Economic nexus rules have become familiar since South Dakota v. Wayfair, but familiarity can create a false sense of simplicity. Many businesses know to ask whether they have crossed a state’s sales threshold. The harder questions are what sales count toward that threshold and, just as importantly, when registration and collection must actually begin.
States continue to revise both pieces of the equation. In 2026, Illinois eliminated its 200-transaction test for remote retailers and marketplace facilitators, leaving a $100,000 gross-receipts threshold beginning January 1. Kentucky likewise removed its 200-transaction test effective August 1, 2026. Ohio, however, still applies a $100,000 sales threshold or 200 separate transactions in the current or prior calendar year. These differences already make a single nationwide nexus rule unreliable.
The timing after a threshold is crossed can vary even more dramatically. Kansas requires a remote seller to register, collect, and remit tax beginning with the next transaction after exceeding its $100,000 threshold. New Jersey also treats the collection obligation as beginning on taxable transactions after the threshold is met, although the state allows a grace period of up to 30 calendar days to register and begin collection.
Virginia provides a different compliance window. A previously unregistered dealer that establishes economic nexus must register no later than 30 days after nexus is established. South Dakota generally requires a remote seller to register by the first day of the month that begins at least 30 days after the $100,000 threshold is met. These are meaningful differences for a company monitoring sales close to year-end or during a period of rapid growth.
North Carolina changed its timing rule in 2026. Effective July 2, a remote seller whose only nexus is exceeding the state’s $100,000 sales threshold becomes engaged in business on the first day of the first calendar month occurring at least 60 days after the threshold is crossed. For example, North Carolina’s guidance explains that a seller crossing the threshold on July 5, 2026 becomes required to register and collect by October 1, 2026.
Other states provide still more lead time. Tennessee requires a remote seller to register and begin collecting on the first day of the third calendar month following the month in which the threshold is met. Texas, which uses a $500,000 safe-harbor threshold measured over the preceding 12 calendar months, generally requires collection no later than the first day of the fourth month after the month the threshold is exceeded. Alabama takes another approach by measuring its $250,000 remote-seller threshold using the previous calendar year’s retail sales rather than a current-year trigger.
The underlying threshold calculation is not uniform either. North Carolina includes taxable, exempt, resale, nontaxable, and marketplace-facilitated sales when measuring its threshold. Texas includes taxable and nontaxable sales, sales for resale, sales to exempt entities, and certain separately stated charges. Alabama excludes qualifying wholesale sales for resale and certain marketplace sales from its calculation. Two companies with identical sales dollars can therefore reach different nexus conclusions depending on the state and sales mix.
Physical presence also remains important. Economic nexus thresholds generally protect only truly remote sellers. Employees, inventory, leased property, trade show activity, installation work, or other in-state activities can create a collection obligation even when sales remain below the economic threshold. Businesses should not assume that staying under a dollar threshold automatically keeps them outside a state’s sales tax jurisdiction.
For multistate companies, an effective nexus process must track more than total revenue. It should identify the applicable threshold, determine which sales count, apply the correct measurement period, monitor transaction counts where they remain relevant, and document the exact date on which registration and collection should begin. Companies that identify historical exposure should also evaluate whether voluntary disclosure, prospective registration, or another remediation approach is appropriate before a state initiates contact.
The lesson from 2026 is not simply that economic nexus thresholds differ. The compliance clock differs too. A business that waits until the next January 1 because that timing works in one jurisdiction may already be late somewhere else.
Need Help Tracking Economic Nexus?
Source Advisors can help businesses evaluate multistate economic nexus, determine when registration and collection obligations begin, and build a monitoring process that keeps pace with changing state sales tax rules.
Sources
- Illinois Department of Revenue, FY 2026-12, “Destination-Based Retailers’ Occupation Tax Changes.”
- Kentucky Department of Revenue, Sales Tax Facts – Summer 2026.
- Ohio Department of Taxation, Sales and Use Tax guidance for out-of-state sellers.
- Kansas Department of Revenue, Publication KS-1510, Sales Tax and Compensating Use Tax.
- Streamlined Sales Tax, New Jersey Tax Administration Practices – remote seller timing.
- Virginia Tax, Ruling 20-43 – Remote Sellers and Marketplace Facilitators.
- South Dakota Department of Revenue, Remote Seller Bulletin.
- North Carolina Department of Revenue, “Important Notice: Extended Compliance Period for Certain Remote Sellers,” August 6, 2026.
- Tennessee Department of Revenue, “RS-6 – Timeline to Start Collecting Tax After Meeting Threshold.”
- Texas Comptroller of Public Accounts, “Remote Sellers.”
- Alabama Department of Revenue, Rule 810-6-2-.90.03 and Simplified Sellers Use Tax guidance.
