Tax nexus: definition, example, and why it matters

Physical nexus (office, employees, inventory) and economic nexus (sales over a state threshold, typically $100k or 200 transactions) both trigger collection duties. Crews working across state lines should track economic nexus carefully.

• Short definition. A connection to a state that obligates you to collect that state's sales tax.
• Category. Tax nexus is a tax term used by service businesses when billing customers.
• How Glo Invoice handles it. Glo Invoice builds tax nexus into the invoice itself, so you don't track it on paper or in a spreadsheet.

Frequently asked questions

What does tax nexus mean?

Physical nexus (office, employees, inventory) and economic nexus (sales over a state threshold, typically $100k or 200 transactions) both trigger collection duties. Crews working across state lines should track economic nexus carefully.

Related terms

• Sales tax — A tax on the sale of goods (and sometimes services) collected from the customer at checkout.
• Use tax — A tax owed on items bought tax-free and used in a state that would normally tax them.