US Illinois ends transaction nexus threshold sales tax 2026

January 2026: 200 transactions per annum remote seller sales tax registration threshold end

Illinois Governor JB Pritzker is completing legislation that withdraws one of the two thresholds for out-of-state / foreign or remote sellers to trigger state sales tax collection obligations. From 1 January 2026, only if non-resident sellers exceed $100,000 sales to Illionois customers will they have to begin charging state sales tax.

South Dakota vs Wayfair opened up remote seller sales tax obligations

The two-threshold test followed the 2018 South Dakota vs Wayfair ruling which introduced the economic nexus test to enable states to impose sales tax collections. This came with the annual sales and number of transactions test. Since then, over 40 states have introduced economic nexus. But increasingly, the transactions threshold has been diluted or withdrawn. States which have withdrawn their thresholds include:

• Utah, sales only July 2025
• North Carolina, sales only since 2024
• Wyoming, sales only since 2024
• South Dakota, sales only since July 2023
• Maine, sales only from 1 January 2021
• Wisconsin, sales only from 20 February 2021
• Colorado, sales only since 1 April 2019
• Iowa, sales only since 1 July 2019
• North Dakota, sales only since 1 January 2019

End of two-threshold sales tax nexus test

Under current Illinois law, a remote retailer—defined as a seller without a physical presence in Illinois—may establish economic nexus and incur an obligation to collect and remit Illinois Retailers’ Occupation Tax (ROT) and Use Taxunder the Illinois Use Tax Act (35 ILCS 105/1 et seq.) and the Retailers’ Occupation Tax Act (35 ILCS 120/1 et seq.), if, during the preceding 12-month period, it meets either of the following statutory thresholds:

1. The remote seller has generated $100,000 or more in cumulative gross receipts from the sale of tangible personal property to purchasers in Illinois; or

2. The remote seller has engaged in 200 or more separate transactions for the sale of tangible personal property delivered into Illinois.

These thresholds were established following the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc., 585 U.S. ___ (2018), and implemented in Illinois via Public Act 101-0009, effective June 28, 2019, codified in 35 ILCS 105/2dand 35 ILCS 120/2f.

However, effective January 1, 2026, pursuant to recent legislative amendments, Illinois will revise its economic nexus standard by eliminating the 200-transaction threshold. Under the revised nexus provisions, a remote seller will be deemed to have established economic nexus with Illinois solely based on meeting or exceeding the $100,000 gross receipts threshold in the preceding 12-month period. This change aligns Illinois with other jurisdictions that have streamlined nexus standards by removing transaction count thresholds in favor of a single sales-based threshold.

Remote retailers meeting the $100,000 threshold will continue to be required to collect and remit Illinois ROT and Use Tax via the destination-based sourcing rules under the Leveling the Playing Field for Illinois Retail Act, effective 1 January 2021.

Businesses currently tracking transaction counts for nexus determination in Illinois should update their compliance procedures to reflect this change before the January 1, 2026 effective date.

US Sales Tax rates and selling thresholds