Understanding Nexus Threshold Calculations
TaxCloud monitors your economic nexus status across US states by automatically calculating your sales against each state's thresholds on a daily basis. View your Thresholds page here.
When are economic nexus thresholds calculated?
Nexus thresholds are recalculated once per day at 1 AM CST. Each calculation uses your live transactions, historical orders, and marketplace orders — applying the rules specific to each state.
How are economic nexus thresholds calculated?
The following factors determine whether you have economic nexus in a given state:
Time frame: Previous or current calendar year, previous calendar year, previous four quarters, or trailing twelve months depending on the state.
Sales volumes: Sales amount, order volume, or both — varies by state.
Marketplace orders: Included only in states where required by law.
Does tax collection automatically turn on?
Tax collection does not turn on automatically when you surpass an economic nexus threshold. You must take action to enable it.
- SST states: Submit a request through support@taxcloud.com to turn on tax calculation.
- Non-SST states: Apply a state license and select a collection start date on the Threshold State Detail page to enable tax calculation.
Tax collection will turn on automatically due to physical nexus only if you have a physical location applied on your Locations page.
Threshold alert emails
TaxCloud sends two email notifications as you approach and reach a state's nexus threshold:
80% threshold reached
Sent when your sales reach 80% of a state's threshold. This email advises you to review your nexus status and consider beginning the registration process in that state.
100% threshold reached
Sent when you've surpassed the full threshold. This email advises you to turn on tax collection in that state if you haven't already done so.