Tax Nexus by State

National Nexus Tripwire: Are You Already Exposed?

Each state has its own ‘Economic Nexus’ threshold—some as low as $100,000 in sales or 200 transactions. Click any state to see the specific trigger that forces you to register and pay.

*States with Trailing Nexus- What is trailing nexus?
**States with a Home Rule policy – What is a Home Rule Policy ?

Alabama Risk Profile

Threshold: $250,000 (Retail sales only)
Look Back: 3 years (Current or previous calendar year)
Audit Note: Medium severity. Complexity arises from aggressive enforcement and 300+ local jurisdictions with varying rates.

Alaska Risk Profile

Threshold: $100,000 (Gross statewide sales)
Look Back: 36 months (3 years)
Audit Note: Medium severity. Economic nexus is revenue-only as of 2025, but complex local-level administration persists.

Arkansas Risk Profile

Threshold: $100,000 or 200 transactions
Look Back: Generally 3 years (up to 6 for underreporting)
Audit Note: Medium severity. Streamlined member state with aggressive enforcement on registration dates and local rates.

Arizona Risk Profile

Threshold: $100,000 (Gross retail sales only)
Look Back: 4 years (Current or previous calendar year)
Audit Note: Medium severity. Economic nexus ignores transaction counts, but nexus is triggered immediately by physical presence.

California Risk Profile

Threshold: $500,000 (Gross sales; no transaction count)
Look Back: 3 years (filed) or 8 years (unfiled)
Audit Note: High severity. High threshold but aggressive enforcement via data matching and marketplace data.

Colorado Risk Profile

Threshold: $100,000 (Gross retail sales; no transaction count)
Look Back: 3 years (Standard statute of limitations)
Audit Note: High severity. Complex home-rule city system requires separate filings for many local jurisdictions.

Connecticut Risk Profile

Threshold: $100,000 AND 200 transactions
Look Back: 3 years (12-month period ending September 30)
Audit Note: Medium severity. Registration requires meeting both thresholds, but SaaS and computer services are taxable.

Delaware Risk Profile

Threshold: $0.00 (Gross Receipts Tax)
Look Back: 3 years
Audit Note: Low severity. No sales tax, but physical presence requires a business license and Gross Receipts Tax.

District of Columbia Risk Profile

Threshold: $100,000 or 200 transactions
Look Back: 3 years (standard) or unlimited (unfiled)
Audit Note: Medium severity. Unified 6% rate increases to 7% on Oct 1, 2026; SaaS is taxable.

Florida Risk Profile

Threshold: $100,000 (Taxable retail sales only)
Look Back: Previous calendar year (3-year statute for audits)
Audit Note: High severity. Aggressive enforcement with high interest rates and “theft of funds” penalties.

Georgia Risk Profile

Threshold: $100,000 or 200 transactions
Look Back: 3 years (standard) or 6 years (understatement)
Audit Note: Medium severity. Aggressive sampling methods and frequent local county rate changes increase compliance risk.

Hawaii Risk Profile

Threshold: $100,000 or 200 transactions
Look Back: 3 years (Current or previous calendar year)
Audit Note: High severity. GET is a unique tax on the business; virtually all services and SaaS are taxable.

Idaho Risk Profile

Threshold: $100,000 (Gross sales; no transaction count)
Look Back: 3 years (filed) or 7 years (unfiled)
Audit Note: Medium severity. Registration required for economic nexus; however, SaaS and digital subscriptions are generally exempt.

Illinois Risk Profile

Threshold: $100,000 (200-transaction count repealed Jan 1, 2026)
Look Back: 3 years (Standard look-back period)
Audit Note: High severity. 15% penalty rate for sourcing errors; Chicago imposes separate 9% SaaS tax.

Indiana Risk Profile

Threshold: $100,000 (200-transaction count repealed Jan 1, 2024)
Look Back: 3 years (filed) or unlimited (unfiled)
Audit Note: Medium severity. Flat 7% rate with no local taxes; remotely accessed SaaS is generally exempt.

