Glossary · Sales tax
Sales tax nexus
Sales tax nexus is the connection with a US state that obliges a business to register, collect that state's sales tax and file returns there. Physical presence, such as an office, staff or stock, creates nexus, and since 2018 states can also apply economic nexus once sales into the state pass a set threshold.
Glossary / Sales tax nexus
How it works
Before 2018, a seller generally needed a physical presence in a state before the state could require it to collect sales tax. In South Dakota v. Wayfair (2018), the US Supreme Court upheld a South Dakota law that required remote sellers to collect once they had more than $100,000 of sales or 200 separate transactions into the state in a year. Every state with a sales tax now has an economic nexus rule of its own.
Thresholds and what counts toward them differ by state, and several states have changed their rules since 2018. Nexus is measured state by state, so a business can have nexus in its home state and in two others where its sales grew. Once you have nexus, you register before you start collecting; collecting without a permit is not allowed.
Worked example: An online shop in Ohio
A shop based in Ohio sells $40,000 in Ohio, $120,000 to customers in Texas and $30,000 to customers in Oregon. It has physical nexus in Ohio. If Texas's threshold is $500,000, the shop has no economic nexus there yet. Oregon has no general sales tax. So it collects Ohio tax only, and keeps watching its sales into each state.
These state thresholds are for illustration; check each state's department of revenue for the current figure before relying on it.
In the US and in Canada
In the United States
Nexus is a US concept. Marketplace facilitator laws mean platforms such as large online marketplaces usually collect the tax on sales made through them, which may count differently toward your threshold.
In Canada
Canada has no nexus test by province for GST/HST. A business registers once it passes the $30,000 small supplier threshold and then charges the rate of the province where the supply is made. Provincial PST and QST have their own registration rules for out-of-province sellers.
In AcboBooks
AcboBooks does not decide where you have nexus. Once you are registered in a state, you set up a sales tax item for its rate and agency (or a tax group for combined state, county and city rates), and the liability report splits what you owe by agency.
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Updated October 25, 2026. General information, not tax, legal or accounting advice. Rules and rates change; check with the IRS, the CRA, your state or province, or your accountant.
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