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Out-of-State Sales Tax Requirements

Out-of-State Sales Tax Requirements

In South Dakota v. Wayfair, the Supreme Court determined that a State could require out-of-state sellers of goods to collect and remit taxes if they perform a significant quantity of business in that State. In doing so, the Court overruled two of its precedents establishing the pre-Wayfair “physical-presence rule.” Under the pre-Wayfair regime, states could require out-of-state sellers to collect and remit taxes to the State only if the seller maintained a physical presence within the State’s borders. After Wayfair, states may require remote sellers to collect and remit taxes if the seller has a “substantial nexus with the taxing State[,]” which need not be a physical presence within the State.

An alarming trend following Wayfair is the lack of business awareness about the decision, its consequences, and its wide-ranging applicability. A 2020 survey of businesses revealed that over 40% of respondents were completely unaware of Wayfair and its impact on sales tax collection.1 Small businesses unaware of the post-Wayfair regime and compliance rules are subject to foreign state tax assessments if they transact business across state lines. In a post-COVID-19 world where States may be seeking to increase their revenues, small businesses out of compliance with their remote seller obligations are convenient targets.

The following chart should help small businesses begin to navigate their post-Wayfair tax obligations.

NFIB’s Small Business Legal Center strongly recommends small businesses work with a CPA or tax professional in navigating their post-Wayfair sales tax obligations.

