Sales Tax Questions
Beginner Quick Answer

If I only sell online, do I still have a sales tax obligation?

⚡ TL;DR

Yes. Selling online doesn't exempt you from sales tax. You owe it in your home state from your first sale, and in any other state once you cross its economic nexus threshold — typically $100,000 in annual sales. The only states with no obligation at any volume are the five NOMAD states.

Yes. Selling online doesn’t exempt you from sales tax. The rules apply the same way they do for physical retailers, once you have a sufficient connection (nexus) to a state, you’re required to register, collect the appropriate tax, and file returns.

The key difference from a physical retail business is which states you need to worry about. A physical store in one location typically has nexus in just that state. An online seller shipping nationally can end up with nexus in dozens of states.

Your home state: immediate obligation

In almost all cases, you have nexus in your home state from your first sale. Your home state is where you operate your business, where you work, where your inventory sits (even if it’s in a garage), where you’re registered as a business entity. That’s physical nexus, and it’s immediate.

Register for a sales tax permit in your home state before you start selling. This is the one sales tax obligation every seller has from day one.

Other states: threshold-based obligation

For states other than your home state, your obligation typically begins when you either:

  • Cross the economic nexus threshold: usually $100,000 in annual sales into that state. Before you hit this level, you generally have no obligation in that state (assuming no physical presence there).
  • Establish physical presence: storing inventory, hiring employees, or operating from an address in another state. FBA inventory creates this in every state Amazon places it.

For a new online seller with modest revenue, you may only have a nexus obligation in your home state for some time. As sales grow into other states and you cross thresholds, those states are added to your compliance footprint.

The states with no sales tax

Five states — Delaware, Montana, New Hampshire, Oregon, and Alaska (with a local caveat) — have no statewide sales tax. Sales to customers in these states create no sales tax obligation regardless of volume.

What “collecting sales tax” actually requires

If you have nexus in a state:

  1. Register for a sales tax permit before collecting
  2. Charge the correct rate on taxable sales (based on the customer’s location)
  3. File returns on the assigned schedule (monthly, quarterly, or annual)
  4. Remit the collected tax with each filing

The rate isn’t one number, it’s a combined state + county + city rate that varies by the customer’s exact address. Tax calculation software handles this automatically; doing it manually across 20 states would require looking up rates for every order.

Marketplace sellers: a partial answer

If you sell exclusively on Amazon, Etsy, eBay, or Walmart, those platforms collect and remit sales tax on your behalf in all 45 states. If that’s your only channel, the collection obligation is handled, though you may still have registration obligations from FBA physical nexus.

If you sell on a marketplace and through your own website, you’re responsible for the direct-channel sales.

Frequently asked questions

Do online sellers have to collect sales tax?
Yes. Being an online-only seller doesn't exempt you from sales tax. You owe sales tax in states where you have nexus, either because you have physical presence there (your home state, or a state with your inventory) or because you've crossed the state's economic nexus threshold through sales volume.
What is the minimum sales volume before I need to worry about sales tax?
In most states, the economic nexus threshold is $100,000 in annual sales into the state. If your total sales into a state are well below $100,000 and you have no physical presence there, you likely have no obligation in that state yet. Your home state is the exception, you almost certainly owe sales tax there from your first sale.
I just started selling online, do I need to collect sales tax right away?
In your home state, yes, you likely have nexus there immediately. In other states, your obligation begins when you cross the economic nexus threshold (typically $100,000 in annual sales) or when you establish physical presence there. New sellers below the threshold in a state have no immediate obligation in that state, but should track sales by state as they grow.
If I sell through Amazon, does Amazon handle my sales tax?
Amazon handles collection on Amazon-platform transactions in all 45 states. If Amazon is your only channel, those sales are covered. If you also sell through your own website or other direct channels, those sales are your responsibility. Amazon's collection also doesn't remove physical nexus obligations created by FBA inventory.

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