An Etsy seller in Colorado ships 168 orders to Florida totaling $92,000 of gross retail sales in 2025, collects no Florida sales tax because "I didn't hit the 200-transaction threshold," and assumes the Etsy marketplace cleaned up the rest. A Shopify store based in Oregon does $112,000 into California across just 42 orders, assumes the "200 transactions" leg excuses them, and files nothing. The first seller is wrong about how Florida's threshold works in 2026, the second is wrong about California's number, and the marketplace assumption saves neither on their own direct-to-consumer site. By the time the state notice arrives — often 18 months after the first threshold-crossing sale, with tax, interest, and penalty on the seller's share — the unpaid liability exceeds the profit on the sales that created it.
Before South Dakota v. Wayfair (2018), remote sellers needed physical presence — an office, employee, inventory, or store — to have sales-tax nexus. Wayfair erased that limit: a state may now require out-of-state sellers to collect and remit sales tax based solely on economic activity in the state. Every state with a sales tax has enacted an economic nexus statute. The trap is that the thresholds, measurement, and effective dates vary by state — and the familiar "$100,000 or 200 transactions" shorthand is already out of date in half the country.
This guide maps where the thresholds sit in 2026, why the "200 transactions" leg catches low-dollar sellers and has been repealed in many states, how marketplace-facilitator laws interact with your own store, and the compliance cadence that proves nexus was monitored rather than missed.
What Economic Nexus Actually Tests
A state has economic nexus with you when your gross retail sales into that state (and, in some states, transaction count) in the lookback period exceed the statutory threshold. Once crossed, you must register, collect at the destination rate, and file — even if you have no office, employee, or warehouse there.
Three measurement details that determine whether you have crossed:
1. Gross retail sales, not taxable sales or profit. Most states measure gross retail sales of tangible personal property (and, where taxed, services and digital products) into the state, before marketplace-facilitator carve-outs in some states and after them in others. Sales of exempt goods, wholesale sales for resale with a valid certificate, and marketplace-facilitated sales excluded by that state's statute may or may not count — and states answer that question differently. Profit is never the test; $100,000 of gross on a 12% margin still creates nexus.
2. Lookback period. The classic South Dakota statute measured the prior or current calendar year. Most states still use calendar year, but a meaningful minority use the preceding 12 months rolling or prior 12-month period ending on a quarter-end. Hitting $101,000 in the 12 months ending March shifts the obligation one quarter earlier than a calendar-year clock — and the return you missed was the quarter you triggered, not the next January.
3. Threshold applies per state, not nationally. $100,000 into each state, not combined. A seller who does $480,000 total but $45,000 into any single state may have nexus nowhere; a seller who does $110,000 into a single high-value customer state has nexus in that one state alone.
Physical-presence nexus still exists in parallel — inventory in a 3PL warehouse (including FBA), an employee or contractor soliciting sales, a trade-show booth that takes orders, or owned property in the state create nexus immediately, without any dollar threshold. Economic nexus is the additional path, not a replacement.
The $100,000 / 200-Transaction Myth — Where It Stands in 2026
The South Dakota law that the Supreme Court blessed used $100,000 of gross sales or 200 transactions. That "or 200" was copied by most states in 2018–2019. By 2024–2026, the trend has decisively reversed — many states have eliminated the transaction count entirely because it penalizes sellers of low-dollar goods.
Why the shift: a seller of $14 stickers does $28,000 across 2,000 transactions and trips a "200 transactions" threshold on trivial revenue, while a seller of $4,000 custom tables can do $120,000 across 30 transactions and escape a pure transaction test. States concluded the transaction leg created compliance burden without meaningful revenue and quietly repealed it.
Where the 200-transaction leg stood going into 2026 (verify each tax year — states move):
- $100,000 and no transaction test (transaction leg repealed): Alabama, Arkansas, Colorado, Florida, Georgia, Indiana, Iowa, Kansas, Louisiana, Maryland, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon parallel? No sales tax. But among the repealed set: Wisconsin, Wyoming, Utah, and a growing majority — now well over 30 states. If you still carry a "200 transactions = nexus" checklist, you are over-collecting or mis-prioritizing in most states and under-collecting where transaction count never mattered.
