What is the difference between physical and economic nexus?

Physical nexus means having a physical presence in a state (office, employees, inventory, trade show attendance). Economic nexus means hitting a revenue or transaction threshold on sales into the state, regardless of physical presence. Post-Wayfair, economic nexus is what catches most remote sellers.

Does Amazon FBA create nexus in a state?

Yes. When Amazon stores your FBA inventory in a state's fulfillment center, you typically have physical nexus there regardless of revenue. Check your Amazon Seller Central inventory reports for state-level distribution.

Do I need to register in a state if I only sell through Amazon?

Amazon collects and remits sales tax as a marketplace facilitator in every US sales-tax state, so you generally don't collect tax yourself on Amazon sales. But FBA inventory in a state may still create a registration obligation for informational filing.

How soon after crossing a threshold do I need to register?

Most states require registration within 30-60 days of crossing the threshold and require you to begin collecting tax on sales after the effective date. Delaying registration creates back-tax exposure plus penalties and interest.

Are digital products and SaaS treated the same as physical goods?

No. Each state defines taxable digital products and SaaS differently. Some states tax SaaS at the general rate, others exempt it entirely. Taxability for physical goods is much more uniform across states.

Sales Tax Nexus Explained

Updated 2026-05-29

What sales tax nexus is, how the 2018 Wayfair decision reshaped it, and when remote sellers must register and collect across state lines.

What is sales tax nexus?

Sales tax nexus is the legal connection between a seller and a US state that obligates the seller to register, collect, and remit sales tax on transactions shipped into that state. Before 2018, nexus required physical presence — an office, a warehouse, an employee, or inventory stored in the state. The US Supreme Court's decision in South Dakota v. Wayfair, Inc. overturned the physical-presence rule and allowed states to tax remote sellers who meet an economic nexus threshold.

Every US state that levies sales tax has now adopted an economic nexus statute. Thresholds vary by state but typically fall into three patterns: a dollar-only threshold (e.g. $100,000 in sales), an OR threshold (dollars OR transaction count), or — in a few states — an AND threshold where both conditions must be met.

Types of nexus

Physical nexus. Offices, employees, agents, inventory (including Amazon FBA warehouses), contractors, or trade show attendance in the state.
Economic nexus. Reaching a state's dollar or transaction threshold in the current or prior calendar year.
Click-through nexus. A relationship with an in-state affiliate that refers customers. Mostly superseded by economic nexus post-Wayfair.
Marketplace nexus. Sales made through a marketplace facilitator (Amazon, Etsy, eBay, Walmart) — usually collected by the marketplace, not the seller.

For a scenario-by-scenario comparison, read the physical nexus vs economic nexus explainer.

When does a remote seller need to register?

Registration is triggered when your business hits a state's threshold for the first time. Most states require you to register within 30-60 days of crossing the threshold, and begin collecting tax on sales made after the registration effective date. Late registration can result in back tax liability, penalties, and interest on uncollected tax.

Marketplace-facilitated sales are typically excluded from your threshold because the marketplace collects on your behalf — but you may still need to register for your direct-to-consumer sales in the same state.

What to do next

Start with the nexus calculator to identify where you already have exposure, compare every 2026 economic nexus threshold, and browse the all-state directory. Then read the state hub page for each state you're active in: California, Texas, Florida, New York.

Source notes checked 2026-05-29

Wayfair background is checked against the official US Supreme Court opinion in South Dakota v. Wayfair, Inc. (date_retrieved: 2026-05-29). State threshold examples are summarized from the site's current state guides and the economic nexus map.

Frequently asked questions

What is the difference between physical and economic nexus?: Physical nexus means having a physical presence in a state (office, employees, inventory, trade show attendance). Economic nexus means hitting a revenue or transaction threshold on sales into the state, regardless of physical presence. Post-Wayfair, economic nexus is what catches most remote sellers.
Does Amazon FBA create nexus in a state?: Yes. When Amazon stores your FBA inventory in a state's fulfillment center, you typically have physical nexus there regardless of revenue. Check your Amazon Seller Central inventory reports for state-level distribution.
Do I need to register in a state if I only sell through Amazon?: Amazon collects and remits sales tax as a marketplace facilitator in every US sales-tax state, so you generally don't collect tax yourself on Amazon sales. But FBA inventory in a state may still create a registration obligation for informational filing.
How soon after crossing a threshold do I need to register?: Most states require registration within 30-60 days of crossing the threshold and require you to begin collecting tax on sales after the effective date. Delaying registration creates back-tax exposure plus penalties and interest.
Are digital products and SaaS treated the same as physical goods?: No. Each state defines taxable digital products and SaaS differently. Some states tax SaaS at the general rate, others exempt it entirely. Taxability for physical goods is much more uniform across states.