State Income Tax Nexus Screener
states you may have an income tax filing obligation in.
Built for US-based businesses. This screener covers state income and franchise
tax nexus, not sales tax nexus.The two follow different rules and different thresholds.
State Income Tax Nexus Screener
Answer a few questions about your business and we'll flag states where you may have an obligation to file a state income (or equivalent) tax return. This is an educational estimate, not tax advice.
Step 1 — Your business
Entity type doesn't change where you have nexus, but it changes who files, what kind of return is due, and whether you owe entity-level fees even at a loss.
This matters because of a federal law (P.L. 86-272) that can protect sellers of tangible goods from state income tax if their only in-state activity is soliciting sales. It generally does not protect services, SaaS, or digital products.
Step 2 — Physical presence (check sparingly)
Only check a state where you actually have employees, an office or property, or inventory / warehoused goods physically located there. This is the strongest nexus trigger, so any state checked here returns “Likely file” regardless of revenue. If you simply sell into a state, do not check it here — add it in Step 3 instead.
Step 3 — Sales by state (last 12 months)
Select each state you sell into, then enter the annual revenue in the box that appears below. These are judged against each state's economic-nexus threshold, so small amounts come back “Unlikely.” Your Step 2 physical-presence states are included automatically and tagged Physical.
Optional, but improves accuracy. If you enter this, the tool also applies the “25% of total sales” factor-presence test that many states use, and flags states that are a significant share of your business even when they have no dollar threshold.
Your answers include at least one factor that commonly establishes nexus in this state, such as an employee working there or revenue above the state's threshold. Most businesses in this position have a filing obligation. If you have not been filing here, this is worth reviewing with a tax advisor.
Nothing in your answers points to a filing obligation in this state today. Rules and thresholds differ by state and change over time, so recheck if you hire there, open a location, or see revenue grow.
An example of how nexus happens
WORKED EXAMPLE
Say you run a 20-person marketing agency headquartered in Atlanta and have historically filed only in Georgia.
In 2023, you hired a remote designer in Colorado. In 2024, you hired developers in Virginia and North Carolina. In 2025, your team spent several weeks working at a client’s location in Illinois.
You did not open offices or formally expand into those states. However, remote employees and on-site work may create nexus and state filing obligations.
Those obligations may begin in the tax year the activity occurred, not when the business later discovers them.
What P.L. 86-272 does and does not protect
P.L. 86-272 may protect a business from state net income tax when its only in-state activity is soliciting orders for tangible personal property that are approved and fulfilled from outside the state.
The protection generally does not apply to SaaS, services, digital products, or taxes not based on net income. Some states also take a narrower view of which sales and online activities qualify for protection.
What to do if the screener flags exposure
Do not immediately register or begin filing without reviewing prior-year exposure.
A voluntary disclosure agreement may limit the number of prior years that must be filed and provide penalty relief. Eligibility and terms vary by state and generally require applying before the state contacts the business.
Have a state tax professional confirm the exposure and recommended filing approach before taking action.
What is state income tax nexus?
State income tax nexus is a connection between your business and a state that may require you to file a tax return there. Nexus can be created by employees, property, services performed, or revenue generated in a state.
Each state has different rules and thresholds. You may have a filing obligation even without an office or physical location in the state. Having nexus does not always mean tax is owed.
Income tax nexus is not the same as sales tax nexus
Sales tax nexus determines whether your business must collect and remit tax on taxable sales. Income tax nexus determines whether your business may need to file an income or franchise tax return in a state.
The 2018 Supreme Court decision in South Dakota v. Wayfair allowed states to require sales tax collection without a physical presence when a seller meets the state’s economic nexus rules.
Income tax and sales tax have separate rules, thresholds, and filing requirements. Complying with one does not mean your business is compliant with the other.
What creates income tax nexus?
Common triggers include employees, property or inventory, services performed, and state-sourced revenue.
A single remote employee can create physical presence and income tax nexus, depending on the state and the employee’s activities.
| Business type | Common triggers |
|---|---|
| SaaS | Remote employees and state-sourced revenue |
| Ecommerce | Inventory in fulfillment warehouses and economic nexus thresholds |
| Agencies | Remote employees and services performed at client locations |
Nexus questions we get most
Not sure where you have to file?
If you sell into many states, have remote employees, or are preparing to raise money or sell, a nexus study is the formal way to map exactly where you have filing obligations and quantify any exposure. It’s the difference between guessing and knowing.
Which states have economic nexus for income tax?
Many do, but the rules and thresholds vary. States such as California, New York, Colorado, Connecticut, Massachusetts, Pennsylvania, Tennessee, and Texas use bright-line thresholds; others assert nexus on economic presence without a published dollar figure. Always check the current rule for each state.
Does having one employee in a state create income tax nexus?
Usually yes. A single employee — including a remote worker — is physical presence and almost always creates income tax nexus, often along with payroll tax obligations.
Does inventory create income tax nexus?
Generally yes. Inventory stored in a state, such as in a third-party fulfillment center, is physical presence and typically creates nexus.
Is income tax nexus the same as sales tax nexus?
No. They’re separate systems with different thresholds and rules. You can have one without the other, and the dollar thresholds usually differ.
Does my home state count?
Yes. Your business is generally required to file in the state where it’s based or commercially domiciled, regardless of revenue.
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