Economic Nexus

Definition

Economic nexus is a standard that requires a business to collect and remit state sales tax based solely on its level of sales activity in a state, even without any physical presence there. Following the Supreme Court's 2018 South Dakota v. Wayfair decision, most states adopted thresholds — commonly $100,000 in sales or 200 transactions — that trigger this obligation. A business that crosses a state's threshold must register, collect, and remit sales tax in that state regardless of where it is physically located.