The Highlights
- Alaska and Utah are the two states to modify their economic nexus thresholds this year.
- Alaska and Utah will now base economic nexus solely on $100,000 in gross annual sales, eliminating the 200-transaction threshold.
- You can ensure compliance with proper tax planning, monitoring, and prompt registration and collection.
The landmark 2018 Wayfair judgment paved the way for states to impose sales tax collection obligations on out-of-state businesses solely based on their economic activity. Today, all 45 states with a general sales tax have imposed economic nexus laws in some form.
2025 saw a significant shift in terms of economic nexus thresholds by two states: Alaska and Utah, and more may follow suit in 2026. Learn more about your sales tax registration requirements in 2025 with this RJM Tax Exemption blog.
Major Economic Nexus Rule Changes in 2025
2025 saw two key changes to economic nexus thresholds:
- Alaska: Alaska has no statewide sales tax; however, local jurisdictions are free to impose taxes. The Alaska Remote Seller Sales Tax Commission elected to remove the 200-transactions threshold in the state. Now, an economic nexus can solely be triggered if a business crosses $100,000 in gross sales in participating areas.
- Utah: Utah has also elected to remove its 200-transaction threshold from its economic nexus requirements. Remote sellers and marketplace facilitators now establish a nexus only if they cross $100,000 in gross revenue from sales in the state.
A Broader Trend
These were the only two states to enact notable economic nexus rule changes in 2025. However, they’re part of a larger group of states that have already modified their thresholds to omit transaction limits. This includes Colorado, Indiana, Louisiana, Maine, Massachusetts, and more.
Potential Changes in 2026
Illinois is currently the only state to have announced a threshold modification for 2026. In terms of other economic nexus threshold changes by states, we’ll likely have to wait until mid-2026 to see more announcements.
Effective January 1, 2026, Illinois will also remove the 200-transaction threshold and shift to the $100,000 gross receipts criterion for triggering an economic nexus.
How to Stay Compliant in 2026 and Beyond
Track Your Sales Regularly
Better sales tax compliance in the face of the 2025 economic nexus rules is all about diligence. Most states now assess economic nexus based on sales activity in the current or previous calendar year. Reviewing your data monthly or quarterly will help you identify when you’re approaching a threshold and need to opt for sales tax registration.
Remember to focus on gross sales figures that include both taxable and exempt transactions involving tangible personal property and digital products. Depending on your state, sales made through marketplace facilitators such as Amazon may also count toward your threshold.
Register Promptly
Under the 2025 economic nexus rules, it’s critical to register promptly once you exceed a state’s threshold. Registration needs to happen without delays to avoid accumulating back taxes and penalties. If you’re unfamiliar with sales tax registration requirements in 2025, contact a tax expert for a personalized tax plan.
Collect and Remit Sales Tax Accurately
Economic nexus thresholds vary by state, and so do rates. Always apply the correct rate based on the county, city, or special district in which your business has a nexus. Your invoices should clearly separate sales tax if/when required by state rules. Finally, your sales tax filing frequency will vary based on sales volume. This can be monthly, quarterly, or annual.
Exemption Strategies You Can’t Miss
Leverage Common State Exemptions
Once you’ve registered under the 2025 economic nexus rules, you can apply exemptions correctly to reduce your taxable sales. A few common exemptions include:
- Sales for resale (provided you have a valid resale certificate), commonly used by wholesalers in states like California.
- Sales to exempt entities like governments, schools, or qualified nonprofits.
- Product-specific exemptions for categories like prescription drugs or certain medical devices. Depending on your state, categories like unprepared groceries may also be exempt.
Plan Strategically for Exemptions
If you’re operating a business that relies/potentially could rely heavily on exempt transactions under the 2025 economic nexus rules, you could benefit from proactive certificate collection.
If you’re a multi-state seller, prioritize the MTC uniform certificate wherever it’s accepted to reduce filing delays and overhead. This certificate is accepted in approximately 36 states with resale exemptions in place.
Target States with Favorable Threshold Inclusions
Going over economic nexus thresholds by state is challenging but can reveal incredible opportunities. For example, a few states offer nexus advantages for sellers that rely heavily on exemptions. Vermont is a notable case here, exempting sellers from registration if they sell only tax-exempt items into the state.
Similarly, some states, such as Arkansas and Florida, will base their threshold only on taxable sales rather than gross or retail sales. Based on 2025 economic nexus rules, it could be worth adjusting your marketing or shipping strategies to prioritize lower-burden states when feasible.
Conduct Periodic Nexus Studies
If sales tax registration requirements in 2025 are anything to go by, it’s absolutely worth conducting regular nexus studies to confirm where your obligations exist.
Why?
If your sales drop below thresholds in prior years, you could qualify for deregistration in certain states. For example, a business with annual sales under $100,000 in Alaska that processes over 200 transactions annually could deregister and save on ongoing filing costs and other fees.
Simplify Your Economic Nexus Landscape with RJM
With 2025’s economic nexus rules behind us, now’s the best time to plan ahead and simplify your tax needs with a top-rated tax expert. RJM Tax Exemption is rated #1 on Trustpilot and is the go-to choice for multi-state ecommerce businesses in the country. Get a free consultation and find out how we can help your business today.
Frequently Asked Questions
Do exempt sales count towards economic nexus thresholds?
Generally, yes. However, economic nexus thresholds do vary by state. Most states generally base their threshold on gross sales, which include exempt transactions.
How can I best manage sales tax exemptions once I have nexus?
Be proactive in collecting valid exemption and resale certificates upfront from qualifying customers. Using forms like the MTC certificate (where valid).
What are the latest changes to economic nexus rules in 2025?
Alaska and Utah are the only two states to modify their economic nexus thresholds this year, dropping the 200-transaction criterion in favor of the $100,000 annual sales threshold.
