The Wayfair decision by state isn’t uniform, and that’s where most remote sellers quietly accumulate a problem they don’t yet know they have.
On June 21, 2018, the U.S. Supreme Court ruled 5–4 in South Dakota v. Wayfair, Inc., ending a decades-old rule that let online sellers off the sales tax hook as long as they kept their warehouses out of state. The old standard came from Quill Corp. v. North Dakota (1992): no physical presence, no obligation. Wayfair buried it. States could now require collection based purely on economic activity, so how much you sell into a state, not whether you have a building there.
What followed was a fast and uneven wave of state-level adoption that’s still shifting today. If you sell across state lines, the details below aren’t background reading. They’re the framework that determines where you owe tax, how much, and how far back that obligation goes.
Hands Off Sales Tax (HOST) has been focused exclusively on sales tax compliance since 1999. Here’s what every remote seller needs to understand about the Wayfair decision, state by state.
Every State Came Around… Eventually
The response was swift, but not instant. Within months of the ruling, more than half the states with a sales tax had either enacted economic nexus laws or had legislation in the pipeline. Some states didn’t need new legislation at all. They had dormant laws already on the books that Wayfair simply unlocked.
New York is the clearest example. Its economic nexus statute had sat unused since 1989, held back by the Quill physical presence requirement. The day Wayfair was decided, New York’s dormant law became enforceable. The state later confirmed enforcement tied to June 21, 2018.
Missouri took the longest. Its legislature passed the bill on May 14, 2021, the governor signed it on June 30, 2021, and enforcement didn’t begin until January 1, 2023. As of that date, every state that imposes a sales tax had enacted economic nexus.
The rulebook now covers all 45 states. What it doesn’t do is agree with itself.
The $100,000 Standard, and the States That Ignored It
South Dakota’s law used $100,000 in annual sales or 200 separate transactions as its threshold. The Supreme Court endorsed it. Most states adopted it. But three of the country’s biggest markets went their own way, and the differences are significant enough to matter to almost any e-commerce business.
California sets its threshold at $500,000 in combined gross sales of tangible personal property, current or prior calendar year. No transaction count. Effective April 1, 2019.
Texas requires $500,000 in total Texas revenue over the preceding 12 months. Gross revenue, which includes taxable, nontaxable, and exempt sales. No transaction count. Enforcement began October 1, 2019.
New York is the most seller-friendly of the three, technically. Its current rule requires $500,000 in gross sales AND more than 100 transactions in the preceding four sales tax quarters. Both conditions must be met. A seller with $600,000 in New York sales but only 80 transactions doesn’t have nexus, yet. Most states use “OR” logic; New York requires “AND.”
Alabama and Mississippi both use $250,000 in annual sales as their threshold. A middle ground that often catches sellers who assumed a state-specific safe harbor still applied.
How You Measure Matters as Much as the Number
Identical thresholds can produce different outcomes depending on how a state measures them. This is where a lot of sellers, even the careful ones, get surprised.
Most states look at either the current year to date or the prior full calendar year. Cross the threshold in either window, and you have nexus. But Illinois, Minnesota, Pennsylvania, Tennessee, and Texas use a rolling 12-month window: any consecutive 12-month period, not just calendar years. You can cross Texas’s $500,000 threshold without either annual total showing it, if the overlap period does.
Florida, Michigan, and New Mexico use only the prior calendar year. Your 2024 sales determine whether you have nexus in 2025.
These aren’t technicalities. They’re the difference between discovering you’ve had nexus since last March versus since last January. The back-tax liability math changes accordingly.
The 200-Transaction Rule Is Quietly Disappearing
Many states initially paired their dollar threshold with a 200-transaction alternative. The idea being that volume of sales, not just revenue, indicated meaningful economic activity. It created an unintended problem: a seller moving 200 units of a $5 product hit the threshold with $1,000 in sales. That’s not the economic presence anyone had in mind.
States have been correcting this. As of July 1, 2025, 15 states have eliminated the 200-transaction threshold entirely, with 16 states still retaining it. Even South Dakota, whose law created the template has since dropped its own transaction count. Confirmed recent removals, per TaxJar and TaxCloud:
- Indiana: Removed March 29, 2024
- North Carolina: Removed July 1, 2024
- Wyoming: Removed July 1, 2024
- Alaska: Removed January 1, 2025
- Utah: Removed July 1, 2025
- Illinois: Removed January 1, 2026
If your previous nexus analysis concluded you were safe in a state because you stayed under 200 transactions despite strong sales, that analysis may now be wrong.
Thresholds Are Only Half the Picture
Two things the threshold conversation tends to crowd out are worth saying plainly.
