Written for online stores in the US selling on their own site or on marketplaces: direct-to-consumer brands, private-label and FBA sellers, dropshippers and subscription sellers.
The short version
- Map where your sales and stock are.Pull sales by state for every channel, plus your FBA and 3PL inventory location reports. FBA can spread stock across several states.
- Check each state's threshold and stock rule.Thresholds differ, and states differ on counting marketplace sales. Stock in a state generally creates nexus, a tax link, from the first unit.
- Register for your own-site sales.Marketplace collection never covers own-site sales. Register, collect and file for them wherever you have nexus. Clean up past years before the state contacts you.
For an online seller, sales tax is decided state by state. Where you owe it depends on where your customers are, where your stock sits, and which channel each sale goes through. FBA can spread your inventory across several states.
Nexus without a physical presence
A state may require a remote seller to collect sales tax on economic presence alone. 45 states plus DC have a statewide sales tax; Alaska, Delaware, Montana, New Hampshire and Oregon have none at state level, though Alaska localities do. As of Oct 2026.
South Dakota v. Wayfair, Inc., 585 U.S. 162 (2018)
The big four thresholds
- California: more than $500,000 of sales of tangible personal property delivered into the state in the current or preceding calendar year (Rev. & Tax. Code §6203(c)(4)). As of Oct 2026.
- Texas: more than $500,000 of total Texas revenue in the preceding 12 calendar months (34 TAC §3.286(b)(2)). Texas expects collection to start no later than the first day of the fourth month after you pass it. As of Oct 2026.
- New York: more than $500,000 of sales of tangible personal property and more than 100 sales in the preceding four sales tax quarters, with both tests met (Tax Law §1101(b)(8)(iv)). As of Oct 2026.
- Florida: more than $100,000 of taxable remote sales in the previous calendar year (Fla. Stat. §212.0596(2)). As of Oct 2026.
| Texas, last 12 months: over $500,000, so register | $530,000 |
| California, 2025 (and $310,000 so far in 2026): under $500,000 in both years, so no economic nexus yet | $420,000 |
| New York, 2,900 sales but under $500,000: both tests must be met, so no | $480,000 |
| Florida, taxable remote sales in 2025: over $100,000, so register | $140,000 |
If this seller also had FBA stock in Arizona and Pennsylvania, that stock would be physical nexus there whatever the sales.
Inventory and marketplaces
Inventory generally creates physical nexus from the first unit. Pull the FBA and 3PL inventory location reports, then check each state's rules for marketplace-only sellers. Marketplace facilitator laws in every sales tax state make Amazon, Walmart, eBay, Etsy and TikTok Shop collect and remit on sales through them. But your own-site sales still need your own registration once you have nexus, and states differ on whether marketplace sales count toward your threshold.
Back-collecting from customers is rarely possible, so a late start comes straight out of your margin.
What is taxable differs too. Clothing items under $110 are exempt from New York's state tax, though local tax may apply. Shipping is taxable as part of a taxable sale in Texas and New York, while California exempts separately stated delivery by common carrier at no more than cost. Never assume one national rule. As of Oct 2026.
Inventory and state income tax
P.L. 86-272 stops at the warehouse door
A state cannot tax your net income where your only in-state activity is soliciting orders for goods that are approved and shipped from outside the state. Inventory stored in the state, FBA stock included, takes you outside that protection, and it never covered gross receipts and franchise taxes such as the Texas franchise tax or Washington B&O. As of Oct 2026.
P.L. 86-272, 15 USC 381 to 384
For an online store, the Multistate Tax Commission's 2021 revised statement treats many interactive website functions, such as post-sale chat support and cookies that gather data for product development, as beyond protected solicitation. Some states have adopted it and others have not, so name the state.
California charges its $800 annual LLC tax to any LLC doing business there, and doing business includes California sales above an inflation-adjusted threshold, so an LLC formed in another state can owe it. Once total income from California reaches $250,000, an LLC fee is added on top, from $900 (Rev. & Tax. Code §17941, §17942 and §23101(b)). As of Oct 2026.
If you get a tariff refund
IEEPA duties refunded after the Supreme Court's February 20, 2026 decision are income in the year you receive them, to the extent you deducted them through cost of goods sold in an earlier year (the tax benefit rule, IRC §111). Duty still sitting in ending inventory reduces inventory cost instead. For example, $46,000 of IEEPA duties paid in 2025, deducted through cost of goods sold and refunded in 2026 is 2026 income to the extent of that deduction. As of Oct 2026.
Cleaning up past years
Clean up past exposure before you sell. A voluntary disclosure agreement, approached before the state contacts you, usually limits the lookback to 3 or 4 years and waives most penalties. Buyers price unfiled exposure, so do it before a sale, not during one. As of Oct 2026.
Sales tax you collect is not income, and marketplace-collected tax should not sit in your revenue at all. Equally, the Form 1099-K threshold, more than $20,000 and more than 200 transactions, is not an income exclusion. If your Etsy shop takes, say, $18,000 and no form arrives, reconcile your gross receipts, fees and expenses anyway. As of Oct 2026.
Asked in Greymill
Texas: more than $500,000 of total Texas revenue in the preceding 12 calendar months (As of Oct 2026). You did $530,000.
Florida: more than $100,000 of taxable remote sales in the previous calendar year (As of Oct 2026). You did $140,000.
