Sales Tax 101 States

What Creates Sales Tax Nexus in Every State

by Jennifer Dunn

what makes state sales tax nexus

This post was last updated on July 5, 2018

Forty-five states and Washington D.C. all have a sales tax. But every state is different – the exact laws that create sales tax nexus in one state may be a little different in another. This post lists all the states and a link to sales tax laws with the exact wording they use regarding what business activities create sales tax nexus.

Remember, if you have sales tax nexus in a state, you need to:

  1. Register for a sales tax permit in that state
  2. Charge sales tax to customers in that state regardless of how you sold them a product or from where that product shipped
  3. File sales tax returns in that state

Also note that it’s almost impossible to avoid home state nexus (meaning if you live or work in a state then you’ll probably have nexus there), so this list focuses on what constitutes nexus for out-of-state sellers. Keep in mind that in many cases what we think of as “sales tax” when we pay it as referred to as “use tax” when collected and remitted by an out-of-state seller.

If you’re wondering if you have sales tax nexus in a state, find it below to read what that state’s laws and/or main taxing authority has to say about sales tax nexus.

What Conditions Create Sales Tax Nexus in Every State

Note: Most definitions of nexus include the terms “doing business” or “engaged in business.”

Alabama Alabama code section 40-23-68 details what creates sales tax nexus in Alabama. Starting after the South Dakota v. Wayfair Supreme Court ruling on June 21, 2018, Alabama also says that some sellers have economic nexus. Read Alabama’s economic nexus law here. Read more about economic nexus here.

Arizona – Arizona’s Nexus in Arizona guide details what creates sales tax nexus in Arizona.

Arkansas –  The Arkansas Department of Finance and Administration’s “Arkansas Rules” publication from 2008 details nexus on page 1, under “F. Doing Business As.” 

California Section 6203 of the California Revenue and Tax Code talks about what creates sales tax nexus in California.

Colorado – Regulation 39-22-301.1 from the Colorado Department of Revenue goes into what creates sales tax nexus in the state.

Connecticut –  The Connecticut Department of Revenue states that, “Anyone engaged in business in Connecticut, which includes selling tangible personal property for storage, use or other consumption in this state, or selling taxable services, must register with the DRS for a Sales and Use Tax Permit.” Due to the passage of Senate Bill 417, this definition will be updated on December 1, 2018. 

Florida – Florida calls sellers with nexus “dealers,” and defines “dealer” in the Florida code section 212.0596.

Georgia – Georgia calls sellers with nexus “dealers,” and defines dealer in Georgia code title 48, section 48-8-2(3). Starting January 1, 2018 Georgia also has an economic nexus law. You can read Georgia’s economic nexus law here. Read more about economic nexus here.

Hawaii – Hawaii doesn’t have sales tax, but does have a “general excise tax.” Most states with any kind of presence in Hawaii, including providing services, will likely be subject to the general excise tax. Hawaii defines doing business in their General Excise Tax law, chapter 237-2 (Starts on p. 4 of this link). Starting July 1, 2018 Hawaii also has an economic nexus law. You can read Hawaii’s economic nexus law here. Read more about economic nexus here.

Idaho – Idaho considers “retailers engaged in business” in Idaho to have sales tax nexus. Here’s how Idaho defines sales tax nexus

Illinois – Illinois considers “retailers” in the state to have sales tax nexus. Here’s how Illinois defines “retailers,” (Page 2) and here (search “Retailer maintaining a place of business in this State”). Starting October 1, 2018 Illinois also has an economic nexus laws. You can read Illinois’ economic nexus laws here. Read more about economic nexus here.

Indiana – Indiana considers “retailers” to have nexus in Indiana. Here’s how Indiana defines retailers with nexus: Indiana Code 6-2.5-3-1(c) (you may have to choose “Chapter 6: Taxation” then use the search bar within the code). Indiana also has an economic nexus law, but as of this writing it is pending legal challenge. You can read Indiana’s economic nexus law here. Read more about economic nexus here.

Iowa – Iowa defines retailers with sales tax nexus in Code of Iowa Section 423-1(43). Starting January 1, 2019 Iowa also has an economic nexus law. You can read Iowa’s economic nexus law here. Read more about economic nexus here.

Kansas Kansas statute 79-3702(h)(1) defines what business activities are considered to create sales tax nexus in Kansas.

Kentucky – Retail activities that create nexus in Kentucky are described in Kentucky statute 139.340(2). Starting July 1, 2018 Kentucky also has an economic nexus law. You can read Kentucky’s economic nexus guidance here. Read more about economic nexus here.

Louisiana – Louisiana considers entities “Engaging in business in a taxing jurisdiction” to have nexus. This definition can be found in Louisiana Code Sec. 47:301(4). Starting June 21, 2018 Louisiana also has an economic nexus law. You can read Louisiana’s economic nexus law here. Read more about economic nexus here.

Maine – You can find what constitutes sales tax nexus in Maine in their “Sales Tax Reference Guide.” Starting October 1, 2017 Maine also has an economic nexus law. You can read Maine’s economic nexus law here. Read more about economic nexus here.

Maryland – Maryland defines what is considered nexus for out-of-state vendors in their Nexus Information for Corporations page here.