- $100,000 gross or 200 transactions (still law): A shrinking set still retains the "or 200" — historically including Connecticut, Hawaii (has GET, different), Massachusetts, New York? New York uses $500,000 and 100 transactions, not $100K/200. The point is: check the state, don't assume.
- Higher gross threshold: California $500,000, Texas $500,000, New York $500,000 and 100 transactions — three of the four largest consumer markets set the bar five times higher than the shorthand. Sellers who block sales under "$100K" avoid registration where they are actually safe, and sellers who assume "$100K" miss that 100-transaction-and-$500K conjunctive test in New York (you need both).
- Different number: Mississippi $250,000 (no transaction test), Alabama $250,000 in early guidance then moved to $100,000 — another reason to check the notice that governs the return you file, not a 2019 slide deck.
The takeaway for 2026: assume $100,000 gross with no transaction count as the default, but check the three high-threshold states and the handful that still retain "or 200 transactions" before you decide low-dollar volume is safe. A transaction leg that no longer exists in Florida cannot excuse $92,000 of gross there, and a $500,000 threshold in California can excuse $112,000 that you assumed was taxable.
Transaction Aggregation Pitfalls
Where a transaction test still exists, states split the transactions themselves into finer questions: does a single order with three line items count as one transaction or three? What about a subscription with monthly renewals? Most states count invoices or orders, not line items, but documentation matters when your 198-transaction count becomes an auditor's 204.
Marketplace Facilitators Don't Cover Your Other Channels
Since 2019, every sales-tax state has enacted marketplace facilitator rules: the marketplace — Amazon, Etsy, eBay, Walmart Marketplace — is deemed the seller for sales it facilitates and must collect and remit the tax itself. That has led to a dangerous half-truth: "Amazon collects, so I don't have nexus."
The facilitator collects only on marketplace-facilitated sales, on that marketplace. It does not cover:
- Your Shopify / WooCommerce / direct site, even if you also sell on Amazon
- Phone, email, or show orders
- Sales on a marketplace that is not a facilitator for that sale (some B2B or special-category sales)
- Inventory nexus — FBA inventory in a state creates physical nexus regardless of who collected on the marketplace sale, which can expand obligations like income-tax nexus or gross-receipts reporting
For threshold measurement, states also diverge: some exclude marketplace-facilitated sales from the economic-nexus calculation (you would never cross on Etsy alone), while others include them (the economic activity counts even though the tax was collected by the marketplace). The consequence is state-specific: in an exclude state, a $140,000 Etsy seller with $30,000 of Shopify sales has $30,000 toward the threshold; in an include state, they have $170,000 and tripped months ago.
Track three buckets per state, per period: marketplace-facilitated gross, direct gross, and exempt/wholesale gross — with a flag for whether the state includes marketplace sales in the threshold. Without that split, you cannot answer "have I crossed" from your Shopify report alone.
Sourcing, Rates, and What to Actually Collect
Once nexus exists, the question becomes at what rate and on what base.
Sales tax is destination-sourced for most remote sales: the rate at the buyer's ship-to address, including state + local jurisdictions where applicable. A sale shipped to Chicago is not a 6.25% Illinois sale; it is a 6.25% state plus county, city, and district components that can push combined rates above 10%. You collect on the sales price including shipping and handling where the state taxes shipping as part of the sale (most do when the goods are taxable and shipped together) and excluding properly documented exempt sales.
Practical collection setup:
- Nexus register first, collect immediately after. The obligation to collect typically begins on the first day of the next calendar month or quarter after crossing, depending on the state — but not filing because "the threshold was only $2,000 over" does not defer the duty. Calendar the trigger month.
- Use a tax engine, not a rate table. Shopify Tax, TaxJar, Avalara, and native platform calculations maintain jurisdiction boundaries and product taxability (apparel exemptions, groceries, digital goods, shipping taxability) that a ZIP-code table cannot. The liability for an incorrect rate is yours even when the engine's data is the source.
