Starting January 1, 2026, Illinois will remove the 200-transaction threshold from its economic nexus standard for remote sellers. This significant change in the Illinois Sales Tax law simplifies the compliance landscape for businesses selling into the state without a physical presence.
What Is Changing in the Illinois Sales Tax Economic Nexus Rules?
Under the current law, remote sellers must register and collect Illinois Sales Tax if they meet either of the following thresholds:
- $100,000 in gross sales into Illinois, or
- 200 separate transactions delivered to Illinois customers.
Beginning January 1, 2026, the second condition- the 200-transaction threshold – will be eliminated. Remote sellers will only be required to register and collect tax if they surpass the $100,000 gross receipts threshold, regardless of how many individual transactions they process.
Why Is This Change Important?
The removal of the transaction threshold is a strategic move toward simplification and greater equity in tax enforcement. Here’s why it matters:
- Reduces the compliance burden on small and midsize remote sellers who might meet the 200-transaction threshold with low-dollar sales.
- Eliminates confusion by aligning with other states that have already adopted revenue-only nexus thresholds post-South Dakota v. Wayfair.
- Helps businesses allocate resources more efficiently, focusing only on jurisdictions where they have meaningful economic activity.
According to both the Sales Tax Institute, Illinois is following a growing national trend that promotes simpler, revenue-based tax compliance standards.
Who Will Be Affected?
The change applies to:
- Out-of-state (remote) sellers making sales to Illinois residents.
- Marketplace facilitators that previously tracked both revenue and transaction volume.
- High-volume, low-dollar retailers, such as those selling inexpensive goods online in bulk.
Example Scenario:
A remote seller processing 250 transactions totaling only $5,000 in revenue would currently be required to collect Illinois Sales Tax. But starting in 2026, that same seller would not have nexus unless their gross sales exceed $100,000.
What Businesses Should Do Now
Although the change is not effective until 2026, businesses should start preparing:
- Review your Illinois sales activity to assess if you’re relying on the transaction count to trigger nexus.
- Update tax systems and ERP software to remove transaction tracking for Illinois nexus analysis.
- Communicate with your tax advisor or provider to ensure your compliance strategy reflects this upcoming change.
- Monitor other states for similar simplifications as part of broader tax modernization trends.
Illinois Sales Tax Simplified
The elimination of the 200-transaction threshold marks a meaningful evolution in Illinois Sales Tax law. It eases burdens on remote sellers, promotes fairness, and better aligns with modern e-commerce realities.
Effective January 1, 2026, only those with more than $100,000 in annual sales into Illinois will be required to collect and remit sales tax- regardless of how many orders they fulfill.
For full details, refer to the official updates from the Sales Tax Institute.
Get Ahead of the 2026 Change
Don’t wait until 2026. Prepare your business now.
Whether you’re a remote seller, marketplace facilitator, or compliance manager, proactive planning is key. At VAT IT Compliance, we help businesses like yours stay ahead of evolving nexus laws with expert guidance and tailored solutions.
👉 Contact us today to:
- Assess your Illinois Sales Tax exposure
- Review your current nexus strategy
- Automate compliance workflows for future changes
Get in touch with our team to schedule a free consultation.
Stay compliant. Stay confident. Stay ahead.
