Sales tax across state lines: What every growing ecommerce store needs to know

A woman in Ohio loves your candles. A guy in Texas keeps coming back for your supplements. A dozen orders a day becomes a hundred. Revenue crosses $500k, then $1M. You’re reinvesting everything, hiring, running your first real ad campaign. 

Tax season? Your accountant handles income taxes in April. You assume it’s handled. But here’s what’s actually happening in the background.

Before 2018, online sellers collected sales tax only in states where they had a physical presence, such as a warehouse, an office, or an employee. Then, the Supreme Court ruled in South Dakota v. Wayfair, and that changed for good. States can now require you to collect sales tax based on how much you sell there, no physical presence needed.

It’s called economic nexus. The most common trigger: $100,000 in sales or 200 transactions in a state within a 12-month period. Some states set the bar lower. Cross that threshold, and you’re legally required to register in that state, collect the correct rate, and file returns on schedule. All 50 states plus D.C. now have these rules. Forty-five of them charge a statewide sales tax.

A store growing quickly can cross nexus thresholds in 10, 15, or 20 states before anyone notices. States passed more than 250 new tax laws in 2024 alone.

What your store handles automatically — and what it doesn’t

Just like other ecommerce platforms, WooCommerce calculates the correct tax rate at checkout for states where you’ve told it to collect taxes. You still have to monitor your nexus thresholds as you grow, register in new states when you cross thresholds, and file returns. The compliance piece has always been on the seller.

Most merchants find this out later than they’d like. It usually starts with a letter. Massachusetts notifies you that your sales likely exceeded its economic nexus threshold. They want records, proof of registration, and back taxes on everything you didn’t collect — plus interest and penalties.

If you’re shipping into a handful of states, manual tracking is manageable. Pull your sales by state quarterly, check them against each state’s threshold, and register when needed. The Sales Tax Institute keeps an updated threshold chart if you want a starting point.

Once you’re shipping nationwide, that process doesn’t scale. My recommendation is to set up Anrok to handle threshold monitoring, registration, filing, and remittance. It integrates natively with WooCommerce, which means setup takes 30 minutes. 

The merchants who handle this well aren’t tax experts. They just set up the right system before the letter arrived.

About

Nick Rezendes

Nick has spent his career obsessing over one thing: getting the right message to the right audience. With marketing experience at Fitbit, Square, and Anrok, he brings a deep understanding of what customers actually need, and how to reach them. At Anrok, Nick currently oversees brand, product, and partner marketing.