- Exempt sales need certificates. A resale or exempt-organization sale without a valid, current certificate on file is a taxable sale on audit. Collect certificates at account setup, not at audit.
Registration, Filing, and the Cost of Being Late
Economic nexus registration is with the state revenue department (or, in SST member states, via the Streamlined Sales Tax Registration System that registers you in up to 24 states at once). SST membership is not a shortcut on taxability — it simplifies registration and filing, not the decision of what is taxable.
Filing frequency after registration is typically monthly, quarterly, or annually by volume — many states require monthly above ~$10,000 of tax collected. Returns are due on the 20th of the month after the period in most states, with g-powered penalties for late filing that are more painful than the interest:
- Failure-to-file and failure-to-pay penalties — often 5–10% per month, capped at 25–50%
- Interest at the state's statutory rate (commonly prime + 3%)
- Lookback to the date nexus was first established, not the registration date — an audit can reach back to the first threshold-crossing sale
- Personal liability — in some states, responsible officers and members can be personally assessed for uncollected trust-fund taxes
Voluntary Disclosure — The Cheaper Door In
If you discover past-period economic nexus where you did not register or collect, a Voluntary Disclosure Agreement (VDA) is usually cheaper than waiting for a notice. VDAs typically limit lookback to 3–4 years (vs. unlimited under audit), waive penalties, and keep the disclosure off the audit queue. Terms are state-specific and VDAs often require that the taxpayer has not already been contacted by the state. Finding $112,000 into a state in 2023 and quietly registering prospectively without a VDA can cost more than disclosing — the audit clock was already running.
A Compliance Cadence That Prevents the Notice
Monthly — the threshold watch:
- Pull gross retail sales by ship-to state for the lookback period that state defines (calendar-year-to-date and trailing 12 months — run both so a rolling clock never surprises you), split into marketplace-facilitated vs. direct vs. exempt. Compare each state to its current threshold. A state that repealed its transaction test in January — like many did between 2023–2025 — changes your status retroactive to that effective date without any sale in that state changing.
- Flag any state where you are above 80% of threshold — accelerate registration preparation before you cross, so collection can start on the first day of the obligation, not after the audit letter.
At trigger — the registration sprint:
- Register within the state's 30-day or next-period window, configure collection on every direct channel, and begin collecting from the obligation start date. Do not "true up" by collecting extra later — you under-collected for the period between trigger and registration, and that delta needs to be evaluated for VDA or amended filing.
At filing — the reconciliation:
- Tie every filing's gross to the book's revenue by state and to the platform reports (Shopify gross by state, Amazon marketplace-facilitated confirmation). Reconcile tax collected to tax remitted — variances are usually refunds, freight-allocation differences, or exempt sales whose certificates lapsed.
Annually — the nexus memo:
- One page per state near or above threshold: the threshold in effect for the year, your gross measurement by inclusion rule, the trigger date if crossed, and the registration and filing record. A preparer or auditor wants that memo, not your recollection of a webinar from 2021.
The Bookkeeping Connection
Sales-tax nexus rewards the habit that makes plain-text accounting powerful: every order is a dated, channel-tagged, ship-to-state event — not a year-end estimate by "mostly California." When gross by state, marketplace vs. direct split, exempt status, and tax collected live in the same version-controlled ledger, the story from "$168 Florida orders, $92,000 gross, marketplace vs. direct split logged, threshold $100,000 with no transaction test" to "nexus not triggered, 80% watch active, no registration required, memo dated January 15" is traceable and explainable to a CPA who must sign the nexus memo — and to an auditor who will test it by state.
Simplify Your Financial Management
Economic nexus is a threshold problem with a bookkeeping answer — know, by state and by channel, the gross that creates the obligation before the notice does. Beancount.io gives you plain-text, version-controlled accounting where revenue by ship-to state, marketplace vs. direct channels, and tax collected vs. remitted stay explicitly linked — no hidden spreadsheets, no vendor lock-in, and AI-ready when you want help turning last month's Shopify report into next quarter's registration plan. Get started for free and prove nexus was monitored, not missed.