Understanding SaaS Taxability and Nexus Obligations: A Multi-State Guide

If your business sells Software-as-a-Service (SaaS), you may have noticed nexus exposure showing up in your Kintsugi account alongside a $0.00 tax liability. This can understandably raise some questions. This article explains why that happens and what it means for your compliance obligations across ten states: Arizona, California, Florida, Georgia, Illinois, Minnesota, Missouri, Nevada, Oklahoma, and Virginia.

Why Does My Account Show Nexus Exposure With $0 Tax Liability?

In all ten states covered in this article, SaaS is either non-taxable or treated in a way that excludes it from counting toward a state's economic nexus threshold. That said, if your business crosses a state's threshold through other taxable sales, or has physical presence in the state, you may still be required to register and file sales tax returns, even when every SaaS sale you make is exempt. When there is no tax due because your sales are non-taxable, those filings are called zero-dollar filings, and they are a normal, expected part of staying compliant.

Seeing nexus exposure with a $0.00 tax liability in your Kintsugi account simply means your business has crossed a state's threshold and is registered for compliance purposes. Nothing is wrong.

Is SaaS Taxable? A Multi-State Breakdown

Arizona

Is SaaS taxable? It depends on your nexus type.

Arizona classifies SaaS as a personal property rental subject to its Transaction Privilege Tax (TPT). However, Arizona's economic nexus threshold applies only to retail sales, and SaaS subscription revenue does not count toward that threshold. Neither B2B nor B2C SaaS sales count toward the $100,000 economic nexus threshold for remote sellers.

If your business has no physical presence in Arizona and sells only SaaS, you likely do not trigger economic nexus. If you do have physical presence (such as employees or contractors working in Arizona), TPT applies from the first dollar, regardless of sales volume, and your SaaS sales would be subject to TPT.

Economic nexus threshold: More than $100,000 in gross retail sales during the current or previous calendar year. No transaction count threshold applies.

What this means for your business:

• SaaS revenue (both B2B and B2C) does not count toward Arizona's economic nexus threshold.

• If you have no physical presence in Arizona, you may not have a TPT obligation even with significant Arizona SaaS revenue. If physical nexus exists, registration and filing are required.

California

Is SaaS taxable? No.

California does not tax SaaS. Because SaaS does not involve the transfer of tangible personal property, it is treated as a non-taxable service under California law. Neither B2B nor B2C SaaS sales count toward California's economic nexus threshold, as only taxable sales are included in the threshold calculation.

Economic nexus threshold: More than $500,000 in taxable sales during the current or previous calendar year.

What this means for your business:

• Because California counts only taxable sales toward its threshold and SaaS is non-taxable, SaaS revenue alone will not trigger economic nexus in California.

• If you sell other taxable products or services alongside SaaS, only those taxable sales count toward the $500,000 threshold.

Florida

Is SaaS taxable? No.

Florida does not impose sales tax on SaaS. The Florida Department of Revenue has confirmed through Technical Assistance Advisement 16A-014 that cloud-based software subscriptions accessed over the internet are not subject to sales tax, as no tangible property is transferred. Neither B2B nor B2C SaaS sales count toward Florida's economic nexus threshold.

Economic nexus threshold: More than $100,000 in taxable sales during the previous calendar year only. Florida uses a prior-year-only measurement period, meaning 2024 sales determine your 2025 nexus obligations.

What this means for your business:

• Because Florida counts only taxable sales and SaaS is non-taxable, SaaS revenue does not count toward the threshold.

• If SaaS is your primary offering, you likely do not trigger economic nexus in Florida.

• If you do have nexus for other reasons, you must still register and file, even with zero taxable SaaS sales.

Georgia

Is SaaS taxable? No.

Georgia does not impose sales tax on SaaS. Georgia has determined through letter rulings LR SUT-2014-05 and LR SUT-2014-01 that cloud-based subscription services accessed via the internet are not subject to sales tax, as they do not involve the exchange of tangible personal property. Neither B2B nor B2C SaaS sales count toward Georgia's economic nexus threshold.

Economic nexus threshold: More than $100,000 in gross revenue, or 200 or more separate transactions, during the current or previous calendar year.

What this means for your business:

• Because SaaS revenue does not count toward Georgia's threshold, SaaS-only sellers are unlikely to trigger economic nexus through sales volume alone.

• If nexus is triggered through other taxable sales or physical presence, you must register and file returns, even if all your SaaS sales are exempt. Zero-dollar filings apply.

Illinois

Is SaaS taxable? Generally no at the state level, but a local tax may apply in Chicago.

Illinois does not impose state sales tax on SaaS. Neither B2B nor B2C SaaS sales count toward Illinois's economic nexus threshold. However, if you have customers in the City of Chicago, the city's Personal Property Lease Transaction Tax applies to SaaS at a rate of 9%. This is a local tax, separate from Illinois state sales tax.

Economic nexus threshold: More than $100,000 in gross receipts during the current or previous calendar year. Effective January 1, 2026, Illinois removed its 200-transaction threshold. Only the $100,000 revenue threshold now applies.

What this means for your business:

• SaaS revenue does not count toward Illinois's state economic nexus threshold.