Iowa Risk Profile

Threshold: $100,000 (200-transaction count repealed May 2019)
Look Back: 3 years (Standard statute of limitations)
Audit Note: High severity. SaaS and digital products are taxable; marketplace sales count toward the threshold.

Kansas Risk Profile

Threshold: $100,000 (Gross sales; no transaction count)
Look Back: 3 years (filed) or unlimited (unfiled)
Audit Note: Medium severity. Destination-based sourcing and frequent local rate changes require precise tracking.

Kentucky Risk Profile

Threshold: $100,000 or 200 transactions
Look Back: 3 years (filed) or unlimited (unfiled)
Audit Note: Medium severity. Unified 6% rate; SaaS and AI software are broadly taxable as prewritten software.

Louisiana Risk Profile

Threshold: $100,000 (200-transaction count repealed Aug 1, 2023)
Look Back: 3 years (Standard statute of limitations)
Audit Note: High severity. Intricate parish-level filing system and broad 2025 expansion of SaaS taxability.

Maine Risk Profile

Threshold: $100,000 (200-transaction count repealed Jan 1, 2022)
Look Back: 3-4 years (VDP available; unlimited for non-filers)
Audit Note: Medium severity. 2026 expansion taxes streaming and digital subscriptions; SaaS generally remains exempt.

Maryland Risk Profile

Threshold: $100,000 or 200 transactions
Look Back: 3 years (filed) or 6 years (understated)
Audit Note: High severity. New “Tech Tax” imposes complex rates; B2B SaaS 3% vs. B2C SaaS 6%.

Massachusetts Risk Profile

Threshold: $100,000 (Gross sales; no transaction count)
Look Back: 3 years (filed) or 6+ years (unfiled/understated)
Audit Note: High severity. SaaS is broadly taxable; state aggressively matches data against federal IRS filings.

Michigan Risk Profile

Threshold: $100,000 or 200 transactions
Look Back: 4 years (for records); 3 years (standard audit)
Audit Note: Medium severity. Flat 6% rate simplifies collection; SaaS is exempt unless there is a downloadable component.

Minnesota Risk Profile

Threshold: $100,000 or 200 transactions
Look Back: 3.5 years (Current or previous calendar year)
Audit Note: High severity. Taxes “prewritten” software and clothing over $100; non-filers face an unlimited look-back.

Mississippi Risk Profile

Threshold: $250,000 (Gross sales in prior 12-month period)
Look Back: 3 years (filed) or unlimited (unfiled)
Audit Note: Medium severity. High revenue threshold ($250,000) but taxes broad categories like digital goods.

Missouri Risk Profile

Threshold: $100,000 (Gross taxable sales; no transaction count)
Look Back: 3 years (filed) or 5+ years (unfiled/underreported)
Audit Note: Medium severity. SaaS is currently exempt, but 2026 proposals seek to tax digital services.

Montana Risk Profile

Threshold: N/A (No state sales tax)
Look Back: 3-5 years (Income and excise taxes)
Audit Note: Low severity. No statewide sales tax; risks limited to local resort taxes and specific excise taxes.

Nebraska Risk Profile

Threshold: $100,000 or 200 transactions
Look Back: 3 years (filed) or unlimited (unfiled)
Audit Note: Medium severity. Economic nexus remains an “either/or” trigger; digital products are broadly taxable.

Nevada Risk Profile

Threshold: $100,000 or 200 transactions
Look Back: 3 years (registered) or 8 years (unregistered)
Audit Note: Medium severity. Major deadline change in Jan 2026; SaaS and digital downloads are generally exempt.

New Hampshire Risk Profile

Threshold: N/A (No state sales tax)
Look Back: 3 years (for BPT/BET audits)
Audit Note: Low severity for sales tax, but high focus on Business Profits Tax (BPT) and Business Enterprise Tax (BET) for companies with a physical presence.

