Taxes

US sales tax for online stores and what nexus means

By the Atiko team · Last reviewed October 2026

Founders arriving from countries with a national VAT often expect the United States to work the same way. It does not. There is no federal sales tax. Sales tax is imposed by the states, and each state writes its own rules on what is taxed, at what rate and who must collect it. A store selling across the country deals with many separate systems.

The concept that organizes all of this is nexus, meaning a sufficient connection between a seller and a state. Where you have nexus, the state can require you to register and collect. Where you have none, it cannot. This guide explains how nexus arises and what follows from it. It is general information, and the application to your own sales belongs to an independent licensed tax professional.

Sales tax is a state matter

Each state decides whether to have a sales tax at all, and a small number have none. In the states that do, local jurisdictions such as counties and cities often add their own rates, so the total charged can vary from one delivery address to another within the same state. The tax is generally calculated on the destination of the shipment.

Sales tax is a tax on the buyer that the seller is required to collect and pass on. The seller acts as a collector for the state. This matters because a seller who should have collected and did not can be held liable for the uncollected amount, usually with interest and penalties, even though the money was never received from customers.

It is separate from income tax and from where your company is formed

Sales tax and income tax are different systems with different triggers. A state with no corporate or personal income tax, such as Wyoming, may still have a sales tax. Forming your LLC in a particular state does not exempt you from collecting in the other states where your customers live.

The same holds for where the owner lives. A company owned by a founder abroad is subject to the same sales tax rules as a company owned by a US resident. The state looks at the seller’s activity in the state, measured by sales and by physical presence, and the nationality or residence of the owner does not enter the calculation.

Economic nexus since Wayfair

For decades a state could require a seller to collect sales tax only if the seller had a physical presence there. Online retailers with no premises in a state sold into it without collecting. In 2018 the US Supreme Court changed this in South Dakota v. Wayfair. The court held that a state may require collection from a remote seller based on the volume of its sales into the state.

This connection through sales volume is called economic nexus. Following the decision, states with a sales tax adopted their own economic nexus laws. Many use a threshold of $100,000 in annual sales into the state. The thresholds are not uniform, however. States differ on the amount, on whether a transaction count also applies, on which sales are counted and on the period measured. The current rule must be checked state by state.

Physical nexus and the inventory question

Physical nexus still exists alongside economic nexus, and it has no sales threshold. A physical connection with a state, such as an office, an employee or stock held there, can create an obligation from the first sale. For e-commerce brands the most common source is inventory.

Inventory in a state can create physical nexus even when it sits in a warehouse you do not own. A brand using a third-party logistics provider has stock in the state where that warehouse is located. A brand using a marketplace fulfillment program may have stock placed in several states by the marketplace, sometimes without choosing which ones. Knowing where your goods are physically stored is therefore a basic part of understanding where you may have obligations.

Marketplace sales and direct sales

Most states now have marketplace facilitator laws. These require the marketplace to collect and remit sales tax on sales made through its platform. If you sell through a large marketplace, the marketplace typically handles the tax on those orders in those states, and the amounts appear in your marketplace reports.

Sales through your own store are different. On a Shopify store or any other site you operate yourself, you are the seller and the obligation to collect rests with your company. A brand selling through both channels therefore has two regimes running at once. States also differ on whether marketplace sales count toward your own economic nexus threshold, which is one more point to verify for each state.

What happens once you have nexus

When your company has nexus in a state, the sequence is consistent. You register with that state’s tax authority and receive a sales tax permit. You configure your store to charge the correct tax to customers in that state. You then file returns at the frequency the state assigns, and you remit what you collected. Returns are usually due even for periods with no sales.

The order matters. Collecting sales tax in a state without being registered there is generally not permitted, so registration comes first. Registration also creates a continuing obligation to file until the permit is formally closed. For this reason, registering in every state as a precaution creates work and filing risk without a corresponding legal need.

• Confirm nexus in the state
• Register and obtain a sales tax permit
• Configure tax collection in the store
• File returns and remit on the assigned schedule
• Keep records of sales by state

Not everything is taxed the same way

Taxability varies by product as well as by state. Some states exempt or reduce tax on categories such as clothing, groceries or dietary supplements, and others tax them in full. Digital products and shipping charges are treated differently from one state to the next. A correct setup therefore depends on classifying your products properly, in addition to knowing where you have nexus.

Sales to other businesses that will resell the goods are generally exempt when the buyer provides a valid resale certificate. The same mechanism can allow your company to buy inventory from US suppliers without paying sales tax on it. Keeping those certificates on file is part of the seller’s responsibility.

A practical way to stay on top of it

The useful habit is monitoring. Your store platform and marketplace reports show sales by destination state. Reviewing those totals regularly against each state’s threshold tells you when you are approaching nexus, so that registration happens when the obligation begins. Tracking where inventory is held covers the physical side.

Sales tax determinations, registrations in complex cases and returns are work for independent licensed professionals, and many stores also use tax calculation software. Atiko does not give tax advice. We help clients organize their company documents and connect them with the professionals who handle these filings. The tax authority of each state decides what is owed.