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Economic nexus laws by state: Texas

by Sarah Craig October 18, 2023

Please note: This blog was originally published in 2019. It’s since been updated for accuracy and comprehensiveness.

State laws on economic nexus vary and it’s hard to keep up if you’re doing business in multiple states. We’ve done the research for you and here’s all the information you need to know about economic nexus in Texas.

What is economic nexus in Texas?

With the recent South Dakota v. Wayfair Supreme Court ruling in favor of South Dakota, states are now free to pursue sales tax from eCommerce businesses who have a “significant presence” in their state.

Significant presence or “nexus” was previously defined as having a physical presence (ex: brick and mortar store, employee, or inventory in a fulfillment center like FBA). But with this recent ruling, now this definition has been expanded to include economic activity in a state as well. This concept of triggering sales tax responsibility because of your economic activity in a state is now referred to as economic nexus.

Most important, this now means that if you pass a state’s economic threshold for total revenue in that state and/or number of transactions in that state, you’re now legally required to register, collect and remit sales tax for that state.

What’s the threshold for economic nexus law in Texas?

• State: Texas
• Threshold: Sales above $500,000 in Texas in the prior 12 months.
• Summary: Remote sellers with Texas revenues above $500,000 are required to register, collect sales tax on sales that ship to Texas, and remit the sales tax to the state. Remote sellers with Texas revenue below this amount will not have to register and collect tax.
• Full text: You can read guidance on the text of Texas economic nexus law here.

When did this Texas law go into effect or is it planned?

October 1, 2019. (The initial timeframe for calculating these revenues was July 1, 2018, through June 30, 2019.)

I’m close to meeting the economic nexus threshold for Texas. Will TaxJar notify me when I reach it?

With TaxJar’s Economic Nexus Insights Dashboard, you can see where you currently have nexus, where you’re approaching nexus, and recommended next steps on how to begin complying with sales tax in all states.

Proactive notifications let you know when you’re approaching or have reached thresholds, so you can stay in front of any changes to your nexus requirements. To be automatically notified when your business reaches economic nexus in a state, get started at TaxJar.com/how-it-works.

I meet the economic threshold requirement in Texas. Now what?

Here’s a quick checklist of what to do next:

1. Register for a sales tax permit in Texas (info below)
2. Choose a technology like TaxJar to help you manage multi-state compliance. Sign up for a free 30-day trial to see how we can help you save time!
3. Connect TaxJar once to all of the places you sell
4. Ensure all your e-commerce channels are setup correctly to collect sales tax
5. Enroll in AutoFile and tell us how often you need to file
6. Relax, you now handled your sales tax exposure.  We’ll handle the rest for you.

Can you help me register for a sales tax permit?

Certainly! TaxJar offers these two options:

1. Read our do it yourself instructions for every state
2. Visit our registration page to request TaxJar manage your Texas registration for you

Who can handle my Texas sales tax filings for me?

At TaxJar, we help more than 15,000 sellers manage their sales tax needs every month. We help your business save on submitting your returns with our automated filing service called AutoFile.  Read more about how AutoFile can handle all of your returns in as many states as you’d like.

I’ve met this threshold in Texas, now where can I ask questions?

We recommend speaking with a vetted sales tax expert to answer specific questions for your business.

Ready to automate sales tax? To learn more about TaxJar and get started, visit TaxJar.com/how-it-works.

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