New Jersey Risk Profile

Threshold: $100,000 or 200 transactions (Repeal pending in 2026)
Look Back: 4 years (Standard audit period)
Audit Note: High severity. 10% interest rate for 2026; “Information Services” are taxable even if SaaS is not.

New Mexico Risk Profile

Threshold: $100,000 (Taxable gross receipts in previous calendar year)
Look Back: 3 years (filed) or 7 years (unfiled)
Audit Note: High severity. Operates under Gross Receipts Tax (GRT), not sales tax; SaaS, digital goods, and most services are broadly taxable.

New York Risk Profile

Threshold: $500,000 AND 100 transactions
Look Back: 3 years (filed) or unlimited (unfiled)
Audit Note: High severity. “Both/And” threshold is high, but SaaS and digital services are broadly taxable; auditors use aggressive “block sampling.”

North Carolina Risk Profile

Threshold: $100,000 (200-transaction count repealed July 1, 2024)
Look Back: 3 years (Standard) or 10 years (Trust taxes/collected but not remitted)
Audit Note: High severity. SaaS is generally exempt, but bundling with “Certain Digital Property” (streaming/e-books) triggers full taxability.

North Dakota Risk Profile

Threshold: $100,000 (Gross taxable sales; transaction count repealed)
Look Back: 3 years (filed) or 10 years (unfiled/fraud)
Audit Note: Medium severity. Destination-based 5% base rate; SaaS and digital goods are generally exempt, but prewritten downloads are taxable.

Ohio Risk Profile

Threshold: $100,000 or 200 transactions
Look Back: 3 years (Standard) or 10 years (Unfiled)
Audit Note: High severity. SaaS is taxable for business use; auditors frequently use extrapolation to increase assessments.

Oklahoma Risk Profile

Threshold: $100,000 (Taxable sales in current or previous calendar year)
Look Back: 3 years (filed) or unlimited (unfiled)
Audit Note: Medium severity. Economic nexus is based on revenue only; most SaaS and digital goods are exempt.

Oregon Risk Profile

Threshold: N/A (No state sales tax)
Look Back: 3 years (Standard for CAT/Income tax)
Audit Note: Low severity for sales tax, but high focus on Corporate Activity Tax (CAT); 2026 brings a massive threshold increase to $10M.

Pennsylvania Risk Profile

Threshold: $100,000 (Gross sales in previous calendar year)
Look Back: 3 years (Standard) or unlimited (Unfiled)
Audit Note: High severity. SaaS is considered “tangible personal property”; 2026 interest rates and penalties are aggressive.

Puerto Rico Risk Profile

Threshold: $100,000 or 200 transactions
Look Back: 3-4 years (registered) or unlimited (unregistered)
Audit Note: High severity. Combined 11.5% rate is the highest in the U.S. system; SaaS and most digital services are broadly taxable.

Rhode Island Risk Profile

Threshold: $100,000 or 200 transactions
Look Back: 3 years (filed/VDP) or unlimited (unfiled)
Audit Note: High severity. SaaS is taxable as “vendor-hosted software”; 18% interest on “Trust Fund” delinquencies for 2026.

South Carolina Risk Profile

Threshold: $100,000 (Gross sales in previous or current calendar year)
Look Back: 3 years (filed) or 6 years (if 25% underreported)
Audit Note: High severity. SaaS is taxable as a “communications service”; 2026 legislative focus is on new sales tax holidays and small business relief.

South Dakota Risk Profile

Threshold: $100,000 (200-transaction count repealed July 1, 2023)
Look Back: 3 years (Standard) or 6+ years (Understated/Unfiled)
Audit Note: High severity. As the Wayfair pioneer, SD is highly automated and taxes SaaS/digital goods as “tangible personal property.”

Tennessee Risk Profile

Threshold: $100,000 (Gross sales in previous 12 months)
Look Back: 3 years (filed) or unlimited (unfiled)
Audit Note: High severity. SaaS is taxable as “remotely accessed software”; 11.5% interest rate for 2026 underpayments.

