Economic nexus: Which sales count toward thresholds?
by December 6, 2024
Since we are more than five years removed from the South Dakota v. Wayfair decision, e-commerce sellers are more familiar with economic nexus laws. Now, instead of only requiring retailers to collect sales tax in states where they are physically located, states can require remote sellers that exceed sales or transaction thresholds to collect and file sales tax.
These thresholds are the key to determining where a company has sales tax obligations. Keeping up with transactions seems simple enough, and you are probably already keeping these records for sales tax compliance purposes. But you may be wondering if all types of sales factor into economic nexus thresholds. For example, should you consider non-taxable/exempt sales when determining if you’ve reached a threshold? What about wholesale or marketplace sales?
Like most things sales tax related, it depends on the state. We’ve outlined what types of sales are included in each state’s threshold calculations below:
Alabama: The threshold calculations include sales of exempt tangible personal property, but exclude:
- sales of services
- wholesale sales or sales for resale
- sales made on a marketplace platform where the facilitator is collecting tax on behalf of the seller
Alaska: The threshold calculations includes:
- gross sales
- marketplace sales
Arizona: The threshold calculations include:
- sales of exempt tangible personal property, including wholesale sales or sales for resale
- sales of taxable and exempt services
The threshold calculations exclude sales made on a marketplace platform where the facilitator is collecting tax on behalf of sellers.
Arkansas: The threshold calculations include taxable sales. The threshold calculation excludes:
- nontaxable sales
- wholesale sales or sales for resale
- marketplace sales
California: The threshold calculations includes:
- sales of tangible personal property
- wholesale sales or sales for resale
- marketplace sales.
The threshold calculations excludes:
- sales of services, whether taxable or nontaxable
Colorado: The threshold calculations include:
- retail sales
- sales of services, whether taxable or nontaxable
The threshold calculation excludes:
- wholesale sales or sales for resale
- marketplace sales
Connecticut: Sellers in Connecticut must meet both the transaction and revenue threshold to have economic nexus in the state. The threshold calculations include:
- gross sales
- marketplace sales
District of Columbia: The threshold calculations include:
- sales of exempt tangible personal property
- sales of taxable and exempt services
- sales made on marketplace platforms, including when facilitators collect tax on behalf of sellers
The threshold calculations exclude:
- wholesale sales or sales for resale
Florida: The threshold calculation includes taxable sales. The threshold calculations exclude:
- nontaxable sales
- wholesale sales or sales for resale
- marketplace sales
Georgia: The threshold calculations include sales of exempt tangible personal property. The threshold calculation excludes:
- wholesale sales or sales for resale
- sales of taxable and exempt services
- sales made on marketplace platforms, including when facilitators collect tax on behalf of sellers
Hawaii: The threshold calculations include:
- sales of exempt tangible personal property
- wholesale sales or sales for resale
- sales of taxable and exempt services
- sales made on marketplace platforms, including when facilitators collect tax on behalf of sellers
Idaho: The threshold calculations include:
- sales of exempt tangible personal property
- sales of services, whether taxable or exempt
- wholesales sales or sales for resale
- sales made on marketplace platforms, including when facilitators collect tax on behalf of sellers
Illinois: The threshold calculations include sales of exempt tangible personal property. The threshold calculations exclude:
- wholesale sales or sales for resale
- sales of taxable and exempt services
- sales made on a marketplace platform where the facilitator collects tax on behalf of sellers
- sales that require state agency registration (such as sales of motor vehicles, watercraft, aircraft, or trailers) when these sales are made from locations outside Illinois
Indiana: The threshold calculations include gross sales, except marketplace sales. Marketplace sales are excluded from the threshold.
Iowa: The threshold calculation includes:
- gross sales
- marketplace sales
Kansas: The threshold calculations include:
- sales of exempt tangible personal property
- taxable sales of services
- wholesales sales or sales for resale
- sales made on marketplace platforms, including when facilitators collect tax on behalf of sellers
The threshold calculations exclude nontaxable sales of services.
Kentucky: The threshold calculations include:
- sales of exempt tangible personal property
- wholesales sales or sales for resale
- sales made on a marketplace platform where the facilitator is collecting tax on behalf of sellers
Louisiana: The threshold calculations includes gross sales and excludes marketplace sales.
Maine: The threshold calculations include:
- sales of tangible personal property
- taxable services
- wholesale sales or sales for resale
The threshold calculations exclude:
- sales of nontaxable services
- marketplace sales
Maryland: The threshold calculations include:
- wholesale sales or sales for resale
- sales of exempt tangible personal property
- sales of taxable services
- sales made on marketplace platforms, including when facilitators collect tax on behalf of sellers
The threshold calculations exclude exempt services.
Massachusetts: The threshold calculation includes gross sales, except marketplace sales. Marketplace sales are excluded from the threshold.
Michigan: The thresholds includes:
- gross sales
- marketplace sales
Minnesota: The threshold calculations include:
- sales of exempt tangible personal property
- sales of taxable services
- sales made on marketplace platforms, including when facilitators collect tax on behalf of sellers
The threshold calculations exclude:
- sales for resale
- exempt services
Mississippi: The threshold calculations include:
- sales of exempt tangible personal property
- sales of services, whether taxable or exempt
- wholesales sales or sales for resale
- sales made on marketplace platforms, including when facilitators collect tax on behalf of sellers
Missouri: The threshold calculations include taxable sales of tangible personal property. The threshold calculation excludes:
- sales of services
- nontaxable sales of tangible personal property
- wholesale sales or sales for resale
- marketplace sales.
