Sales Tax Nexus in the Metro Area

By Courtney Easterday, MSA, and Breea Boylan, CPA, Withum On Jan 21, 2026

In today’s fast-evolving regulatory landscape, sales tax nexus has become a critical issue for business leaders across the country. Traditionally, nexus was established through tangible connections to a state, such as owning or leasing property, employing staff or agents, storing inventory, or participating in trade shows.

However, the 2018 Supreme Court decision in South Dakota v. Wayfair, Inc. redefined nexus to include economic presence. This means businesses can be required to collect and remit sales tax based solely on sales volume or transaction count, even without a physical footprint in the state.

Key Developments in NJ and the Metro Area

Business leaders in New Jersey, New York and Connecticut should be aware of the following recent changes:

New Jersey: The state is considering simplifying its nexus criteria by eliminating the 200-transaction threshold and focusing solely on the $100,000 gross sales benchmark. The state has also clarified that remote employees working from home within New Jersey can establish physical nexus for their employer. Additionally, marketplace facilitator platforms like Amazon and Etsy are required to collect and remit sales tax on behalf of sellers, but these sales still count toward a seller’s nexus threshold.

New York: Businesses exceeding $500,000 in gross receipts and conducting more than 100 sales in New York over four quarters must register and collect sales tax. Remote employees in New York can trigger nexus, especially if their activities go beyond basic sales solicitation.

Connecticut: It follows similar economic nexus standards and has issued guidance on remote work scenarios, emphasizing the need for businesses to track employee locations and activities.

Strategic Considerations for Business Leaders

The expanding definition of nexus presents both challenges and opportunities, including the following:

Compliance complexity: Managing sales tax compliance across multiple states presents significant challenges due to varying nexus thresholds and regulatory requirements. To address this, many businesses are implementing tax automation solutions or engaging specialized consultants, particularly when they operate in numerous jurisdictions.

Audit risk: Missteps in nexus determination or tax collection can lead to penalties, interest and audits. Proactive compliance is far less costly than reactive remediation.

Remote workforce management: HR and finance leaders must collaborate to track employee locations and assess nexus implications, especially in flexible work environments.

Digital goods taxation: States like New Jersey now tax digital products such as e-books and streaming services. Other states impose sales tax on software as a service (SaaS) or information services. While New Jersey generally does not impose sales tax on SaaS, businesses should be aware of a key exception. If a SaaS product is categorized as an information service, it may be subject to sales tax under state law.

Sales tax nexus is no longer a static concept. For business leaders in the Metro area, it is a dynamic compliance challenge shaped by economic activity, remote work, and digital commerce. With New Jersey and many other states refining their laws to impose sales tax on more services and digital products, now is the time to reassess your nexus footprint, review taxability of your products and services, update internal policies and seek expert guidance.

About the Authors: Courtney Easterday, MSA, is a senior tax manager on the State and Local Tax team at Withum and can be reached at [email protected]. Breea Boylan, CPA, is a supervisor on the State and Local Tax team at Withum and can be reached at [email protected].

To access more business news, visit NJB News Now.

Related Articles: