Sales Tax

Internet Sales Tax (Post-Wayfair): Complete Guide 2026

Updated 2026-03-12

Data Notice: Figures, rates, and statistics cited in this article are based on the most recent available data at time of writing and may reflect projections or prior-year figures. Always verify current numbers with official sources before making financial, medical, or educational decisions.

Internet Sales Tax (Post-Wayfair): Complete Guide 2026

Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.

Since the landmark 2018 Supreme Court decision in South Dakota v. Wayfair, Inc., states have the authority to require out-of-state sellers to collect and remit sales tax on online purchases, even without a physical presence in the state. By 2026, all ~45 states with a general sales tax (plus the District of Columbia) have enacted economic nexus laws requiring remote sellers to collect sales tax once they exceed certain thresholds of sales or transactions within the state. This has fundamentally transformed e-commerce taxation, generating an estimated ~$40 billion to ~$50 billion in additional annual state and local tax revenue. For online sellers, understanding economic nexus thresholds, marketplace facilitator laws, and multi-state compliance is essential to avoid penalties and maintain business operations.

Economic Nexus Thresholds by State (2026)

Most Common Thresholds

Threshold TypeNumber of StatesExamples
~$100,000 in sales only~30+ statesCalifornia, Texas, Florida, New York
~$100,000 in sales OR ~200 transactions~10+ statesSouth Dakota (original Wayfair), Indiana
~$500,000 in sales~3 statesTexas (originally, now ~$500,000), California
Other thresholdsVariesNew York: ~$500,000 AND ~100 transactions

Selected State Thresholds

StateEconomic Nexus ThresholdSales Tax Rate
California~$500,000 in sales~7.25%+
Texas~$500,000 in sales~6.25%+
Florida~$100,000 in sales~6%+
New York~$500,000 AND ~100 transactions~4%+
Illinois~$100,000 in sales OR ~200 transactions~6.25%+
Pennsylvania~$100,000 in sales~6%+
Ohio~$100,000 in sales OR ~200 transactions~5.75%+
Washington~$100,000 in sales~6.5%+
Georgia~$100,000 in sales OR ~200 transactions~4%+
New Jersey~$100,000 in sales OR ~200 transactions~6.625%

States With No General Sales Tax

StateSales Tax Status
OregonNo general sales tax
MontanaNo general sales tax
New HampshireNo general sales tax
DelawareNo general sales tax
AlaskaNo state sales tax (local taxes in some areas)

How Internet Sales Tax Works

Economic Nexus

Economic nexus is the concept established by the Wayfair decision: a state can require a business to collect sales tax based on economic activity (sales volume or transaction count) within the state, regardless of physical presence. Most states set the threshold at approximately ~$100,000 in annual sales, though several larger states use ~$500,000. Once a seller exceeds the threshold in a state, they must register for a sales tax permit, collect tax on subsequent sales to customers in that state, and remit the tax according to the state’s filing schedule.

Thresholds are typically measured on a rolling ~12-month or calendar-year basis. Sellers must monitor their sales into each state continuously. Falling below the threshold in a subsequent period may allow a seller to cease collection in some states, though the rules vary.

Marketplace Facilitator Laws

By 2026, all ~45 sales tax states plus the District of Columbia have enacted marketplace facilitator laws. These laws shift the sales tax collection and remittance obligation from the individual seller to the marketplace platform (such as Amazon, Etsy, eBay, and Walmart Marketplace). If you sell exclusively through a qualifying marketplace facilitator, the platform handles sales tax collection in most states, simplifying your compliance burden. However, sellers who also sell through their own websites, at trade shows, or through non-qualifying channels retain collection obligations for those sales.

Destination-Based Sourcing

Most states use destination-based sourcing, meaning the sales tax rate is determined by the buyer’s delivery address, not the seller’s location. This means a seller in Oregon (no sales tax) shipping to a customer in Los Angeles must charge the Los Angeles combined rate of approximately ~9.5%. A minority of states use origin-based sourcing for in-state transactions but destination-based for out-of-state sales.

Multi-State Compliance

Sellers with economic nexus in multiple states face significant compliance complexity. Each state has its own registration process, filing frequency (monthly, quarterly, or annually), product taxability rules (some states exempt clothing, food, or digital goods), and rate structures (state + local rates). The Streamlined Sales and Use Tax Agreement (SSUTA) standardizes rules across approximately ~24 member states, but major non-member states like California, Texas, and New York maintain independent systems.

Comparison of Compliance Approaches

ApproachCostBest For
Manual compliance (file in each state)$50—$200 per state per filingSellers in ~1—~3 states
Sales tax automation software (TaxJar, Avalara, etc.)$50—$500+ per monthSellers in ~5+ states
Marketplace-only selling~$0 (marketplace handles tax)Sellers using Amazon, Etsy, etc.
Outsourced to CPA/tax service$200—$500+ per monthSellers preferring hands-off compliance

Tips for Online Sellers

  1. Monitor your sales in every state. Track total sales and transaction counts into each state on a rolling basis. Crossing an economic nexus threshold of approximately ~$100,000 (or ~200 transactions) triggers registration and collection obligations.
  2. Register promptly when you exceed a threshold. Failure to register and collect can result in liability for uncollected tax plus penalties of approximately ~10% to ~25% and interest.
  3. Leverage marketplace facilitator laws. If you sell primarily through Amazon, Etsy, or similar platforms, the marketplace handles sales tax in most states. Verify which platforms qualify in each state.
  4. Invest in sales tax automation software. For sellers in ~5 or more states, automation tools calculate rates, file returns, and manage registrations for approximately ~$50 to ~$500 per month, far less than the cost of errors or penalties.
  5. Understand product taxability. Not all products are taxable in all states. Clothing is exempt in some states, digital goods are treated differently, and food taxability varies widely.
  6. Keep records for at least approximately ~3 to ~4 years. States may audit online sellers for prior-period compliance, particularly after initial registration.
  7. Consider joining the Streamlined Sales Tax program. The SSUTA’s Volunteer Disclosure Agreement allows sellers to come into compliance in approximately ~24 states simultaneously with limited lookback per state tax guidelines.

Key Takeaways

  • All ~45 states with sales tax (plus D.C.) have enacted economic nexus laws requiring remote sellers to collect sales tax after exceeding state-specific thresholds
  • The most common threshold is approximately ~$100,000 in annual sales, though several large states use ~$500,000
  • Marketplace facilitator laws shift the collection obligation to platforms like Amazon and Etsy, covering the majority of third-party online sales
  • Destination-based sourcing means tax rates are determined by the buyer’s location, creating complexity for sellers shipping nationwide
  • Sales tax automation software costs approximately ~$50 to ~$500 per month and is essential for sellers with nexus in multiple states
  • The Wayfair decision has generated an estimated ~$40 billion to ~$50 billion in additional annual state and local revenue

Next Steps