Black Friday and Christmas do two things to a seller outside the US. They move stock, and they quietly create registration obligations in states the seller has never thought about. The first shows up in the bank account in December. The second shows up in January.
Crossing a state’s economic nexus threshold during Q4 creates an obligation to register and collect sales tax in that state, and when that obligation starts depends entirely on which state it is. Seventeen states have now dropped the 200-transaction test, so revenue alone decides it in those states. Six states measure only the previous calendar year, which means a threshold crossed in late 2026 becomes a live obligation from January 2027.
Not sure which states you crossed into this quarter? WhatsApp us your sales-by-state figures and we will work out where you now stand.
Quick Summary
| What varies | Position |
| Common revenue threshold | $100,000 of sales into the state |
| Higher thresholds | Alabama and Mississippi $250,000; California, New York and Texas $500,000 |
| Transaction test | Dropped in 17 states, including Illinois from 1 Jan 2026 and Kentucky from 1 Aug 2026 |
| States needing both tests | Connecticut ($100,000 and 200 transactions); New York (>$500,000 and >100 sales) |
| Measurement — current or previous year | Most states, including Arizona, Colorado, Idaho |
| Measurement — previous year only | Alabama, Florida, Michigan, New Mexico, Pennsylvania, Rhode Island |
| Measurement — rolling 12 months | Illinois, Missouri, Minnesota, Tennessee, Texas, Mississippi |
| When collection starts | Kansas: next transaction. Tennessee: first day of the third month after crossing |
💡 TaxKitab Tip Pull a sales-by-state report for the full calendar year now, in October, not in January. Two columns: your own direct sales, and sales made through each marketplace, kept separate. You need them separate because states disagree about whether marketplace sales count toward your own threshold, and a single combined figure cannot answer the question in any state. Ten minutes of report-building in October replaces a week of reconstruction in January.
The Threshold Is Not One Number
The $100,000 figure gets quoted as though it were federal. It is not.
Most states sit at $100,000 in sales into the state. Alabama and Mississippi are at $250,000, and California, New York and Texas at $500,000. Alaska has no statewide sales tax, and its $100,000 test applies only to local taxes.
Two states require both tests rather than either: Connecticut needs $100,000 and 200 transactions together, New York more than $500,000 and more than 100 sales. There, a high-value, low-volume seller can be under the threshold at a revenue figure that would trigger registration elsewhere.
Seventeen States Have Dropped the Transaction Test
This is the part most published guidance is still wrong about.
The original post-Wayfair pattern was “$100,000 or 200 transactions.” A long list of states has since removed the transaction limb: Alaska, California, Colorado, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Massachusetts, North Carolina, North Dakota, South Dakota, Utah, Washington, Wisconsin and Wyoming. Illinois’ removal took effect 1 January 2026, Kentucky’s 1 August 2026.
That usually helps a small seller — 250 low-value orders into Illinois no longer create nexus on their own. But working from a chart published two years ago, you may be registered somewhere you no longer need to be. Roughly fifteen states, plus Puerto Rico and the District of Columbia, still have a transaction threshold.
The Measurement Period Decides When It Bites
This is what makes Q4 the pinch point.
Current or previous calendar year — the most common test. Crossing in November 2026 means you are in nexus now, in the current year.
Previous calendar year only — Alabama, Florida, Michigan, New Mexico, Pennsylvania and Rhode Island. A threshold crossed during 2026 creates the obligation for 2027. January is exactly when it starts.
Rolling twelve months — Illinois and Missouri check the preceding twelve months quarterly, Minnesota and Tennessee use the prior twelve months, Texas the preceding twelve calendar months, Mississippi any twelve-month period. These do not reset on 1 January, so a December peak keeps counting well into the following year.
Other — Connecticut measures the twelve months ending 30 September. New York uses the previous four sales tax quarters.
Marketplace Sales: There Is No Single Answer
If you sell on Amazon, Walmart, Etsy or a similar platform, the marketplace generally collects and remits the tax on those sales under marketplace facilitator laws. The question that matters is whether those sales still count toward your own threshold for your direct sales.
- Counted: California, Texas and Washington include marketplace sales in your threshold.
- Excluded where the marketplace collected: Georgia, Tennessee and Pennsylvania, among others.
- Excluded entirely: Arizona leaves marketplace sales out of the remote seller’s threshold.
The practical consequence for a seller who sells both on a marketplace and through their own website: in California your Amazon volume can push your own site’s sales into a registration obligation, and in Arizona it cannot. Same business, same numbers, opposite answer.
When Collection Actually Starts
Crossing the threshold and having to collect are not the same date, and states differ.
Kansas requires collection from the very next transaction after the threshold is met. Tennessee gives until the first day of the third month after the month of crossing. Most states sit between, and several expect registration before the first taxable sale rather than after.
This is why the October report matters. A seller who finds out in February that they crossed in November has three months of sales they should have collected on, and the tax is owed whether or not the customer paid it.
What to Do This Month
- Sales by state for the full calendar year, direct and marketplace in separate columns.
- Compare against each state’s current threshold — not a chart from last year.
- Check the measurement period for any state you are close to; it decides whether the clock has started.
- List the states where registration is now required, with the date collection must begin.
- Register before you collect. Collecting without a permit is its own problem in several states.
- Check whether a permit renewal falls due in January, which some states require.
Where the transaction data is the problem rather than the thresholds, that is a bookkeeping question first — the state-level breakdown is part of the monthly work in where VAT and sales tax coding goes wrong, and Indian sellers will recognise the parallel burden from GST for e-commerce sellers under Section 52.
How We Work on This
We prepare the data — sales by state, by channel, reconciled to the platform reports and the books — so registration and filing decisions rest on figures that tie. Registration and filing are handled by our US partner under a separate engagement with you.
State sales tax is not a federal matter, so this is not IRS work and no IRS credential governs it. It is state-by-state registration and filing.
Frequently Asked Questions
Does Amazon collecting tax mean I have no obligation? For the marketplace sales themselves, generally yes — the marketplace remits. It does not necessarily mean those sales are excluded from the threshold that applies to your direct sales, and in California, Texas and Washington they are included.
I am an Indian company with no US presence. Does nexus apply to me? Economic nexus does not require physical presence. It is based on sales into the state. A seller with no US entity, no office and no staff can still have a registration obligation.
What if I crossed the threshold and did not collect? The tax is generally still owed by the seller, with penalty and interest, whether or not the customer paid it. Several states run voluntary disclosure programmes that limit the look-back — a conversation to have before a state contacts you, not after.
Does inventory in a fulfilment centre create nexus? In most states yes, because stored inventory is a physical presence. Where a marketplace moves your stock between states without telling you, check the platform’s inventory reports.
Is there a federal sales tax return? No. There is no federal sales tax. Every registration and return is state-level, and in some states local jurisdictions file separately again.
References
- Avalara — states eliminating economic nexus transaction thresholds, table as of 21 April 2026
- Kintsugi — economic nexus thresholds, measurement periods and marketplace treatment by state, 2026
- TaxCloud — sales tax nexus by state chart, 2026
- South Dakota v. Wayfair, Inc., 585 U.S. 162 (2018)
⚠️ Thresholds, measurement periods, marketplace rules and collection start dates change frequently and the sources above are secondary summaries. Confirm each state’s current position with that state’s department of revenue, or through your US partner, before registering or deciding not to.
Call or WhatsApp: +91 7448200422 | Email: info@taxkitab.com
See our USA Accounting Services page, or Global Desk if you are selling into the US from outside it. Get in touch.