First, physical nexus didn’t go away. Wayfair added economic nexus on top of existing rules. A single remote employee working from home in a state creates physical nexus immediately, regardless of how much you’ve sold there. So does inventory stored in an Amazon fulfillment center, and Amazon distributes FBA stock across its warehouse network without notifying sellers, which means your products may already be sitting in states where you’ve never registered. No threshold applies to physical presence. Any qualifying connection triggers the obligation.
Second, crossing a threshold means registering promptly. Most states require registration within 30 days of establishing nexus; some require it immediately. California gives 30 days. Texas requires registration before collecting the first dollar of tax after the threshold is crossed. The obligation begins when the threshold is crossed, and uncollected tax from that point forward is your liability.
Even among states using identical dollar amounts, the definition of what counts as a qualifying sale can differ enough to change whether you’ve crossed the line.
Some states count gross sales including exempt and wholesale transactions. Others count only taxable sales. California counts tangible personal property including wholesale and marketplace sales, but excludes services. Florida counts only taxable sales, excluding wholesale and marketplace sales. A seller with significant exempt or wholesale volume could be below threshold in one state’s calculation and above it in another’s, using the exact same sales data.
Marketplace sales add a second layer. Some states count sales made through Amazon or Etsy toward your threshold even though the marketplace collects and remits the tax. Others exclude them entirely. If most of your volume runs through a marketplace, this distinction can determine whether you have nexus at all in certain states, and whether you need to register independently.
Already Behind? The Clock Is Running
Here’s the part that keeps compliance professionals busy: most sellers don’t discover a nexus gap while it’s small. They find out when it isn’t.
One thing worth knowing before you act: Wayfair’s logic hasn’t stayed contained to sales tax. States including California, New York, and Massachusetts are applying the same economic nexus reasoning to income tax and franchise tax, asserting that sufficient revenue from a state can create income tax obligations even without physical presence. A sales tax nexus review is the right starting point, but for businesses with significant multi-state volume, the full exposure picture is often broader than sales tax alone.
If you’ve crossed thresholds in states where you haven’t registered, a Voluntary Disclosure Agreement (VDA) is almost always the better path. A VDA lets you come forward before the state comes to you, limiting the lookback period to three or four years, and typically eliminating penalties entirely. The math on that trade-off is usually straightforward.
What closes the window is state contact. Once you receive a notice or an audit inquiry, VDA eligibility is gone. You’ve lost the ability to negotiate as a voluntary discloser and will face whatever lookback period and penalty structure the state chooses to apply.
If you have any reason to think you’ve been selling into states without collecting, like a new product line, a year of fast growth, a market you entered informally, the time to act is before any letter arrives.
How HOST Helps
Tracking thresholds, measurement periods, transaction rule changes, and what counts toward nexus across dozens of states isn’t a one-time project. The rules change, your sales grow, and your exposure in a new state can appear faster than most businesses realize.
Hands Off Sales Tax handles the full compliance picture: nexus analysis to determine where you have obligations, registration in every required state, ongoing filings across all jurisdictions, and notice management when states get in touch. If you’ve been operating across state lines without a current nexus review, now is the right time.
Contact HOST today to find out exactly where you stand, before the Wayfair decision creates a problem you’re still catching up to.
Frequently Asked Questions
What did the Wayfair decision change for remote sellers?
It ended the physical presence requirement for sales tax collection. Before the June 21, 2018 ruling, you only owed sales tax in states where you had employees, warehouses, or other physical ties. After Wayfair, selling enough into a state (typically $100,000) creates a collection obligation whether you’ve ever set foot there or not. HOST’s FAQ page covers the most common nexus questions sellers face post-Wayfair.
Do all states have the same economic nexus threshold?
No. Most use $100,000, but California, New York, and Texas use $500,000. Alabama and Mississippi use $250,000. Measurement periods, what sales count, and whether transaction thresholds still apply vary further by state. TaxJar’s state-by-state guide is a reliable current reference.
When did each state start enforcing economic nexus?
It varies significantly. New York tied enforcement to June 21, 2018. California’s rules took effect April 1, 2019. Texas began enforcement October 1, 2019. Missouri’s governor signed the law June 30, 2021, with enforcement beginning January 1, 2023. For any specific state, consult that state’s Department of Revenue or contact HOST directly.
What happens if I’ve already crossed a threshold without registering?
You likely have back tax obligations, potentially with penalties and interest attached. A Voluntary Disclosure Agreement (VDA) can limit the lookback period to three to four years and often eliminates penalties, but only if you act before the state contacts you. HOST evaluates exposure and files VDAs on your behalf.
Does selling through Amazon or Etsy mean the marketplace handles everything?
Marketplace facilitator laws require platforms like Amazon and Etsy to collect and remit tax on your behalf in most states. But some states still count those sales toward your economic nexus threshold, and gaps remain in states where a marketplace isn’t collecting. A sales tax registration review can clarify exactly where your exposure sits.
