Sales Tax Post-Wayfair: State-by-State Economic Nexus for SaaS Startups
Collated by Aparna Devalla, CPA
Curated by Rubric Financial
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What Wayfair Changed
- Pre-2018: states could only require sales tax collection from companies with PHYSICAL PRESENCE (an office, employee, or warehouse) in the state.
- Post-Wayfair (South Dakota v. Wayfair, 2018): states can require collection based on ECONOMIC NEXUS: sales volume or transaction count, regardless of physical presence.
- Implication for SaaS: a Bay Area company selling $500K of annual contracts into Texas now triggers Texas sales tax obligations, with no Texas office and no Texas employees required.
- All 45 states with statewide sales tax now have economic nexus rules. Plus DC, Puerto Rico, and several locality-level taxes (NYC, Chicago, etc.).
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