calculate Sales Tax

How Do You Calculate Sales Tax if You’re a Remote Seller?

First things first: you’re a “remote seller” if you sell products or services into a state where you don’t have a physical presence. 

Say you have a physical location in Michigan, but you sell goods to consumers in other states. Congratulations! You’re officially a remote seller – one who may be required to collect and file sales taxes to states other than your own.

Calculating Your US Sales Tax Obligations

To determine whether or not you need to pay US sales taxes to other states, you have to first find out whether or not you have a “nexus” (or, “connection”) in the state.

You might have a nexus in an external state if you meet any of the following conditions, among others:

  • Having a physical location in another state
  • Generating a sufficient sales or transaction volume in the state to create an “economic nexus
  • Making sales through an affiliate arrangement with a local business in another state

You’ll also have to make sure that the state you have a potential nexus with actually has a local or state sales tax. No sales tax? No obligations on your part.

US Sales Tax Thresholds

If you think you might have a nexus in another state, use the table below to calculate whether or not you meet the state-by-state sales and/or transaction requirements to be required to collect and remit sales tax:

US StateSales ThresholdTransaction Requirement
Alabama$250,000
Arizona$250,000
Arkansas$100,000200
California$500,000
Colorado$100,000
Connecticut$250,000200
Georgia$250,000200
Hawaii$100,000200
Idaho$100,000
Illinois$100,000200
Indiana$100,000200
Iowa$100,000200
Kentucky$100,000200
Louisiana$100,000200
Maine$100,000200
Maryland$100,000200
Massachusetts$500,000100
Michigan$100,000200
Minnesota$100,000100
Mississippi$250,000
Nebraska$100,000200
Nevada$100,000200
New Jersey$100,000200
New Mexico$100,000
New York$500,000100
North Carolina$100,000200
North Dakota$100,000
Ohio$100,000200
Oklahoma$100,000
Pennsylvania$100,000
Rhode Island$100,000200
South Carolina$100,000
South Dakota$100,000200
Tennessee$500,000
Texas$500,000
Utah$100,000200
Vermont$100,000200
Virginia$100,000200
Washington$100,000
Washington DC$100,000200
West Virginia$100,000200
Wisconsin$100,000200
Wyoming$100,000200

Use this table for guidance only. Rates change. States add restrictions and repeal others.

To confirm whether or not you need to calculate sales tax as a remote seller, use a tool like Quaderno that automates US sales tax compliance. Never worry again about whether you’ve calculate the right taxes, at the right rates. Our software takes the headache out of sales tax management so that you can get back to what you’re best at.

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* At Quaderno we love providing helpful information and best practices about taxes, but we are not certified tax advisors. For further help, or if you are ever in doubt, please consult a professional tax advisor or accountant.