Economic nexus means a state can require you to collect its sales tax based purely on how much you sell into that state, with no office, warehouse or employee there. Cross the state’s threshold and the obligation attaches. In 2026 the thresholds are moving, and the direction of travel favors small sellers: states are dropping the transaction-count trigger that used to catch businesses doing a few thousand dollars of low-priced orders.
Where the rule came from
Before 2018, a state generally could not require an out-of-state seller to collect sales tax without physical presence. That changed with South Dakota v. Wayfair, Inc., decided by the Supreme Court on June 21, 2018.
The South Dakota law at issue applied to sellers with more than $100,000 in sales into the state or 200 or more separate transactions. The Court upheld it, and within two years nearly every state with a sales tax had enacted something similar. The $100,000 or 200 transactions pairing became the template because it was the version that survived review.
Why the 200-transaction half was a problem
The dollar threshold is a proxy for meaningful business activity. The transaction count is not.
A seller shipping $14 phone cases could hit 200 separate transactions in a state on roughly $2,800 of revenue. That triggered a registration, a filing obligation, and in many cases a monthly or quarterly return for the rest of the business’s life, over an amount of tax that cost more to compute than to remit.
Revenue departments worked out that the tax collected from those sellers barely covered the cost of processing their returns, and several states moved to drop the count.
What changed by 2026
According to Avalara’s tracking, updated August 3, 2026, seventeen states had eliminated the 200-transaction threshold for economic nexus as of August 1, 2026. A transaction threshold still exists in fourteen states, Puerto Rico and Washington, D.C. Thirteen states never adopted one at all.
Illinois is the most recent significant change and it is documented in the state’s own materials. Illinois Department of Revenue Informational Bulletin FY 2026-12 states that on or after January 1, 2026, the only threshold determining whether a remote retailer or marketplace facilitator is subject to Illinois retailers’ occupation tax is whether the retailer makes $100,000 or more in cumulative gross receipts. The bulletin adds directly: “The 200-transaction threshold no longer applies.”
South Dakota, the state that started this, dropped its own transaction count as well. Its Department of Revenue’s remote seller bulletin, dated August 2025, describes the obligation as attaching to a business with more than $100,000 in gross sales into South Dakota in the previous or current calendar year, with no transaction count mentioned.
The thresholds that are not $100,000
Most states use $100,000. Two of the largest markets do not, and both use dollars only.
California sets it at $500,000. The California Department of Tax and Fee Administration describes the trigger as applying if, during the preceding or current calendar year, total combined sales of tangible personal property in California or for delivery in California by the retailer and all related persons exceed $500,000. There is no transaction count.
Texas also uses $500,000. Texas Comptroller Publication 94-108 sets the trigger at $500,000 in total Texas revenue in the preceding twelve calendar months, again with no transaction count. Note the difference in measurement window: California measures by calendar year, Texas by rolling twelve months. Those produce different answers for a seasonal business.
The part that lets most sellers off the hook
Marketplace facilitator laws. A marketplace facilitator is a business that owns, operates or otherwise controls a physical or electronic marketplace, facilitates the sale of a third-party seller’s products, and collects payment from the purchaser. Illinois Department of Revenue Bulletin FY 2026-12 applies the same $100,000 gross receipts test to remote retailers and marketplace facilitators alike, which is the common pattern.
Most states now require the facilitator, not the seller, to collect and remit sales tax on sales it facilitates. In practice, if all your revenue comes through Amazon, Walmart, eBay and similar marketplaces, the marketplace is generally handling collection on those sales.
Two cautions. First, the rule is not uniform. A handful of states allow the collection obligation to shift back to a registered marketplace seller by written agreement, so read your own states rather than assuming the marketplace has it covered everywhere. Second, and more commonly relevant, marketplace-facilitated sales may still count toward your own threshold in some states even when you are not collecting on them. That can create a registration and zero-return filing obligation without any tax due.
A worked example
Take a seller doing $2.6 million across Amazon, eBay and their own Shopify store, with the Shopify store at 15% of revenue, or $390,000.
In Illinois, as of January 1, 2026, the question is whether cumulative gross receipts into the state reach $100,000. Say Illinois represents 4% of revenue, which is $104,000 in total, of which $15,600 came through Shopify. Amazon and eBay collect on their own portions. Whether the $104,000 or the $15,600 is the figure measured against the threshold is a state-specific determination, and it is exactly the question to put to a professional rather than to a spreadsheet.
In California, 12% of revenue is $312,000, comfortably under the $500,000 trigger. Under the old 200-transaction rule the direct channel alone would likely have crossed it on transaction count. This is the practical effect of the change.
In Texas, the rolling twelve-month window means a seller who had a large Q4 can cross in February and drop back below in July, which is a different compliance shape than a calendar-year test.
What to actually do about it
Three things, none of which require a consultant to start.
First, pull a sales-by-state report split by channel for the trailing twelve months. Direct sales and marketplace sales in separate columns, because the two are treated differently and blending them makes the analysis useless. Sellers who cannot produce that report from their accounting system usually need the channel data posted at a level that supports it, which is one of the reasons multi-channel accounting tools such as ConnectBooks exist.
Second, list the states where either column, or the combined total, is within 25% of the applicable threshold. Those are your watch list, and they are where the next twelve months of growth creates an obligation.
Third, take that list to a sales tax professional. Registration timing, back-tax exposure, voluntary disclosure agreements and whether marketplace sales count toward your threshold in a given state are all state-specific determinations with real consequences for getting them wrong.
The rules will keep moving
Seventeen states have dropped the transaction test and more are expected to follow. Thresholds get raised, measurement windows get changed, and marketplace facilitator rules get amended.
Which means any figure in an article like this one carries a date and nothing more. Every number above was checked in August 2026 against the states’ own publications or Avalara’s tracking. Before you act on any of it, check the current version at the source, because the state’s website is the only citation that matters when someone asks why you did not register. None of this is tax advice, and the specifics of your situation belong with a sales tax professional or your state’s department of revenue.