Nebraska: The thresholds calculations include:
- retail sales
- marketplace sales
- sales of services, whether taxable or non-taxable
The threshold calculations exclude wholesale sales or sales for resale.
Nevada: The threshold calculations include:
- sales of exempt tangible personal property
- sales made on marketplace platforms, including when facilitators collect tax on behalf of sellers
The threshold calculations exclude wholesale sales and sales of service.
New Jersey: The threshold calculations include:
- sales of exempt tangible personal property
- wholesale sales or sales for resale
- sales of taxable services
- sales made on marketplace platforms, including when facilitators collect tax on behalf of sellers
The threshold calculations exclude sales of non-taxable services.
New Mexico: The threshold calculations includes:
- taxable retail sales
- marketplace sales
The threshold calculations exclude wholesales sales or sales for resale.
New York: The threshold calculations includes gross receipts exceeding $500,000 and made more than 100 sales during preceding four sales tax quarters.
North Carolina: The threshold calculations include:
- sales of exempt tangible personal property
- wholesale sales or sales for resale
- sales of taxable and exempt services
- sales made on marketplace platforms, including when facilitators collect tax on behalf of sellers
North Dakota: The threshold calculations include sales of taxable services. The threshold calculation excludes:
- wholesale sales or sales for resale
- sales of exempt tangible personal property
- sales of exempt services
- sales made on marketplace platforms, including when facilitators collect tax on behalf of sellers
Ohio: The threshold calculations includes:
- sales of exempt tangible personal property
- sales of exempt services
- sales made on marketplace platforms, including when facilitators collect tax on behalf of sellers
The threshold calculations exclude wholesale sales or sales for resale.
Oklahoma: The threshold calculations exclude:
- wholesale sales or sales of resale
- sales of exempt tangible personal property
- sales of taxable and exempt services
- sales made on a marketplace platform where the facilitator collects tax on behalf of sellers
Pennsylvania: The threshold calculations include gross sales.
Puerto Rico: The threshold calculations include:
- wholesale sales or sales for resale
- sales of exempt tangible personal property
- sales of taxable services
- For marketplace sellers, only sales that are not made through a marketplace facilitator will be counted in the threshold.
The threshold calculations exclude exempt services.
Rhode Island: The threshold calculations include:
- wholesale sales or sales for resale
- sales of exempt tangible personal property
- sales of taxable and exempt services
- sales made on marketplace platforms, including when facilitators collect tax on behalf of sellers
South Carolina: The threshold calculations include:
- wholesale sales or sales for resale
- sales of exempt tangible personal property
- sales of taxable and exempt services
- sales made on marketplace platforms, including when facilitators collect tax on behalf of sellers
South Dakota: The threshold calculations include:
- wholesale sales or sales for resale
- sales of exempt tangible personal property
- sales of taxable and exempt services
- sales made on marketplace platforms, including when facilitators collect tax on behalf of sellers
Tennessee: The threshold calculations include retail sales, whether taxable or nontaxable, but exclude:
- wholesale sales or sales for resale
- marketplace sales
Texas: The threshold calculations includes total Texas revenue of $500,000 or more in the preceding twelve calendar months.
Utah: The threshold calculations include:
- sales of exempt tangible personal property
- sales of taxable and exempt services
- wholesale sales or sales for resale
The threshold calculations exclude sales made on marketplace platforms, including when facilitators collect tax on behalf of sellers.
Vermont: The threshold calculations include:
- wholesale sales or sales for resale
- sales of exempt tangible personal property
- sales of taxable and exempt services
- sales made on marketplace platforms, including when facilitators collect tax on behalf of sellers
Virginia: The threshold calculations include retail sales. The threshold calculations exclude:
- wholesale sales or sales for resale
- nontaxable sales
- marketplace sales
Washington: The threshold applies to all Washington income, including retailing, wholesaling, service and other activities, and other related activities. This means threshold calculations include:
- sales of services
- sales of exempt tangible personal property, including wholesale sales or sales for resale
- sales made on a marketplace platform where the facilitator is collecting tax on behalf of sellers, unless the seller makes all its retail sales through a marketplace facilitator
West Virginia: The threshold calculations include:
- wholesale sales or sales for resale
- sales of exempt tangible personal property
- sales of taxable and exempt services
- sales made on marketplace platforms, including when facilitators collect tax on behalf of sellers
Wisconsin: The threshold calculations include:
- sales of exempt tangible personal property
- wholesale sales or sales for resale
- sales of taxable and exempt services
- sales made on marketplace platforms, including when facilitators collect tax on behalf of sellers
Wyoming: The threshold calculations includes:
- sales of exempt tangible personal property
- sales of taxable and exempt services
- Wholesale sales or sales for resale
- The threshold calculations exclude sales made on marketplace platforms, including when facilitators collect tax on behalf of sellers
How TaxJar can help
Keeping up with economic nexus thresholds is a full-time job. Between maintaining transaction and sales counts for your business, as well as staying up to date on the different state threshold amounts and rules, it’s no wonder many businesses choose to automate nexus management for their business with companies like TaxJar.
TaxJar’s Nexus Insights Dashboard makes it easy to see which states require you to collect sales tax based on your economic activity without having to rely on manual workflows. Our dashboard looks at all eligible sales to determine if your sales met any of these thresholds. Sales not included in a state’s threshold count are subtracted, so you know your economic nexus monitoring is accurate.
TaxJar simplifies the process with an easy-to-use dashboard and notification system that helps you monitor your nexus exposure as you transact more sales online and across more states. Our dashboard warns you when you may need to register in a new state. Ready to get started? Start your free 30-day TaxJar trial today, or reach out to our sales team if you have any questions.