State
Alabama
Sales Tax (%)
4
Covered Items
Gross proceeds of all retail sales from tangible personal property
Reference Period
Previous Calendar Year
Remote Seller Threshold
> $250,000
State Contact Information
Alabama Department of Revenue
State
Alaska (3)
Sales Tax (%)
0
Covered Items
Gross sales from property, products, or services delivered into Alaska
Reference Period
Previous or Current Calendar Year
Remote Seller Threshold
$100,000; or 200 transactions
State Contact Information
Alaska Remote Seller Sales Tax Commission
State
Arizona
Sales Tax (%)
5.6
Covered Items
Gross proceeds of sales of tangible personal property or gross income from sales of tangible personal property or services into the State
Reference Period
Previous or Current Calendar Year
Remote Seller Threshold
> $200,000 (2019) > $150,000 (2020) > $100,000 (2021+)
State Contact Information
Arizona Department of Revenue E-Commerce Compliance and Outreach
State
Arkansas
Sales Tax (%)
6.5
Covered Items
Sales of tangible personal property, taxable services, digital code, or certain digital products delivered into the State
Reference Period
Previous or Current Calendar Year
Remote Seller Threshold
> $100,000; or 200 transactions
State Contact Information
Arkansas Department of Finance and Administration
State
California
Sales Tax (%)
7.25
Covered Items
Total combined sales of tangible personal property delivered into California by the retailer and all persons related to the retailer, as set forth in 26 U.S.C 267(b)
Reference Period
Preceding or Current Calendar Year
Remote Seller Threshold
> $500,000
State Contact Information
California Department of Tax and Fee Administration
State
Colorado
Sales Tax (%)
2.9
Covered Items
Retail sales of tangible personal property, commodities, and/or services
Reference Period
Previous or Current Calendar Year
Remote Seller Threshold
> $100,000; 200 transactions (Prior to April 14, 2019) > $100,000 (After April 14, 2019)
State Contact Information
Colorado Department of Revenue Tax Division
State
Connecticut
Sales Tax (%)
6.35
Covered Items
Retail sales of tangible personal property or services set forth in § 12-407
Reference Period
Oct. 1 – Sept. 30 immediately preceding month/quarter of tax liability determination
Remote Seller Threshold
200 transactions AND $100,000
State Contact Information
Connecticut Department of Revenue Services
State
Delaware (4)
Sales Tax (%)
0
Covered Items
Total receipts of a business received from goods sold and services rendered into Delaware
Reference Period
N/A
Remote Seller Threshold
N/A
State Contact Information
Delaware Division of Revenue
State
District of Columbia
Sales Tax (%)
6
Covered Items
Total gross receipts from retail sales delivered into D.C. or retail sale transactions
Reference Period
Previous or Current Calendar Year
Remote Seller Threshold
> $100,000; or > 200 transactions
State Contact Information
District of Columbia Office of Tax and Revenue
State
Florida
Sales Tax (%)
6
Covered Items
Sale of tangible personal property
Reference Period
Previous Calendar Year
Remote Seller Threshold
>$100,000
State Contact Information
Florida Department of Revenue
State
Georgia
Sales Tax (%)
4
Covered Items
Sales of tangible personal property
Reference Period
Previous or Current Calendar Year
Remote Seller Threshold
> $250,000; or 200 transactions (prior to Jan. 1, 2020) > $100,000; or 200 transactions (after Jan. 1, 2020)
State Contact Information
Georgia Department of Revenue
State
Hawaii (5)
Sales Tax (%)
0
Covered Items
Gross receipts from selling retail goods and services
Reference Period
Preceding or Current Calendar Year
Remote Seller Threshold
$100,000; or 200 transactions
State Contact Information
Hawaii Department of Taxation
State
Idaho
Sales Tax (%)
6
Covered Items
Cumulative gross receipts from sales delivered into Idaho
Reference Period
Previous or Current Calendar Year
Remote Seller Threshold
> $100,000
State Contact Information
Idaho State Tax Commission
State
Illinois
Sales Tax (%)
6.25
Covered Items
Sale of tangible personal property
Reference Period
Preceding 12-Month Period
Remote Seller Threshold
$100,000; or 200 transactions
State Contact Information
Illinois Department of Revenue
State
Indiana
Sales Tax (%)
7
Covered Items
Sales of tangible personal property, products transferred electronically, and services
Reference Period
Previous or Current Calendar Year
Remote Seller Threshold
> $100,000; or 200 transactions
State Contact Information
Indiana Department of Revenue
State
Iowa
Sales Tax (%)
6
Covered Items
Sales of tangible personal property, services, or certain digital products
Reference Period
Preceding or Current Calendar Year
Remote Seller Threshold
$100,000; or 200 transactions (prior to July 1, 2019) $100,000 (after July 1, 2019)
State Contact Information
Iowa Department of Revenue
State
Kansas
Sales Tax (%)
6.5
Covered Items
Cumulative gross receipts from sales to customers in the State
Reference Period
Preceding or Current Calendar Year
Remote Seller Threshold
> $100,000
State Contact Information
Kansas Department of Revenue
State
Kentucky
Sales Tax (%)
6
Covered Items
Sales of tangible personal property or digital property
Reference Period
