Business glossary
Economic nexus
A tax connection created by economic activity in a jurisdiction, even without a physical location.
Example
A seller with customers in another U.S. state may need to examine that state's economic nexus rules even without premises there. The relevant sales types, thresholds and measurement period depend on the jurisdiction.
How it differs from related terms
Economic nexus is a connection that can create tax obligations; it does not determine a transaction's tax rate by itself. Check the responsible state authority and marketplace rules rather than applying one nationwide threshold.
Frequently asked questions
What is an example of economic nexus?
A seller with customers in another U.S. state may need to examine that state's economic nexus rules even without premises there. The relevant sales types, thresholds and measurement period depend on the jurisdiction.
How should economic nexus be interpreted?
Economic nexus is a connection that can create tax obligations; it does not determine a transaction's tax rate by itself. Check the responsible state authority and marketplace rules rather than applying one nationwide threshold.