What creates state income-tax nexus for my business?

Two things: physical presence — an office, employees, inventory, or property in the state — or economic nexus, where enough sales into the state trigger a filing obligation even with no physical footprint. A single remote employee working from a state generally creates physical-presence nexus there.

Does one remote employee in another state create nexus?

Almost always, yes. An employee performing work from within a state is physical presence, which creates income-tax nexus and usually payroll-withholding and unemployment-tax obligations too. This is the most common way growing businesses accidentally acquire filing duties in new states.

Does Florida have a state income tax on my business?

Florida has no personal income tax, so pass-through owners (S-corp, partnership, sole proprietor) pay no Florida tax on business income. Florida does levy a 5.5% corporate income tax on C-corporations. But operating from Florida does not exempt you from filing in other states where you have nexus.

What is Public Law 86-272 and does it still protect me?

P.L. 86-272 is a federal law that bars a state from taxing your income if your only activity there is soliciting orders for tangible goods that are shipped from outside the state. It does not protect sales of services or digital products, and many states now treat website interactions as exceeding its protection — so rely on it cautiously.

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State & Local Tax (SALT)

State Income-Tax Nexus for Remote and Multi-State Businesses

Hiring a remote employee in another state, opening a warehouse, or crossing an economic threshold can force you to register and file an income-tax return there. Know where you have nexus before the notices arrive.

SMAART Tax Team

February 10, 2026

6 min read