US Sales Tax on Digital Goods: Nexus, Thresholds and SaaS

There is no such thing as US sales tax

There are roughly 12,000 taxing jurisdictions across states, counties and municipalities, each with its own rate and its own view of what a digital product is. A downloadable course may be taxable in one state, exempt in the next, and taxable only if bundled with support in a third.

Economic nexus in plain terms

Since the Wayfair decision, a seller with no physical presence can still owe tax once it crosses a state's revenue or transaction threshold — commonly $100,000 in sales or 200 transactions in a year. Thresholds are per state, measured on different periods, and some states have dropped the transaction count entirely.

• Track cumulative sales per state, not globally
• Register before the first taxable sale after crossing, not at year end
• Remember that exempt sales can still count toward a threshold in some states
• Filing frequency is assigned by the state and changes as volume grows

SaaS is the hardest category

States disagree on whether remotely accessed software is a service, tangible personal property, or a data processing service — and the answer changes the rate and sometimes who is liable. Getting the classification wrong is the most common source of assessment on audit for software sellers.

The merchant of record shortcut

When the MoR is the seller of record, its registrations and its classifications apply. You do not monitor thresholds, register in new states, or file returns — the obligation sits with the entity whose name is on the invoice.