
Usually not. Out-of-state sales on their own don’t require foreign qualification, and corporate codes like Delaware’s leave out business that is wholly interstate. The exceptions are states that won’t issue a tax account without a company registration, and states where the same sales also create an income or franchise tax nexus.
It depends on the state. California counts sales made through a marketplace toward your $500,000 threshold, even though the marketplace collects the tax on them. Oklahoma leaves them out when the marketplace collects Oklahoma tax for you, so check each state’s rule before you total your figures.
The amount depends on the tax you would have collected, the state’s own interest and penalty rules, and any program the state runs for sellers who come forward on their own. Ask the state’s revenue department for the figure before you file.
It usually means the state has no statewide sales tax. That is true of Alaska, Delaware, Montana, New Hampshire, and Oregon, though Alaska lets local governments charge sales tax. A state without a sales tax can still have other taxes and registration rules that apply to you.
No, and the figures can vary within a single state. In California, the sales tax threshold for remote sellers is $500,000, while the Franchise Tax Board’s “doing business” figure for the 2025 tax year was $757,070. Public Law 86-272 protects some sellers of physical goods from state income tax even where they owe sales tax.
Filing Fees
Filing fees depend on your individual situation. We do our best to calculate your filing fees
upfront and collect those fees today so we can get started. Your specialist will determine your
exact filing fees and invoice additional fees if required.