Massachusetts – You can find out what constitutes nexus on this page under the heading “Who is a sales/use tax vendor?” Starting October 1, 2017 Massachusetts also has an economic nexus law. You can read Massachusetts’ economic nexus law here. Read more about economic nexus here.

Michigan – Find out what Michigan has to say about sales tax nexus here. Also note that Michigan updated their definition of nexus as of October 1, 2015.

Minnesota – Minnesota defines sales tax nexus in Minnesota Statute 297A.66.

Mississippi – Find out what constitutes doing business/sales tax nexus in Mississippi in Mississippi Code Ann. 27-65-9. Starting December 1, 2017, Mississippi also has an economic nexus law. You can read Mississippi’s economic nexus laws here (starting on p. 32.) Read more about economic nexus here.

Missouri – Find out what constitutes sales tax nexus in Missouri in the Missouri Revised Statutes here. (If the link doesn’t work, search Section 144.635).

Nebraska –  Nebraska Revised Statute 77-2701.13 defines what business activities create sales tax nexus in Nebraska.

Nevada – Nevada defines what creates sales tax nexus in the state in a Sales Tax FAQ. Interestingly, Nevada repealed their definition of “retailer maintaining a place of business” in the state in 2007 and have not replaced it. They have, however, provided guidance for out-of-state sellers in the Use Tax – Common Questions and Answers (opens in word doc!) document on their Department of Taxation Website.

New Jersey New Jersey defines what is considered a “seller” under New Jersey law, and New Jersey Technical Bulletin 78-R goes into more detail about what activities create sales tax nexus in New Jersey (p. 2).

New Mexico – New Mexico has a “gross receipts tax” rather than a sales tax. You can most easily find out more about who has to collect and remit gross receipts tax here.

New York – New York defines “vendors” as having sales tax nexus. You can find the definition of “vendor” in New York Code Section 1101(B)(8).

North Carolina – You can find North Carolina’s definition of “engaged in business” (which creates sales tax nexus) here (p. 4 under “Engaged in Business.”)

North Dakota – In North Dakota, any “Retailer maintaining a place of business in this state” has nexus. You can find that definition here (p. 2). Starting October 1, 2018 North Dakota also has an economic nexus law.  You can read about North Dakota’s economic nexus law here. Read more about economic nexus here.

Ohio – Ohio discusses what constitutes nexus for out-of-state sellers here Sections (H, I). Starting January 1, 2018 Ohio also has a Commercial Activity Tax (CAT), though it is pending litigation at the time of this writing. Read Ohio’s CAT law here.

Oklahoma – You can click here to read exactly what the Oklahoma Department of Revenue (Oklahoma’s taxing authority) has to say about what constitutes sales tax nexus in Oklahoma (page 8 – “Place of Business.”) 

Pennsylvania – Pennsylvania considers sellers “having or maintaining a place of business” in the state to have nexus. Here’s what Pennsylvania code has to say about what defines “having or maintaining a place of business.” 

Rhode Island – See p.2 of this document for what constitutes “engaging in business in the state” of Rhode Island.

South Carolina – South Carolina spells out who has sales tax nexus in the state on this page under “Who is required to file a sales and use tax return?”

South Dakota – Any “retailer maintaining a place of business in the state” has sales tax nexus in South Dakota. See their definition here (10-46-1(12).) Effective May 1, 2016 (though pending litigation at the time of this writing), South Dakota also has an economic nexus law. You can read more about South Dakota’s economic nexus law here.

Tennessee – You can find Tennessee’s definition of sales tax nexus for out-of-state retailers here. Starting July 1, 2017 (and pending litigation) Tennessee also has an economic nexus law. You can read Tennessee’s economic nexus law here. And read more about economic nexus here.

Texas – You can find Texas’s definition of “engaged in business” in the Texas code Sec. 151.107.

Utah – Read Publication 37 for what constitutes sales tax nexus in Utah.

Vermont – Find out what creates sales tax nexus for out of state sellers in Vermont here (under subheading (9).) Starting July 1, 2018 Vermont also has an economic nexus law. You can read guidance on economic nexus from the Vermont Department of Revenue here. Read more about economic nexus here.

Virginia – Virginia considers “dealers” to have sales tax nexus. Find out how Virginia defines “dealer” here. (This definition is updating on July 1, 2017. You can read more about Virginia’s new definition of “dealer” here.)

Washington – This publication defines nexus in Washington state.

Washington D.C. – Sellers “engaging in business in the District” have sales tax nexus in the District of Columbia. Find out what they mean by “engaging in business in the District” by searching for those terms here

West Virginia – This page defines what conditions create sales tax business in West Virginia for “retailers.”

Wisconsin – View “activities which create Wisconsin nexus” here (11.97(3).) Starting October 1, 2018 Wisconsin also has an economic nexus regulation. You can read guidance from Wisconsin on economic nexus here. Read more about economic nexus here.

Wyoming – Wyoming considers “vendors” to have sales tax nexus. You can find Wyoming’s definition of “vendor” here under “Article 1 – State Use Tax.” Starting July 1, 2017 Wyoming also has an economic nexus law. You can read Wyoming’s economic nexus law here. And you can read more about economic nexus here.

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