Previous or Current Calendar Year
Remote Seller Threshold
$100,000; or 200 transactions
State Contact Information
Kentucky Department of Revenue Division of Sales and Use Tax
State
Louisiana
Sales Tax (%)
4.45
Covered Items
Sales of tangible personal property, products delivered electronically, or services for delivery in Louisiana
Reference Period
Previous or Current Calendar Year
Remote Seller Threshold
> $100,000; or 200 transactions
State Contact Information
Louisiana Sales and Use Tax Commission for Remote Sellers
State
Maine
Sales Tax (%)
5.5
Covered Items
Sales of tangible personal property, products transferred electronically, or taxable services for delivery
Reference Period
Previous or Current Calendar Year
Remote Seller Threshold
> $100,000; or 200 transactions
State Contact Information
Maine Revenue Services
State
Maryland
Sales Tax (%)
6
Covered Items
Sales of tangible personal property or taxable services
Reference Period
Previous or Current Calendar Year
Remote Seller Threshold
> $100,000; or 200 transactions
State Contact Information
Comptroller of Maryland Sales and Use Tax
State
Massachusetts
Sales Tax (%)
6.5
Covered Items
Sales of tangible personal property or services
Reference Period
Previous or Current Calendar Year
Remote Seller Threshold
>$100,000
State Contact Information
Massachusetts Department of Revenue
State
Michigan
Sales Tax (%)
6
Covered Items
Tangible personal property
Reference Period
Previous Calendar Year
Remote Seller Threshold
> $100,000; or > 200 transactions
State Contact Information
Michigan Department of Treasury
State
Minnesota
Sales Tax (%)
6.875
Covered Items
Sales of tangible personal property or taxable services
Reference Period
Prior 12-month period
Remote Seller Threshold
> $100,000; or 200 transactions
State Contact Information
Minnesota Department of Revenue
State
Mississippi
Sales Tax (%)
7
Covered Items
Gross proceeds or gross income from sales of tangible personal property or taxable services
Reference Period
Prior 12 months
Remote Seller Threshold
> $250,000
State Contact Information
Mississippi Department of Revenue
State
Missouri
Sales Tax (%)
4.225
Covered Items
Sales of tangible personal property or taxable services
Reference Period
Current or Previous Calendar Year (determined quarterly)
Remote Seller Threshold
$100,000
State Contact Information
Missouri Department of Revenue
State
Montana
Sales Tax (%)
0
Covered Items
N/A
Reference Period
N/A
Remote Seller Threshold
N/A
State Contact Information
Montana Department of Revenue
State
Nebraska
Sales Tax (%)
5.5
Covered Items
Total retail sales
Reference Period
Previous or Current Calendar Year
Remote Seller Threshold
> $100,000; or 200 transactions
State Contact Information
Nebraska Department of Revenue Taxpayer Assistance
State
Nevada
Sales Tax (%)
4.6
Covered Items
Retail sales of all tangible personal property
Reference Period
Previous or Current Calendar Year
Remote Seller Threshold
> $100,000; or 200 transactions
State Contact Information
Nevada Department of Taxation
State
New Hampshire
Sales Tax (%)
0
Covered Items
N/A
Reference Period
N/A
Remote Seller Threshold
N/A
State Contact Information
New Hampshire Department of Revenue
State
New Jersey
Sales Tax (%)
6.625
Covered Items
Tangible personal property, specified digital products, or taxable services
Reference Period
Prior or Current Calendar Year
Remote Seller Threshold
> $100,000; or 200 transactions
State Contact Information
New Jersey Division of Taxation
State
New Mexico
Sales Tax (%)
5.125
Covered Items
Gross receipts from sales pursuant to Section 7-1-14 NMSA 1978
Reference Period
Previous Calendar Year
Remote Seller Threshold
$100,000
State Contact Information
New Mexico Department of Taxation and Finance
State
New York
Sales Tax (%)
4
Covered Items
Sales of tangible personal property
Reference Period
Preceding 4 sales tax quarters (3/1-5/31, 6/1-8/31, 9/1-11/30,12/1-2/28 or 29)
Remote Seller Threshold
> $500,000 AND > 100 transactions
State Contact Information
New York Department of Taxation and Finance
State
North Carolina
Sales Tax (%)
4.75
Covered Items
Sales of tangible personal property, certain digital property, and taxable services
Reference Period
Previous or Current Calendar Year
Remote Seller Threshold
> $100,000; or 200 transactions
State Contact Information
North Carolina Department of Revenue
State
North Dakota
Sales Tax (%)
5
Covered Items
Taxable sales of tangible personal property and some specified services
Reference Period
Previous or Current Calendar Year
Remote Seller Threshold
> $100,000; or 200 transactions (Prior to July 1, 2019) > $100,000 (After July 1, 2019)
State Contact Information
North Dakota Office of Tax Commissioner
State
Ohio
Sales Tax (%)
5.75
Covered Items
Sales of all tangible property and taxable services
Reference Period
Previous or Current Calendar Year
Remote Seller Threshold
> $100,000; or 200 transactions
State Contact Information
Ohio Department of Taxation
State
Oklahoma
Sales Tax (%)
4.5
Covered Items
Aggregate sales of tangible personal property
Reference Period
Previous or Current Calendar Year
Remote Seller Threshold
> $100,000
State Contact Information
Oklahoma Tax Commission
State