Texas Risk Profile

Threshold: $500,000 (Gross revenue in preceding 12 months)
Look Back: 4 years (Standard) or unlimited (Unregistered/Fraud)
Audit Note: High severity. SaaS is a “data processing service” (20% exempt); 2026 brings major changes to R&D and franchise tax thresholds.

Utah Risk Profile

Threshold: $100,000 (200-transaction count repealed July 1, 2025)
Look Back: 3 years (Standard) or unlimited (Unfiled)
Audit Note: Medium severity. SaaS is taxable as “remotely accessed software”; 2026 expansion targets digital subscriptions and streaming.

Vermont Risk Profile

Threshold: $100,000 or 200 transactions
Look Back: 3 years (filed) or unlimited (unfiled)
Audit Note: High severity. Major 2024 law change made SaaS taxable; interest and penalties for 2026 can reach 25% of the tax due.

Virginia Risk Profile

Threshold: $100,000 or 200 transactions
Look Back: 3 years (Standard) or unlimited (Unfiled)
Audit Note: Medium severity. SaaS is currently exempt, but a massive legislative push in 2026 aims to tax digital products and B2B digital services.

Washington Risk Profile

Threshold: $100,000 (Gross receipts; transaction count repealed)
Look Back: 4 years (Standard) or unlimited (Unregistered)
Audit Note: High severity. SaaS is taxable as “Remotely Accessed Software” (RAS); remote sellers are also subject to Business & Occupation (B&O) tax.

West Virginia Risk Profile

Threshold: $100,000 or 200 transactions
Look Back: 3 years (filed) or unlimited (unfiled)
Audit Note: Medium severity. SaaS and streaming are explicitly taxable; 12.25% interest rate for 2026 delinquencies.

Wisconsin Risk Profile

Threshold: $100,000 (200-transaction count repealed in 2021)
Look Back: 4 years (Standard) or unlimited (Unfiled)
Audit Note: Medium severity. SaaS is generally exempt, but “canned” software (downloads) and specific digital goods are taxable.

Wyoming Risk Profile

Threshold: $100,000 (200-transaction count repealed July 1, 2024)
Look Back: 3 years (Standard) or unlimited (Unfiled/Fraud)
Audit Note: Medium severity. SaaS is generally exempt; digital downloads are taxable only if permanent rights are transferred.

2026 Sales Tax High-Risk Profile

A guide to states with aggressive enforcement and high compliance complexity.

1. Aggressive Enforcement (Audit Risk)

These states utilize advanced data-matching and have high budgets for finding unregistered remote sellers.

States: New York, California, Florida, Illinois

  • New York: Known for “block sampling” audits and holding company officers personally liable for unpaid tax.
  • Florida: High focus on “Use Tax” audits for business purchases and software.
  • California: Sophisticated automated discovery and complex “trailing nexus” rules.
  • Illinois: Aggressively shares data with neighboring states to identify unregistered out-of-state vendors.

2. Technology Traps (Taxability Risk)

States that broadly tax SaaS, digital goods, and cloud-based services.

States: Texas, Pennsylvania, Washington, Tennessee, Vermont

  • Texas: Taxes SaaS as a “Data Processing Service” where 80% of the bill is taxable.
  • Pennsylvania: One of the strictest; treats SaaS as Tangible Personal Property.
  • Washington: Double liability via Sales Tax AND the Business & Occupation (B&O) gross receipts tax.
  • Vermont: Recently made SaaS taxable (July 2024); auditors are heavily focused on these new revenue streams in 2026.

3. Home Rule Minefields (Complexity Risk)

States where local cities can audit you independently of the state government.

States: Colorado, Louisiana, Alabama, Arizona

  • Colorado: 100+ self-collecting cities; many require separate licenses and direct filings.
  • Louisiana: Parish-level (county) tax authorities have unique rules that often differ from state laws.
  • Alabama: Requires separate local filings unless you qualify for the “Simplified Sellers Use Tax” (SSUT) program.

2026 Compliance Note: States are currently broadening tax bases to include digital products to offset declining revenue from physical goods. Verify your product classification quarterly.

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