• If you do cross the threshold through other taxable sales, you must register and file state returns, even if no state tax is due on your SaaS sales.

• If any of your customers are located in Chicago, a separate local tax obligation may apply.

Minnesota

Is SaaS taxable? Generally no.

Minnesota does not impose sales tax on most SaaS products. SaaS accessed remotely over the internet is generally exempt. Note that some other digital goods, such as music downloads and e-books, are taxable in Minnesota and treated differently. Neither B2B nor B2C SaaS sales count toward Minnesota's economic nexus threshold.

Economic nexus threshold: More than $100,000 in gross revenue, or 200 or more separate transactions, in the previous 12 months. Minnesota uses a trailing 12-month measurement period, meaning threshold calculations are based on any rolling 12-month period, not just the calendar year.

What this means for your business:

• SaaS revenue does not count toward Minnesota's threshold. SaaS-only sellers are unlikely to trigger economic nexus through sales volume alone.

• If nexus is triggered through other taxable sales or physical presence, registration and filing are required. The rolling 12-month window means you should monitor your Minnesota sales on an ongoing basis.

Missouri

Is SaaS taxable? No.

Missouri does not impose sales tax on SaaS. The state defines SaaS as a service model for on-demand access to configurable computing resources, which does not include the right to use tangible personal property. Neither B2B nor B2C SaaS sales count toward Missouri's economic nexus threshold, as only taxable sales are included in the threshold calculation.

Economic nexus threshold: More than $100,000 in taxable retail sales in the previous 12 months.

What this means for your business:

• Because Missouri counts only taxable sales and SaaS is non-taxable, SaaS revenue does not count toward the threshold.

• If SaaS is your primary offering, you are unlikely to trigger economic nexus in Missouri.

• If nexus is triggered through other taxable sales or physical presence, registration and filing are required.

Nevada

Is SaaS taxable? No.

Nevada does not impose sales tax on SaaS. Because no tangible property is transferred in a SaaS transaction, it falls outside the scope of Nevada's sales tax. Neither B2B nor B2C SaaS sales count toward Nevada's economic nexus threshold.

Economic nexus threshold: More than $100,000 in sales, or 200 or more separate transactions, during the current or previous calendar year.

What this means for your business:

• SaaS revenue does not count toward Nevada's threshold. SaaS-only sellers are unlikely to trigger economic nexus through sales volume alone.

• If nexus is triggered through other taxable sales or physical presence, you must register and file returns.

• Zero-dollar filings apply when all sales are for non-taxable SaaS.

Oklahoma

Is SaaS taxable? No.

Oklahoma does not impose sales tax on SaaS. Because no tangible property is transferred to the customer, SaaS falls outside Oklahoma's taxable categories. Neither B2B nor B2C SaaS sales count toward Oklahoma's economic nexus threshold, as the state measures only taxable merchandise sales.

Economic nexus threshold: More than $100,000 in taxable merchandise sales during the current or previous calendar year.

What this means for your business:

• Because Oklahoma counts only taxable sales and SaaS is non-taxable, SaaS revenue does not count toward the threshold.

• SaaS-only sellers are unlikely to trigger economic nexus in Oklahoma.

• If nexus is triggered through other taxable sales or physical presence, registration and filing are required.

Virginia

Is SaaS taxable? No.

Virginia does not tax SaaS. Because SaaS is considered a service rather than a sale of tangible personal property, it is non-taxable under Virginia law. Neither B2B nor B2C SaaS sales count toward Virginia's economic nexus threshold.

Economic nexus threshold: More than $100,000 in gross revenue from retail sales, or 200 or more separate retail transactions, during the current or previous calendar year.

What this means for your business:

• SaaS revenue does not count toward Virginia's threshold.

• SaaS-only sellers are unlikely to trigger economic nexus through sales volume alone.

• If nexus is triggered through other taxable sales or physical presence, you must register for a Virginia sales tax permit and file regular returns, even if all your SaaS sales are exempt.

• Zero-dollar filings are expected and necessary to stay compliant.

Quick Reference: SaaS Taxability and Nexus Thresholds by State

Key Takeaways

• SaaS is non-taxable in all ten states covered in this article, with one exception: Arizona may impose TPT on SaaS if your business has physical nexus in that state. Chicago, Illinois, also applies a local Personal Property Lease Transaction Tax on SaaS.

• Neither B2B nor B2C SaaS sales count toward the economic nexus threshold in any of these ten states.

• SaaS-only sellers are generally unlikely to trigger economic nexus through sales volume alone in these states. However, physical presence, such as employees or contractors in a state, creates nexus regardless of sales volume.

• If your business does cross a threshold through other taxable sales or physical presence, you are required to register and file sales tax returns, even if no tax is due on your SaaS sales. These are called zero-dollar filings.

• When Kintsugi shows nexus exposure alongside a $0.00 tax liability, that is normal. It means your account is tracking your compliance obligations accurately.

If you have any questions about your specific account or need help understanding your nexus exposure, reach out to our support team. We are here to help.

Disclaimer: Tax laws change frequently. The information in this article reflects guidance available as of early 2026. Always verify current rules with the applicable state Department of Revenue or consult a licensed tax professional for advice specific to your business.

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