Oregon
Sales Tax (%)
0
Covered Items
N/A
Reference Period
N/A
Remote Seller Threshold
N/A
State Contact Information
Oregon Department of Revenue
State
Pennsylvania
Sales Tax (%)
6
Covered Items
Taxable sales of tangible personal property and services
Reference Period
Previous 12 Calendar Months
Remote Seller Threshold
> $100,000
State Contact Information
Pennsylvania Department of Revenue
State
Rhode Island
Sales Tax (%)
7
Covered Items
Sales of tangible personal property, prewritten computer software delivered electronically or by load and leave, and taxable services
Reference Period
Previous Calendar Year
Remote Seller Threshold
$100,000; or 200 transactions
State Contact Information
Rhode Island Department of Revenue Division of Taxation
State
South Carolina
Sales Tax (%)
6
Covered Items
Gross revenue from sales of tangible personal property, products transferred electronically, and services delivered into South Carolina
Reference Period
Previous or Current Calendar Year
Remote Seller Threshold
> $100,000
State Contact Information
South Carolina Department of Revenue
State
South Dakota
Sales Tax (%)
4.5
Covered Items
Tangible personal property, products transferred electronically, or services delivered into the State
Reference Period
Previous or Current Calendar Year
Remote Seller Threshold
> $100,000; or 200 transactions
State Contact Information
South Dakota Department of Revenue
State
Tennessee
Sales Tax (%)
7
Covered Items
All retail sales, excluding resale sales
Reference Period
Previous 12-Month Period
Remote Seller Threshold
Prior to 10/1, 2020) > $100,000 (After 10/1, 2020)
State Contact Information
Tennessee Department of Revenue
State
Texas
Sales Tax (%)
6.25
Covered Items
Gross revenue from taxable and nontaxable sales of tangible personal property and services
Reference Period
Preceding 12 Calendar Months
Remote Seller Threshold
$500,000
State Contact Information
Texas Comptroller
State
Utah
Sales Tax (%)
6.10
Covered Items
Sales of tangible personal property, products transferred electronically, or services
Reference Period
Previous or Current Calendar Year
Remote Seller Threshold
> $100,000; or 200 transactions
State Contact Information
Utah State Tax Commission
State
Vermont
Sales Tax (%)
6
Covered Items
Sales of taxable and nontaxable tangible personal property, products transferred electronically, or services
Reference Period
Any preceding 12-Month Period
Remote Seller Threshold
$100,000; or 200 transactions
State Contact Information
Vermont Agency of Administration Department of Taxes
State
Virginia
Sales Tax (%)
5.3
Covered Items
Retail sales of tangible personal property and certain taxable services
Reference Period
Previous or Current Calendar Year
Remote Seller Threshold
> $100,000; or 200 transactions
State Contact Information
Virginia Department of Taxation
State
Washington
Sales Tax (%)
6.5
Covered Items
Gross receipts applying to all Washington income, including retailing, wholesaling, service, other apportionable activities, and all retail sales
Reference Period
Previous or Current Calendar Year
Remote Seller Threshold
> $100,000
State Contact Information
Washington Department of Revenue
State
West Virginia
Sales Tax (%)
6
Covered Items
Gross sales of tangible personal property and/or services
Reference Period
Previous or Current Calendar Year
Remote Seller Threshold
> $100,000; or 200 transactions
State Contact Information
West Virginia State Tax Department
State
Wisconsin
Sales Tax (%)
5
Covered Items
Gross sales of tangible personal property, specified digital goods, and taxable services
Reference Period
Previous or Current Calendar Year
Remote Seller Threshold
> $100,000; or 200 transactions (Prior to 2/20/21) > $100,000 (2/20/21 – Present)
State Contact Information
Wisconsin Department of Revenue
State
Wyoming
Sales Tax (%)
4
Covered Items
Gross revenue of tangible personal property, admissions, or services
Reference Period
Immediately Preceding or Current Calendar Year
Remote Seller Threshold
> $100,000; or 200 transactions
State Contact Information
Wyoming Department of Revenue

1 Gail Cole, Wayfair Turns 2, But Survey Shows Many Businesses Still Unaware of Economic Nexus, AVALARA, (June 1, 2020), https://www.avalara.com/blog/en/north-america/2020/06/wayfair-turns-2-but-many-businesses-still-unaware-of-economic-nexus.html.

2 These thresholds reference the amount of activity into the specified state, not overall business activity. For example, if the threshold is $100,000 of gross receipts from sales of tangible personal property, then a business would only look to see whether it had $100,000 of gross receipts of tangible personal property into that specific state.

3 While Alaska does not have a state sales tax, these thresholds are used by local jurisdictions for taxing out-of-state sellers with an economic nexus

4 Delaware imposes a gross receipts tax, which comprises “the total receipts of a business received from goods sold and services rendered in the State.” This tax usually ranges from .0945% – 1.9914%.

5 Hawaii imposes a 4 or 4.5%, depending on location within the State, general excise tax on businesses.

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