Here is a problem that tends to arrive without warning. You have been selling steadily, business is good, and then you realize you have quietly built up enough sales in three other states that you now owe sales tax in all of them, including on orders from months ago. Nobody sent you a memo. You just crossed a line you did not know was there.
That line is called economic nexus, and if you sell across the United States from a Shopify store, it is worth understanding before it understands you.
What economic nexus actually means
Since the 2018 South Dakota v. Wayfair decision, a state can require you to collect and remit its sales tax once your sales into that state pass a certain point, even if you have no office, no warehouse, and no people there. That trigger point is the economic nexus threshold.
The catch is that every state sets its own. There is no single national number. Most states use either a dollar amount of sales, a number of separate transactions, or both. So the exact moment you become responsible shifts depending on where your customers happen to live.
The thresholds that catch people out
Most states landed on a familiar baseline: $100,000 in sales OR 200 transactions in a year. Plenty of stores assume that number applies everywhere and stop thinking about it. That assumption is where the trouble starts, because a lot of states do not use it.
A few examples of how sales tax nexus by state actually varies, using commonly cited current thresholds:
- California: $500,000 in sales, with no transaction count.
- Texas: $500,000 in sales.
- New York: $500,000 in sales AND more than 100 transactions (you need both).
- Florida: $100,000 in sales.
- Tennessee: $100,000 in sales.
- Colorado: $100,000 in sales.
- Illinois: $100,000 or 200 transactions.
- Kansas: $100,000 in sales.
Notice the pattern breaking. High-volume states like California, Texas, and New York set the bar much higher on dollars, while others hold the $100,000 line. And the transaction-count test matters more than people expect: if you sell a lot of low-priced items, you can blow past 200 transactions in a state long before you hit any dollar figure, in the states that still count transactions.
One more honest note, because this is tax and it changes: thresholds get amended, measurement periods differ (some look at the current year, some the previous), and marketplace sales can be treated separately. Treat the numbers above as a starting point, not gospel, and confirm the current rule for any state where you are getting close. This is not tax advice, and once real money is involved, a sales tax professional or a tool like Avalara or TaxJar earns its fee.
The real issue is not the rule. It is noticing.
Most stores that get burned by nexus did not misread a threshold. They simply never saw themselves approaching one. Sales in a given state accumulate quietly in the background, and by the time it shows up in a year-end review, you have owed tax there for months and now face back-filing and penalties.
The fix is boring but effective: watch your sales by state as they happen, so a state creeping toward its threshold is something you notice in real time rather than in April.
This is where store alerts pull their weight. If a new order over a certain size, or an order into a state you are watching, drops into a Slack channel the moment it happens, the numbers stop being invisible. Our own Slack Store Alerts app is built for exactly this kind of real-time visibility: pipe orders, revenue milestones, and high-value events straight into Slack, filter by country or order total, and route them to whoever owns the number. It will not file your taxes, but it makes sure a state quietly approaching its threshold is something a human actually sees.
A simple way to stay ahead of it
You do not need a tax department. A light routine covers most of the risk:
- Know the big thresholds. At minimum, keep the high-dollar states (California, Texas, New York) and the common $100,000 states on your radar.
- Track sales by state. Shopify reports give you this. Check quarterly at a minimum, and set up real-time alerts on large or milestone orders so nothing sneaks up.
- Register when you cross. Once you pass a state's threshold, register there, turn on tax collection in Shopify for that state, and start remitting.
- Get help before it is urgent. A sales tax service or accountant is far cheaper than back taxes and penalties across three states you forgot about.
Economic nexus is not something you can opt out of, but it is entirely something you can stay ahead of. The stores that struggle are the ones flying blind. Watch the numbers as they move, know which state lines you are near, and the whole thing becomes a calendar task instead of a nasty surprise.
