Businesses that have a physical presence or economic "nexus" in a state are typically required to collect and remit sales tax to that state. If you're unsure if your business has a nexus in a state, consult with a tax professional or your state's department of revenue. We have also included a list below.
Nexus sales tax laws vary by state and are constantly evolving. The U.S. Supreme Court's decision in South Dakota v. Wayfair, Inc. in 2018 overturned a previous ruling that a business had to have a physical presence in a state to collect sales tax. Now, states can require businesses to collect and remit sales tax even if they don't have a physical presence in the state but have a certain amount of sales or transactions there, commonly known as economic nexus.
If a business ships orders to multiple states, it's important to understand each state's nexus sales tax laws and comply with their requirements.
As of April 2023, the following states have economic or physical presence nexus laws:
Alabama
Alaska (does not have a statewide sales tax)
Arizona
Arkansas
California
Colorado
Connecticut
Delaware (does not have a statewide sales tax)
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana (does not have a statewide sales tax)
Nebraska
Nevada
New Hampshire (does not have a statewide sales tax)
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon (does not have a statewide sales tax)
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
It's best to be in compliance with all laws regulations therefore it is important to note that each state has its own rules and thresholds for determining nexus. If you are confused or have questions, consider consulting with a tax professional or the state's department of revenue to determine if they have nexus in a particular state and what their sales tax obligations may be.