How to Determine if You Have Nexus in a State — Sales Tax, Income Tax & Remote Workers

Nexus questions aren’t abstract tax theory — they have real dollar consequences. Below are the situations that catch businesses off guard most often, answered directly.

• 1
  How do I know if I have sales tax nexus in a state? Ask two questions: Do you have any physical presence there? · Have you exceeded $100,000 in sales OR 200 transactions (check your specific state) · If yes to either — you have nexus from that moment forward

  The quickest way to evaluate your nexus exposure is to pull your sales by state for the current and prior calendar year, then compare each state’s totals against that state’s threshold. Most states use $100,000 in gross revenue, measured either on a rolling 12-month basis or calendar year depending on the state. Some still use a transaction count (200 is the most common) as an alternative trigger — meaning you hit nexus if you cross either the dollar OR the transaction number, whichever comes first. The key trap: many states count exempt sales and marketplace sales toward your threshold even if no tax was collected on them. If you sell through Amazon, Etsy, or another marketplace, those sales often count toward your threshold in the state the buyer is in — even though the marketplace collected the tax on your behalf. Illinois just eliminated its transaction count as of 2026, leaving only the $100,000 revenue trigger. Always verify the specific measurement period and inclusion rules for each state you sell into, since these differ.
• 2
  What is the income tax nexus threshold by state — how is it different from sales tax nexus? Sales tax nexus and income tax nexus are entirely separate determinations · Income tax nexus in most states: physical presence, remote employee, or exceeding a state’s receipts/payroll/property factor threshold · P.L. 86-272 protects some sellers — but not service businesses or SaaS

  Sales tax nexus and income (or corporate franchise) tax nexus are determined independently — you can have one without the other. For income tax, most states follow physical presence rules: an office, employees (including remote workers), or significant property in the state creates a filing obligation. Many states also have economic income nexus thresholds based on how much revenue is sourced to the state, or on payroll and property factors in the state’s apportionment formula. A critical federal protection called Public Law 86-272 (enacted in 1959) limits state income tax nexus for sellers whose only activity in a state is soliciting orders for sales of tangible personal property — where orders are approved and shipped from outside the state. This protection still applies in 2026, but it has two important limits: it doesn’t protect service businesses, SaaS companies, or businesses that sell digital goods — and it can be lost if employees or contractors do anything beyond mere order solicitation while in the state (like providing customer service, installing products, or conducting training).
• 3
  What creates nexus in a transaction — the specific activities that trigger it? Physical: employees, offices, inventory/warehouses, sales reps, trade shows · Economic: exceeding revenue or transaction thresholds · Click-through: in-state affiliate or referral partner · Marketplace: inventory stored via Amazon FBA or similar · Remote worker: one employee working from home there

  Nexus is created by a surprising variety of activities — many of which businesses don’t notice until audited. The most commonly missed triggers are: inventory stored in a third-party warehouse or Amazon Fulfillment Center (FBA) — you have physical nexus in every state where Amazon stores your goods, which could be dozens of states you never intended to sell into; a remote employee or independent contractor working from home in a state creates nexus for both sales tax and income tax purposes; attending a trade show in a state can create nexus depending on what your representative does while there (taking orders, demonstrating products, or providing services beyond just looking can all cross the line in some states); having an affiliate or referral partner in a state that sends customers to your website can create “affiliate nexus” in states with those laws. The overarching rule: states are actively expanding the definition of what creates a connection, and courts continue to uphold new interpretations of what constitutes “substantial nexus” under the Commerce Clause.
• 4
  What is the Ohio nexus threshold for sales tax? Ohio: $100,000 in gross sales OR 200 separate transactions in current or prior calendar year · Either threshold triggers nexus · Marketplace sales count toward the threshold · Non-taxable sales also count toward the total

  Ohio enforces economic nexus rules established August 1, 2019. You trigger sales tax nexus in Ohio when either of these thresholds is met in the current or prior calendar year: $100,000 in total gross sales delivered into the state, or 200 or more separate retail transactions with Ohio customers. Meeting either one — not both — is sufficient. A critical detail many Ohio sellers miss: marketplace sales through platforms like Amazon, Etsy, or Walmart count toward your nexus threshold even when the marketplace collects the tax on your behalf. And non-taxable sales are included in Ohio’s nexus calculation — meaning exempt transactions can push you over the threshold even though you never collected a dollar of tax on them. Once you exceed Ohio’s threshold, you register through the OHID Portal at ohid.ohio.gov. Ohio’s base state rate is 5.75%, but combined with county rates the total can reach 8.75% depending on where the customer is located. Ohio is a destination-based state, so you charge based on the buyer’s location.
• 5
  What is the Massachusetts economic nexus threshold? Massachusetts: $100,000 in annual sales to MA customers · No transaction threshold · Revenue-only standard · Massachusetts also aggressively taxes remote workers under the “convenience of employer” rule for income tax · Amazon FBA stored in MA = physical nexus from day one

  Massachusetts sets its economic nexus threshold at $100,000 in annual sales delivered to Massachusetts customers — no transaction count applies. For income tax purposes, Massachusetts is notably aggressive in claiming jurisdiction over remote workers and out-of-state businesses. Under Massachusetts’ convenience of employer rule for income tax, an employee working remotely for a Massachusetts employer is generally considered to be working in Massachusetts — meaning the employer may have income tax nexus in Massachusetts regardless of where the employee physically sits. Massachusetts also interprets physical nexus broadly: even brief visits by sales representatives, attendance at trade shows, and inventory stored in any Massachusetts warehouse (including Amazon FBA facilities in the state) create immediate physical nexus with no revenue threshold. The Massachusetts Department of Revenue is known for active enforcement, and the state successfully obtained seller data from Amazon in audits targeting third-party marketplace sellers whose inventory was stored in Massachusetts facilities without the sellers having registered.
• 6
  What is New York’s economic nexus threshold — why is it different? New York requires BOTH: $500,000 in sales AND 100+ transactions — not either/or · This is the highest combined threshold in any state · NY also aggressively taxes remote workers under the “convenience of employer” rule

  New York is the only major state that requires a business to meet both a revenue AND a transaction threshold to trigger economic nexus — not one or the other. To have economic sales tax nexus in New York, you must have both $500,000 in annual sales to New York customers AND at least 100 separate transactions with those customers during the same period. This makes it meaningfully harder to accidentally trigger nexus in New York through sales volume alone — a business with $600,000 in revenue from a single large New York client but only 3 invoices would not have economic nexus. However, the income tax picture in New York is an entirely different matter: the state’s convenience of the employer rule for income tax is among the most aggressively enforced in the country. Under this rule, a remote employee’s income is considered sourced to New York if they work remotely for their own convenience rather than employer necessity — even if the employee never sets foot in New York. New York’s Tax Department actively audits out-of-state remote workers and accepts very few “employer necessity” exceptions.
• 7
  Does having a remote employee working from home create nexus for my business in that state? Yes — for both sales tax and income tax in most states · One remote employee creates physical nexus from day one · The employee’s home office is treated as a business location · This creates immediate registration, withholding, and potentially income tax filing obligations

  This is one of the most common sources of surprise nexus for growing companies. In most states, a single employee working remotely from home creates physical nexus for the employer — the same as if the company had opened an office in that state. There’s no minimum time threshold in most jurisdictions: from the employee’s first day working from their home in that state, the business may have sales tax registration requirements, payroll withholding obligations for that state, and income tax filing obligations if the employee’s activities exceed mere order solicitation. Contractors and independent contractors can create nexus too in some states, though the rules vary more. Seven states — New York, Pennsylvania, Delaware, Arkansas, Connecticut, Nebraska, and Massachusetts — also have “convenience of employer” rules for income tax, which can source income to the employer’s state even when the employee works elsewhere. Companies with rapidly growing remote workforces that span multiple states have found themselves with compliance obligations in 20–30 states seemingly overnight. A nexus study at the start of remote hiring is far cheaper than catching up on back taxes later.
• 8
  I think I already have nexus in states where I haven’t been collecting tax — what do I do? Don’t panic and don’t ignore it · Most states offer Voluntary Disclosure Agreements (VDAs) that cap lookback periods (usually 3–4 years) and reduce or waive penalties · Acting before the state contacts you is always better · A CPA or state tax attorney can negotiate on your behalf anonymously in many states

  Discovering you’ve had nexus in a state for years without collecting tax is a stressful moment — but the path forward is well-established and, when handled proactively, far less damaging than people fear. Most states offer Voluntary Disclosure Agreements (VDAs) that allow businesses to come into compliance in exchange for a limited lookback period — typically three to four years of unpaid sales tax rather than the full unlimited liability they could theoretically pursue. Many states also reduce or completely waive penalties for businesses that come forward voluntarily before being audited. The Multistate Tax Commission (MTC) runs a free program through which businesses can apply for VDAs in multiple states simultaneously using a single anonymous application — the state never learns the business’s identity during the initial process, which reduces the risk of disclosing in one state triggering a notice in another. Engaging a CPA or state and local tax (SALT) attorney before approaching any state is strongly advisable. Once you’ve come into compliance, automated nexus monitoring software prevents the same gap from recurring as your business grows into new states.

Most states use $100,000 in sales as the standard threshold. The states below either use a different number, require both revenue AND transactions simultaneously, or have recently changed their rules.

Nexus analysis and voluntary disclosure require specialized state and local tax (SALT) expertise. Use the buttons below to find CPAs and tax attorneys who handle multi-state compliance near you.