Economic nexus: the post-Wayfair reality
Since South Dakota v. Wayfair (2018), every US state can require out-of-state sellers to collect sales tax once they cross an economic threshold — most commonly $100,000 in sales OR 200 transactions per year into that state. For a course seller doing $300k nationally, you may have nexus in 20+ states simultaneously. Tools like TaxJar, Avalara, or Stripe Tax track and file across all of them; doing it manually past 5–6 states usually costs more in CPA time than the SaaS.
- • Most states: $100k OR 200 transactions per calendar year.
- • California, New York, Texas: $500k threshold (higher because of population).
- • Digital products taxability varies by state — courses are taxable in ~30 states, not in ~20.
EU OSS and the 'one-stop shop'
Selling digital products to EU consumers (B2C) triggers VAT obligations in their country at their VAT rate (17–27%). The OSS (One-Stop Shop) scheme lets non-EU sellers register in ONE EU member state and file a single quarterly return covering all 27 countries — a massive simplification. B2B sales to VAT-registered EU businesses use reverse-charge (you don't collect; the buyer accounts for VAT) — collect their VAT number at checkout.
Sales tax is the silent nightmare of digital creators. The day you sell a course in California, an ebook in Texas, or a coaching package in New York, you may have created a sales tax obligation in that state — and economic nexus thresholds mean you can owe in states you've never set foot in. This calculator estimates your potential sales tax liability across the US so you find out before a state notice does.
What each input means
Get these inputs right and the output is reliable. Get them wrong and the calculator just multiplies bad assumptions.
Annual digital product revenue
Total revenue from digital products, courses, memberships, ebooks, software.
Typical range: $10k–$500k for solo creators; $1M+ once you scale or hit affiliate networks.
% of US sales
Share of revenue from US-based buyers (vs. international, which typically uses VAT/GST).
Typical range: 60–85% for most US-based creators.
Avg blended sales tax rate
Estimated weighted-average rate across states where you have nexus, including local rates.
Typical range: 6–9% for digital goods in taxable states. Many states still exempt digital products.
States where you have nexus
Physical presence (office, employees, inventory) OR economic nexus (revenue/transaction thresholds met).
Typical range: 0–5 for new creators; 10–25 once you cross economic nexus in major states.
Worked examples
Real scenarios with the math walked through line by line.
Course creator, $150k/year, single-state
Scenario: $150k digital course revenue, 80% US, only home-state nexus (CA), 9% CA digital goods rate.
Math: Taxable US revenue = $120k. CA-attributable revenue ≈ $15k (CA share of US population × CA-only nexus). Sales tax ≈ $15k × 0.09 = $1,350.
Outcome: Small liability but real. Need a CA seller's permit, file quarterly, collect tax on CA buyers — most creators ignore this until they get a notice.
Established educator, $800k/year, multi-state nexus
Scenario: $800k revenue, 75% US ($600k), nexus in 15 states, blended 7.5% rate.
Math: Taxable share = ~$280k (states with digital goods tax). Sales tax = ~$21k. Plus filing/registration overhead across 15 jurisdictions.
Outcome: At this scale, use TaxJar/Anrok/Avalara ($2.5k–$10k/yr). Trying to file 15 returns manually costs more in time than the software.
Common mistakes
Where this calculation usually goes wrong in the real world.
- Assuming digital products aren't taxable. Over 30 US states tax at least some digital goods. The list expands every year.
- Ignoring economic nexus thresholds ($100k revenue or 200 transactions in most states triggers nexus regardless of physical presence).
- Treating Stripe Tax / Lemon Squeezy / Paddle as 'handled'. Merchant of record platforms handle this; Stripe Tax just calculates — you still register and file.
- Not collecting tax from launch. You owe the state regardless of whether you collected from the buyer — meaning it comes out of your margin.
- Forgetting marketplace facilitator rules. If you sell on Udemy, Teachable, or Amazon, those platforms often collect for you — but only sometimes.
When to use this calculator
- Before launching a digital product or course at $50k+ projected ARR.
- When sales volume crosses $100k in a single state for the first time.
- Before adding international payment methods (different rules — UK VAT, EU VAT, AU GST).
- Annually to audit which states you've quietly hit economic nexus in.
- Before deciding between selling direct vs. using a merchant-of-record platform.
Glossary
Sales tax nexus
Legal connection to a state that creates sales tax collection obligation. Triggered by physical presence OR economic nexus.
Economic nexus
Threshold-based nexus, typically $100k revenue OR 200 transactions in a state over the prior year. Established by South Dakota v. Wayfair (2018).
Merchant of record (MoR)
Platform that sells the product to the customer on your behalf (Lemon Squeezy, Paddle, FastSpring). MoR handles sales tax/VAT entirely; you receive payouts after their fees.
Digital goods
Downloadable software, ebooks, courses, music, video. Taxability varies wildly by state — some tax all, some exempt all, some tax only certain types.
Marketplace facilitator law
State laws requiring platforms (Amazon, Etsy, Udemy) to collect and remit sales tax on behalf of sellers above certain thresholds.
More questions answered
Do I really need to register in 20 states?
Only the ones where you've established nexus. Track revenue and transaction count by state monthly; register the moment you cross a threshold. Tools like TaxJar and Anrok automate detection. For most creators under $250k revenue, nexus is limited to home state plus 2–5 major buyer states (CA, NY, TX, FL).
Should I just use Lemon Squeezy or Paddle to avoid all this?
For digital products under $500k revenue, often yes. MoR platforms charge 5–8% per transaction but handle every jurisdiction globally — including EU/UK VAT. The math: $300k revenue × 5% = $15k/yr. Compared to $5–10k for a multi-state tax software stack + your time. MoR is usually the simpler answer until volume justifies in-house compliance.
What about international sales — VAT and GST?
Different rules. EU/UK VAT is owed from the first sale to a consumer (no threshold). UK VAT registration triggers at £90k UK revenue. Australia GST at AU$75k. If selling direct, use TaxJar/Avalara global modules or switch to an MoR. The IRS doesn't care about VAT; the relevant authority is in each buyer's country.
Methodology last reviewed: 2026-05 by the RevenueLab editorial team.
FAQ
Does Gumroad handle sales tax for me?
Gumroad acts as Merchant of Record for EU VAT, UK VAT, AU GST, and several others — they collect and remit on your behalf. For US states, they handle it where they have nexus (almost everywhere now). Always confirm in your dashboard which jurisdictions are platform-collected vs your responsibility.
Do I owe US sales tax on digital courses?
Depends on the state. Roughly 30 US states tax digital products (TX, NY, WA, CT, OH, PA, etc.); 20 don't (CA, FL, MO, OK, etc.). Once you have economic nexus in a taxing state, you must register, collect, and remit. SaaS-style memberships have an even more fragmented map.
What's the EU VAT MOSS / OSS scheme?
It's a simplified registration that lets non-EU digital sellers file a single quarterly VAT return covering all EU sales instead of registering in each of 27 countries. Register in any EU member state (Ireland is common for English-speaking sellers); file quarterly via the OSS portal.
Should I include VAT in my list price or add at checkout?
Add at checkout. Including VAT compresses your effective margin by 17–27% on EU sales, and US buyers see a different price than EU buyers (which is normal and expected). Stripe Tax / Paddle / LemonSqueezy all support automatic price-on-top configuration.