Before 2018, the rule was simple and, for Canadian sellers, genuinely comfortable: no physical presence in a US state meant no obligation to collect that state's sales tax. South Dakota v. Wayfair, Inc. ended that comfort permanently, ruling that a state's "substantial nexus" requirement under the Commerce Clause can be satisfied through economic activity alone, no office, no warehouse, no employee required[1].
Key Takeaway
Every US state that imposes a sales tax, 45 states plus the District of Columbia, now has economic nexus rules on the books. A Canadian brand selling exclusively through its own Shopify store, with no US presence whatsoever, can owe sales tax registration and collection obligations in multiple states purely based on revenue crossing each state's threshold.
The Wayfair Decision, In Plain Terms
The Supreme Court upheld South Dakota's economic nexus law specifically because it was carefully bounded: a clearly defined threshold, prospective application only, and participation in a multistate standardization agreement[2]. Those guardrails mattered to the Court's reasoning, but in practice, nearly every state with a sales tax adopted its own version within a few years, generally modeled on South Dakota's original $100,000-sales-or-200-transactions threshold[2].
The Common Threshold Pattern, and Where It Is Heading
Most states still use some version of the original $100,000 revenue or 200 transaction benchmark, but a clear trend has emerged toward simplification: sixteen states, including California, Illinois, and Washington, have already dropped the transaction-count prong entirely, relying solely on a revenue threshold, and Kentucky joins that list effective August 1, 2026[3]. The shift reflects a practical reality: gross sales are far easier to track and substantiate through accounting records than a raw transaction count, which can vary depending on order bundling and system configuration[3].
State-by-State Variations Worth Knowing
| State | Threshold | Notes |
|---|---|---|
| Most states | $100,000 in sales (transaction count often dropped) | The original Wayfair-modeled standard |
| New York | $500,000 AND 100 transactions | Both prongs required, not either/or |
| California | $500,000 in sales | No transaction-count threshold at all |
| Texas | $500,000 in sales | Higher threshold shields smaller remote sellers |
Whether exempt and resale sales count toward a threshold varies by state; most include gross sales regardless of taxability unless the statute specifically excludes them[4].
Illustrative Economic Nexus Threshold Comparison
Marketplace Facilitator Laws: The Good News
Every state with a sales tax has now enacted marketplace facilitator legislation, which shifts the primary collection obligation from an individual third-party seller onto the platform itself, Amazon, Etsy, and Walmart Marketplace among them[5]. For a Canadian brand selling exclusively through these platforms, this is genuinely favourable: the marketplace generally handles calculation, collection, and remittance on your behalf for those specific sales, and your own individual nexus analysis does not apply to that portion of revenue[6].
Where The Real Risk Concentrates
The exposure that actually requires active management sits with direct-to-consumer sales through a brand's own website, Shopify, WooCommerce, or a custom storefront, where no marketplace facilitator stands between the seller and the collection obligation[6]. A Canadian brand running a hybrid model, some Amazon sales, some direct Shopify sales, needs to track only the direct-channel revenue against each state's threshold, since marketplace-channel sales are generally excluded from that specific calculation, though the exact treatment varies by state[5].
The Compliance Workflow Once a Threshold Is Crossed
Monitor Continuously
Track direct-channel revenue by state in real time, not at year-end, since some states require registration almost immediately after a threshold is crossed.
Register Within The Window
Most states allow 30 to 60 days from crossing the threshold before registration is required.
Collect At The Correct Rate
Rates are typically destination-based, calculated on the customer's delivery address, not the seller's location.
File On Schedule
Filing frequency varies by state and volume; even a nil return, where no tax is owed for the period, must generally still be filed to avoid a penalty.
Economic nexus is not retroactive by design, obligations begin only from the point a threshold is actually crossed, but failing to register and collect after that point does expose a business to back taxes, interest, and penalties if the failure is later discovered[7].
Beyond Sales Tax: Nexus Creep Into Income Tax
Wayfair's logic has migrated well beyond sales tax. States including California, Massachusetts, and New York now assert economic nexus for state income tax purposes as well, meaning a business can owe state income tax purely based on revenue derived from customers in that state, with no office, employees, or property required[8]. Gross receipts taxes add another layer entirely, Ohio's commercial activity tax, for example, applies once gross receipts in the state exceed a threshold that itself doubled from $3 million to $6 million between 2024 and 2025[8]. For a Canadian brand scaling meaningfully into the US market, sales tax nexus is often just the first of several state-level obligations to plan around, not the only one.
Frequently Asked Questions
Do exempt or resale sales count toward my economic nexus threshold?
If I only sell through Amazon, do I need to worry about nexus at all?
Does crossing a threshold in one state affect my obligations in other states?
References
- AbitOs. (2025, July 1). US sales tax rules evolve for Canadian sellers. abitos.com/canadian-seller-us-sales-tax-nexus-rules
- Eide Bailly. (2026, June 25). The evolution of sales tax economic nexus: From Wayfair to today's enforcement trends. eidebailly.com/insights/blogs/2026/6/salt20260625
- Eide Bailly. (2026, June 25). The evolution of sales tax economic nexus, transaction-threshold elimination trend. eidebailly.com/insights/blogs/2026/6/salt20260625
- Sales Tax Institute. (n.d.). Economic nexus state chart, state by state economic nexus rules. salestaxinstitute.com/resources/economic-nexus-state-guide
- TaxConnex. (2025, January 14). US sales tax requirements for Canadian sellers. taxconnex.com/blog/us-sales-tax-requirements-canadian-sellers
- Numeral. (2026). Economic nexus: State-by-state handbook for 2026. numeral.com/blog/economic-nexus
- VAT IT. (2026, April 13). Economic nexus and US sales tax: What triggers compliance obligations. vatit.com/blog/economic-nexus-us-sales-tax-obligations
- The CPA Journal. (2025, September 2). How Wayfair's economic nexus has redefined business tax obligations. cpajournal.com/.../wayfairs-economic-nexus-redefined
This article reflects US state economic nexus rules current as of publication and is provided for general informational purposes. It is not tax advice for any specific business. State thresholds and rules change frequently and vary significantly; confirm current requirements with a cross-border tax professional before registering in any state.