{"id":1502,"date":"2025-07-30T13:50:19","date_gmt":"2025-07-30T13:50:19","guid":{"rendered":"https:\/\/leyton.majjane.agency\/us\/insights\/articles\/affiliate-nexus-tax-risk-in-2025\/"},"modified":"-0001-11-30T00:00:00","modified_gmt":"-0001-11-29T22:00:00","slug":"affiliate-nexus-tax-risk-in-2025","status":"publish","type":"article","link":"https:\/\/leyton.com\/us\/insights\/articles\/affiliate-nexus-tax-risk-in-2025\/","title":{"rendered":"Affiliate Nexus & Tax Risk in 2025"},"content":{"rendered":"

As influencer marketing and affiliate relationships continue to power modern commerce, affiliate nexus tax risk<\/strong> has become a growing concern for state tax authorities<\/strong>. <\/p>\n

These agencies are paying closer attention to how partnerships, especially those crossing state lines can trigger unexpected tax obligations<\/strong>.<\/p>\n

Understanding Affiliate Nexus in 2025<\/h2>\n

In 2025, brands that partner with influencers or affiliates, particularly those operating across state lines<\/strong>, face increasing exposure to sales tax<\/a><\/strong> and income tax obligations<\/strong>, regardless of having a physical footprint in the state.<\/p>\n

Roughly 25 states enforce<\/strong> affiliate nexus rules<\/strong>, 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.<\/p>\n

Click-Through vs. Affiliate Nexus<\/h2>\n

A narrower group of 16 states also apply click-through nexus<\/strong>, triggered when in-state affiliates use referral links to generate customer traffic and revenue for a business.<\/p>\n

Notable examples include Connecticut (at $100K), Georgia ($50K), and Pennsylvania, which applies nexus for any compensated referral.<\/p>\n

New Thresholds: States Getting Stricter<\/h2>\n

What\u2019s more, several states, including California and South Carolina, eliminated the 200-transaction economic nexus threshold effective July 1, 2025. <\/p>\n

This policy shift makes affiliate and influencer relationships an even more prominent trigger for nexus<\/strong>. Especially for companies that no longer meet economic thresholds based on volume but still maintain substantial referral-based sales activity within a state.<\/p>\n

How Influencers Can Trigger Nexus on Their Own<\/h2>\n

Compounding this exposure are long-standing agency nexus principles<\/strong>, most notably outlined in Tyler Pipe Industries v. Washington<\/em> (1987).<\/p>\n

Under these rules, a business can establish nexus <\/strong>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.<\/p>\n

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<\/strong> for that brand in New York, even if the company has no direct operations there.<\/p>\n

Why Affiliate Nexus Tax Risk Is a Compliance Priority<\/h2>\n

The risks of non-compliance<\/strong> are real. Once nexus is triggered, businesses may face back taxes, penalties, interest, and limitations on access to voluntary disclosure relief <\/strong>if they delay addressing their obligations.<\/p>\n

To mitigate these risks in 2025 and beyond, companies should:<\/p>\n

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