States eliminating economic nexus transaction thresholds

This post has been updated; it was originally published in February 2023.

More and more states are moving away from their 200-transaction economic nexus threshold — a baseline that establishes an obligation to collect and remit sales tax for remote sellers. Many states have used a transaction threshold since enacting economic nexus laws in the wake of the U.S. Supreme Court decision in South Dakota v. Wayfair, Inc. (June 2018). This shift in economic nexus rules could simplify sales tax compliance for many small and midsize businesses.

• As of July 1, 2025, 15 states and counting have eliminated the 200-transaction threshold for economic nexus.
• There’s a transaction threshold in 16 states, Puerto Rico, and Washington, D.C. 
• Illinois will remove its transaction threshold on January 1, 2026.

State economic nexus laws require businesses with no physical presence in the state to register for sales tax once their economic activity in the state reaches a certain threshold. Every state with a sales tax has an economic nexus law, and following the example of South Dakota, the first state to enact economic nexus, many states use these economic nexus thresholds:

• More than $100,000 in sales in the current or previous calendar year; or 
• At least 200 separate transactions in the state in the current or previous calendar year

But that’s changing.

As of July 1, 2025, 15 states — including South Dakota — have cut the 200-transaction threshold from their economic nexus laws.

As of July 1, 2025, the following states have eliminated their economic nexus transaction threshold:

Other states will join this list in the coming years. In fact, Illinois is removing its remote seller nexus transaction threshold effective January 1, 2026.

*There’s no statewide sales tax in Alaska. The Alaska Remote Seller Sales Tax Commission, which administers remote sales tax for participating local governments, eliminated the transaction threshold.

These 13 states never created a transaction threshold in the first place:

Though the needle does seem to be moving toward sales tax simplification for remote sellers with the 200-transaction rule removal, sales tax thresholds remain complex. 

Broadly speaking, there are six different categories of economic nexus thresholds as of July 1, 2025:

• $100,000 (24 states)
• $100,000 or 200 transactions (16 states, Puerto Rico, and the District of Columbia)
• $100,000 and 100 transactions (1 state)
• $250,000 (2 states)
• $500,000 (2 states)
• $500,000 and 100 transactions (1 state)

Some sales tax thresholds include only taxable sales of tangible personal property (TPP); others are based on gross sales, meaning even businesses that only make exempt sales can also establish economic nexus. Thresholds in some states include services in addition to TPP. 

Selling through a marketplace adds another layer of complexity, because some thresholds include sales made through a marketplace that collects and remits tax on behalf of the seller, while others don’t.

Finally, states base remote seller nexus sales tax thresholds on a variety of different time periods:

• The prior or current calendar year
• The prior calendar year
• The preceding 12 months
• The preceding 4 calendar quarters
• The preceding 4 sales tax quarters
• Other time periods

For businesses, especially businesses selling a variety of products into numerous states, figuring out where and whether nexus exists is a difficult, time-consuming task. 

Furthermore, businesses must be prepared to start collecting sales tax as soon as they cross an economic nexus threshold, as required in approximately 12 states and the District of Columbia.

No wonder sales tax experts (and businesses) are calling for increased simplification and uniformity.

“The biggest burden on small businesses and remote sellers is lack of uniformity and consistency between all the states,” Diane Yetter, President of Sales Tax Institute, told the United States Senate Committee on Finance on June 14, 2022. “States should make every effort to reduce unnecessary complexity and variations of law that create avoidable burdens on sellers.” 

The transaction threshold is particularly burdensome for small businesses, according to Yetter: “A third of our clients with sales under $50,000 in a state in the last year were required to register solely by exceeding the 200-transaction threshold.”

Yetter praised the states that have recognized — and removed — “the undue burden of the 200-transaction threshold,” and she encouraged other states to do the same. “Uniformity of economic thresholds, definitions, and compliance will have the greatest impact on reducing the burdens on small businesses and remote sellers.”

The Streamlined Sales Tax Governing Board also recommends member states do away with the transaction threshold. Most states that still use the threshold are SST states.

“There’s a big initiative among the SST states to remove and update the transaction threshold,” says Chad Paulson, Manager of SST Government Affairs at Avalara. “It’s a burden for small sellers who do very low-dollar transactions to collect and remit in all these states where they don’t exceed the dollar threshold.”

If any other states decide to eliminate their economic nexus transaction thresholds, the Avalara Tax Desk will let you know. In the meantime, here’s what you need to know about nexus.

An economic nexus threshold for sales tax is the level of economic activity a business must have with a state for the state to require the business to collect and remit sales tax.

The U.S. Supreme Court decision in South Dakota v. Wayfair, Inc. (June 21, 2018) enabled states to tax remote sales and enforce economic nexus laws. Prior to the Wayfair decision, states could only require businesses with a physical presence in the state to collect sales tax.

The 200-transaction threshold is a remote seller sales tax nexus rule. It requires a business to register for sales tax once it has made 200 separate sales transactions in the state in a specific time period (usually the current or previous calendar year).

Alaska eliminated the transaction threshold on January 1, 2025. Utah is removing the transaction effective July 1, 2025.

Removing the transaction threshold can simplify sales tax compliance for some businesses. A company that makes more than 200 transactions but less than $100,000 in sales in a state that eliminates its transaction threshold may be able to cease collecting and remitting sales tax in the state.

It’s best practice for businesses to consult with a trusted tax advisor before deregistering for sales tax. Some states have trailing nexus laws that require a business to continue collecting and remitting sales tax even after nexus-creating activities have ceased.