As influencer marketing and affiliate relationships continue to power modern commerce, affiliate nexus tax risk has become a growing concern for state tax authorities.
These agencies are paying closer attention to how partnerships, especially those crossing state lines can trigger unexpected tax obligations.
Understanding Affiliate Nexus in 2025
In 2025, brands that partner with influencers or affiliates, particularly those operating across state lines, face increasing exposure to sales tax and income tax obligations, regardless of having a physical footprint in the state.
Roughly 25 states enforce affiliate nexus rules, which apply when an out-of-state business works with an in-state individual, such as an influencer or blogger, who earns commissions for driving sales.
Click-Through vs. Affiliate Nexus
A narrower group of 16 states also apply click-through nexus, triggered when in-state affiliates use referral links to generate customer traffic and revenue for a business.
Notable examples include Connecticut (at $100K), Georgia ($50K), and Pennsylvania, which applies nexus for any compensated referral.
New Thresholds: States Getting Stricter
What’s more, several states, including California and South Carolina, eliminated the 200-transaction economic nexus threshold effective July 1, 2025.
This policy shift makes affiliate and influencer relationships an even more prominent trigger for nexus. Especially for companies that no longer meet economic thresholds based on volume but still maintain substantial referral-based sales activity within a state.
How Influencers Can Trigger Nexus on Their Own
Compounding this exposure are long-standing agency nexus principles, most notably outlined in Tyler Pipe Industries v. Washington (1987).
Under these rules, a business can establish nexus if an in-state representative, like a paid influencer, helps create or maintain a market presence, regardless of whether the business owns property or employs staff in the state.
For example, a New York-based influencer who promotes a product and drives meaningful conversions on behalf of a national brand may effectively create nexus for that brand in New York, even if the company has no direct operations there.
Why Affiliate Nexus Tax Risk Is a Compliance Priority
The risks of non-compliance are real. Once nexus is triggered, businesses may face back taxes, penalties, interest, and limitations on access to voluntary disclosure relief if they delay addressing their obligations.
To mitigate these risks in 2025 and beyond, companies should:
- Track affiliate and influencer activity by state and revenue contribution
- Clarify responsibilities in influencer and affiliate agreements, especially around tax collection and compliance
Leyton’s Support for Tax Compliance in the Creator Economy
At Leyton, we help businesses identify exposure, assess compliance needs, and implement multi-state tax strategies that align with modern sales and marketing models.
If you’re unsure whether your influencer program or affiliate network is creating tax nexus, our team can guide!
Contact one of our experts to get get a customized risk analysis and a compliance plan.
