eCommerce Sales Tax Guide
Navigating economic nexus, marketplace facilitators, and digital goods across all 50 states.
The Wayfair Ruling & Economic Nexus
Since the 2018 Supreme Court decision in South Dakota v. Wayfair, physical presence is no longer required for a state to demand you collect sales tax. If your eCommerce business hits a state's "Economic Nexus" threshold, you are legally obligated to register and remit tax.
Standard Nexus Threshold
Most states use a standard threshold of $100,000 in gross revenue OR 200 separate transactions within the state in the previous calendar year. Once you cross this line, you must register.
Marketplace Facilitator Laws
If you sell exclusively on Amazon, eBay, or Etsy, the "Marketplace Facilitator" laws require the platform to collect and remit sales tax on your behalf. However, you may still need to register for a permit and file a "zero return" depending on the state.
Origin vs. Destination Sourcing
When you sell a product online, which tax rate do you charge? It depends on your home state's sourcing rules.
Origin-Based States
You charge the sales tax rate based on your business location. (e.g., Texas, Pennsylvania, Arizona).
Destination-Based States
You charge the tax rate based on the buyer's shipping address. Most states use this method.
Digital Goods & SaaS
Selling physical products is straightforward, but digital goods are a compliance minefield. About half of US states consider Software-as-a-Service (SaaS), ebooks, and downloadable music to be taxable "tangible personal property." The other half treat them as tax-exempt services. Always check the specific digital goods exemptions for the state where your buyer resides.