Arizona and Pennsylvania: stock there generally creates nexus, a tax link, from the first unit, whatever your sales. Register for your own-site sales, and check each state's rule for marketplace-only sellers.
Amazon's limit: its collection covers Amazon sales only. You can rarely back-collect from customers, so a late start comes out of your margin.
For past years, a voluntary disclosure agreement, approached before the state contacts you, usually limits how far back the state looks to 3 or 4 years and waives most penalties (As of Oct 2026).
Send me your FBA inventory report and I'll check for other states.
Ask it about your own business
Paste this into Greymill with your own figures, and Tax & Bookkeeping works it through for your business.
I run an online shop in [state], in the US. Run a nexus check for me. Own-site sales by state for this year and last [list], marketplace sales by state [list], states where FBA or my 3PL holds stock [list], and states where I am already registered [list]. Tell me where to register, where to consider a voluntary disclosure, and whether to charge tax on shipping. If I am due an IEEPA duty refund of [$], tell me how to treat it.
More for online retail and ecommerce in the US
- Knowing what an order earns after landed cost, tariffs, free shipping and returnsWork out contribution margin per order with duty in your landed cost, the ROAS you need to break even, and what a tariff change does to both.Read the lesson
- Paying for inventory and ads weeks before the platforms pay youBuild a 13-week cash flow on real payout timing, plan for reserves, holds and chargebacks, and turn any revenue-based advance into an APR before you sign.Read the lesson
- Proving the products you import or private-label are legal to sellIf you import or private-label, you are in the chain the law holds responsible: the certificates, testing, warnings and reports your products need before they go live.Read the lesson
- Shipping promises, a refund policy that holds up, and the 3PL clause that caps your lossFederal and state rules decide what your shipping times, refund policy, warranties and subscriptions must say, and your 3PL and supplier contracts decide who pays when stock is lost.Read the lesson
- Paying packers, an overseas assistant and a freelance designer the right wayOnline sellers lean on packers, virtual assistants and freelancers: how classification works for each, which tax form each one needs, and the wage rules that bite at peak.Read the lesson
- Reviews, creators, texts and 'Made in USA': selling harder without a penalty or a lawsuitThe federal and state rules that govern how online stores win customers: reviews, influencer disclosure, origin claims, pricing, email, texts and marketplace verification.Read the lesson
- A Prop 65 notice or a website accessibility demand letter has arrivedWhat to do in the first days after a Prop 65 60-day notice or an ADA website demand letter, and how to make the next one less likely.Read the lesson
Open the interactive lesson · Every online retail and ecommerce lesson · What Greymill knows about the trade
Sources
The primary sources behind this lesson, checked Oct 2026.
- 585 U.S. 162 (2018) (Sales tax: nexus, marketplaces and the big four states)
- State list (Sales tax: nexus, marketplaces and the big four states)
- Rev. & Tax. Code §6203(c)(4) (Sales tax: nexus, marketplaces and the big four states)
- 34 TAC §3.286(b)(2) (Sales tax: nexus, marketplaces and the big four states)
- Tax Law §1101(b)(8)(iv) (Sales tax: nexus, marketplaces and the big four states)
- Fla. Stat. §212.0596(2) (Sales tax: nexus, marketplaces and the big four states)
- Statement of Information on P.L. 86-272 (Aug 2021) (State income and franchise tax, P.L. 86-272 and voluntary disclosure)
- FTB, Annual tax and LLC fee; Rev. & Tax. Code §17941, §17942; §23101(b) (State income and franchise tax, P.L. 86-272 and voluntary disclosure)
- Due dates; no tax due (State income and franchise tax, P.L. 86-272 and voluntary disclosure)
- Fin. Code §22800 to §22805 (Unit economics, landed cost and worked examples in dollars)
- Financial Services Law Art. 8 (Unit economics, landed cost and worked examples in dollars)
- Quarterly Retail E-Commerce Sales, 2nd quarter 2026, Table 1 and notes (Unit economics, landed cost and worked examples in dollars)
- 17 USC 105 (no copyright in US government works) (Unit economics, landed cost and worked examples in dollars)
- FOMC statement Sep 16, 2026 (Unit economics, landed cost and worked examples in dollars)
- 16 CFR Part 465; 16 CFR 1.98 (Hard cases: sales tax, FEDERAL tax, cash and exit)
- 15 USC 381 (Hard cases: sales tax, FEDERAL tax, cash and exit)
- Thresholds (Hard cases: sales tax, FEDERAL tax, cash and exit)
- IRC §111 (Hard cases: sales tax, FEDERAL tax, cash and exit)
- Tax Law §1141(c); R&TC §6811 (Hard cases: sales tax, FEDERAL tax, cash and exit)
- Rev. Proc. 2025-32, gross receipts test (Federal tax: entity, inventory, depreciation and 1099S)
- FTB conformity tables (Federal tax: entity, inventory, depreciation and 1099S)
- Threshold (Federal tax: entity, inventory, depreciation and 1099S)
- IRS Publication 946, "What's New for 2026" and "100% special depreciation allowance" (Federal tax: entity, inventory, depreciation and 1099S)
- R&TC §6811, §6812 (Growth, size stages and exit)
- IRC §1060 (Growth, size stages and exit)
- IRC §453(b)(2)(B) (Growth, size stages and exit)
- IRC §1202(a), (b), (d) (Growth, size stages and exit)
- Public Law 119-21 section 70431(a)-(c), amending IRC section 1202(a), (b), and (d) (Growth, size stages and exit)