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Sales TaxMay 22, 20257 min read

US Sales Tax Nexus in 2025: What Foreign-Owned US Businesses Must Know

Since South Dakota v. Wayfair (2018), economic nexus has fundamentally changed US sales tax. If your US entity has more than $100,000 in sales or 200 transactions in a state, you may have a filing obligation — even without a physical presence.

The Wayfair Revolution

Before 2018, US sales tax was relatively straightforward for companies without a physical presence in a state: if you didn't have an office, warehouse, or employee there, you generally didn't have to collect that state's sales tax.

The Supreme Court's 2018 decision in South Dakota v. Wayfair, Inc. changed everything. The Court ruled that states can require out-of-state sellers to collect and remit sales tax based on economic activity alone — even without any physical presence.

Today, 46 states plus Washington D.C. impose sales tax, and virtually all of them have enacted economic nexus laws following Wayfair. If your US business sells into multiple states — whether physical products, digital goods, or certain services — you likely have obligations you may not be aware of.

What Triggers Economic Nexus?

Most states follow a threshold of:

  • $2
  • $2

    • in the prior or current calendar year. A few states (California, Texas, New York) have different thresholds, but the $100K/200 transaction rule is the most common.

    Types of sales that typically count toward the threshold:

  • $2
  • $2
  • $2

    • What Taxable Goods and Services Look Like

    Sales tax applicability varies enormously by state:

    CategoryGenerally TaxableOften Exempt

    |----------|------------------|--------------|

    Physical goodsYes (most states)Groceries, prescription drugs SaaS / cloud software24+ statesRest (varies) Downloaded softwareMost statesSome states Consulting servicesVariesMost states Marketplace salesHandled by platformN/A

    If you sell SaaS to US customers, pay close attention: states like New York, Texas, Pennsylvania, and Washington treat SaaS as taxable. Others like California do not (as of now). The rules change, and a nexus analysis is state-specific.

    The Registration and Remittance Process

    Once you determine you have nexus in a state, you must:

  • Register for a sales tax permit in that state (most states offer online registration)
  • Collect the correct sales tax rate from customers in that state
  • File returns on the state's schedule (monthly, quarterly, or annually based on your sales volume)
  • Remit the collected tax to the state

    • Most states charge penalties and interest for late registration and back taxes. Voluntary disclosure programs allow businesses to come forward proactively, often with penalty relief and a limited lookback period.

    Marketplace Facilitator Rules

    If you sell through Amazon, Etsy, Shopify Plus, eBay, or other marketplace facilitators, the marketplace is typically required to collect and remit sales tax on your behalf in most states. This significantly reduces your compliance burden for marketplace sales.

    However, if you sell direct-to-consumer (your own website or Shopify store without a facilitator designation), you are responsible for collection.

    Steps to Take Now

  • Conduct a nexus review — Determine which states you have nexus in based on your sales data
  • Product taxability analysis — Understand whether what you sell is taxable in each nexus state
  • Register in all nexus states (or use voluntary disclosure to address historical exposure)
  • Automate collection — Tools like TaxJar, Avalara, or Stripe Tax can automate the calculation and reporting
  • Set up a compliance calendar — Filing deadlines vary by state and by your assigned filing frequency

    • Consequences of Non-Compliance

    States have become aggressive in enforcing sales tax compliance. The risks of non-compliance include:

  • $2
  • $2
  • $2
  • $2

    • How Finexus Edge Can Help

    Our sales tax compliance practice handles the full lifecycle: nexus determination, product taxability analysis, state registration, ongoing return filing, and voluntary disclosure negotiation where historical exposure exists. We also integrate with your e-commerce and billing platforms to automate future compliance.

    Contact us to schedule a sales tax nexus review for your business.