Sales Tax Nexus for Shopify Sellers — What the Wayfair Ruling Actually Means in 2026.
Most Shopify sellers I've spoken to don't know this rule exists. The ones who find out usually find out the hard way — a letter from the state revenue department they've never dealt with, asking why they haven't been collecting sales tax from their residents.
If your store ships to customers across multiple U.S. states, this article is worth your time. This affects more sellers than most people realise.
The 2018 Court Case That Changed Everything
Before June 2018, the rule was straightforward. States could only make you collect sales tax if you had a physical presence there. An office, a warehouse, an employee. No physical presence meant no obligation to collect.
Then the Supreme Court ruled on South Dakota v. Wayfair, Inc. and changed that completely. States can now require you to collect sales tax based purely on how much you sell to their residents. Doesn't matter where your business operates. Doesn't matter if you've never set foot in that state.
This is called economic nexus. Every state gets to set its own threshold. And that's where it gets complicated for online sellers.
The Thresholds You Need to Know
Most states landed on $100,000 in annual sales to their residents as the trigger. Cross that in any given state and nexus likely applies — meaning you may need to register with their revenue department and start collecting tax on sales there.
But some states work differently. These are the ones that catch sellers off guard:
- California and Texas both use a $500,000 threshold. Much higher than most states, which gives smaller sellers more breathing room. That said, California's tax authority (CDTFA) is one of the most aggressive enforcement agencies in the country once you do cross it. They actively pursue retroactive assessments from remote sellers who weren't registered.
- New York has the most misunderstood sales tax rule of any state. You need BOTH $500,000 in annual revenue AND 100 separate transactions to trigger nexus. Both at the same time. A seller with $700,000 in New York sales but only 90 transactions doesn't have nexus there. Most sellers track only the revenue number and either assume they're safe when they're not, or panic when they don't need to.
- Alabama and Mississippi sit at $250,000. Higher than the standard $100,000 threshold but lower than California and Texas.
- Alaska has no state-level sales tax — but don't write it off completely. The Alaska Remote Seller Sales Tax Commission (ARSSTC) was set up specifically for remote sellers. Cross $100,000 in total Alaska sales and you're required to register with ARSSTC and collect local municipal taxes for all participating cities and boroughs. Over 50 municipalities participate with rates ranging from 1% to 7%. Anchorage has no local tax, but Juneau charges 5%. The good news is one ARSSTC registration covers all member jurisdictions — you're not filing separately with each city.
Two Changes That Happened Recently
Illinois removed its 200-transaction threshold on January 1, 2026. It's now purely revenue-based at $100,000. If you were tracking Illinois using the old combined method, check your numbers again. Your status there may have changed.
Alaska also removed its 200-transaction threshold effective January 1, 2025. The ARSSTC now uses only the $100,000 revenue threshold. If you sell anything meaningful to Alaskan customers, that's worth knowing.
Which States Come After Remote Sellers Most Actively
All states technically enforce economic nexus. But some are far more aggressive about actually pursuing unregistered remote sellers. Based on published enforcement activity from their official revenue departments, California, Texas, New York, and Washington has the most active programs targeting online sellers who haven't registered. These departments compare sales data, pursue retroactive assessments, and in some cases go back years.
All information in this article comes from the official state revenue department and government sources. Regulens is informational only and nothing here is legal or tax advice. Always consult a licensed professional for your specific situation.
What to Actually Do With This Information
Start with your own data. Pull the last 12 months of sales broken down by state in Shopify analytics and run each state's total against the thresholds above. It's tedious but it gives you an actual picture of where you stand.
If you've crossed thresholds in states where you're not registered, speaking with a CPA who handles e-commerce sales tax is the right next step. Most states have voluntary disclosure programs that reduce penalties significantly for sellers who come forward proactively rather than waiting to get audited.
Still well below most thresholds? Set a reminder to review this annually. What doesn't apply today might apply next year as your store grows.
Check Your Specific Store's Exposure
Going through all 39 states manually takes time — and the rules change more often than you'd expect. We built Regulens to do this automatically. It generates an informational readiness score for your Shopify store across all covered U.S. jurisdictions based on your actual revenue data, using only verified government sources.
Free to try. Takes about three minutes. No credit card needed. Just remember it's informational only and not a substitute for professional advice when you need it.
Further Reading
Does Your Store Need to Detect a Browser Signal? A State-by-State Guide
Some states require your store to automatically recognize a consumer's opt-out preference through their browser settings, with no click required on your site at all. Here's exactly which states require it.
Four More States Are About to Get Privacy Laws — Here's Your Advance Notice
Alabama, Oklahoma, Louisiana, and Vermont have all signed comprehensive privacy laws into effect between 2027 and 2028. None are enforceable yet, but each is worth understanding well before its clock starts.