Threshold

A threshold is the sales or transaction volume limit set by a state to determine whether a business has established nexus and is required to collect and remit sales tax. These thresholds are most commonly used for economic nexus and vary by state.

Thresholds typically fall into one or both of the following categories:

1. Revenue-Based Thresholds – A business must collect sales tax if its gross sales exceed a specific dollar amount (e.g., $100,000 in sales in a state).
2. Transaction-Based Thresholds – A business must collect sales tax if it processes a certain number of transactions (e.g., 200 or more separate sales in a state).