Illinois updated its economic nexus rules beginning January 1, 2026. The state removed the 200-transaction threshold, meaning businesses only trigger nexus if they exceed $100,000 in sales to Illinois customers during a 12-month period.
This change simplifies compliance for many remote sellers but requires businesses to monitor their total revenue from Illinois sales more closely.
What Is Economic Nexus?
Economic nexus is a rule that requires businesses to collect and remit sales tax in a state even if they do not have a physical presence there.
These rules were widely adopted after the 2018 Supreme Court decision in South Dakota v. Wayfair, which allowed states to require tax collection based on economic activity instead of physical presence.
Most states determine economic nexus using thresholds such as:
- Total sales revenue in the state
- Number of transactions with customers in the state
Illinois previously used both metrics, but that changed in 2026.
What Changed in Illinois in 2026?
Beginning January 1, 2026, Illinois simplified its economic nexus standard by eliminating the 200-transaction test.
Before 2026, a remote seller created nexus if they had either:
- $100,000 in sales to Illinois customers, OR
- 200 separate transactions shipped into Illinois.
After the rule change, the transaction threshold no longer applies.
This means businesses will only establish nexus if they meet the sales-based threshold.
New Illinois Nexus Threshold (2026)
Illinois now uses a single economic nexus standard:
| Threshold | Requirement |
| $100,000 in gross sales | Nexus triggered |
| 200 transactions | No longer applies |
If a business exceeds $100,000 in Illinois sales during the previous 12 months, it must:
- Register with the Illinois Department of Revenue
- Collect Illinois sales tax
- File sales tax returns
The threshold applies to:
- Remote retailers
- Marketplace facilitators
- Some service providers selling to Illinois customers.
How the New Illinois Nexus Rules Work
Businesses must evaluate their nexus status quarterly using a rolling 12-month lookback period.
Step 1: Monitor Illinois sales
Track total gross receipts from customers located in Illinois.
Step 2: Determine if the $100,000 threshold is met
If sales exceed $100,000 within the last 12 months, nexus is triggered.
Step 3: Register and begin collecting sales tax
Once nexus is established, businesses must:
- Register with the Illinois Department of Revenue
- Begin collecting state and local sales tax
- File regular tax returns
Step 4: Continue monitoring annually
If sales later fall below $100,000, the business may no longer be required to collect tax but must continue monitoring activity.
Example Scenarios
Example 1: Ecommerce retailer
An online retailer ships products nationwide.
Sales into Illinois during the past year:
- 1,200 transactions
- $75,000 total revenue
Result: No nexus because revenue does not exceed $100,000, even though the transaction count is high.
This scenario is one of the main reasons Illinois removed the transaction threshold.
Example 2: Growing online brand
A direct-to-consumer brand ships orders to Illinois customers.
Annual Illinois sales:
- $125,000
- 90 transactions
Result: Economic nexus is triggered because sales exceed $100,000, even though transactions are low.
The company must register and collect Illinois sales tax.
Why the Rule Change Matters
The removal of the transaction threshold simplifies compliance for many small businesses. Previously, companies with many low-value transactions could trigger nexus even if total revenue was relatively small. Now, sellers only need to track gross sales revenue when evaluating Illinois nexus.
This change also aligns Illinois with other states that have moved toward sales-only nexus thresholds.
Common Mistakes Businesses Make
1. Ignoring marketplace sales
Some businesses assume marketplaces handle everything. However, companies must still monitor total sales activity into Illinois to determine nexus.
2. Failing to monitor thresholds quarterly
Illinois requires businesses to evaluate the previous 12-month sales period regularly. Missing this review can result in late registration.
3. Registering unnecessarily
Businesses that previously met the 200-transaction rule but not $100,000 in sales may no longer need to collect Illinois sales tax.
4. Poor documentation
Businesses should maintain accurate records of:
- Customer location
- Sales amounts
- Shipment destinations
Incomplete records can lead to tax issues during audits.
Frequently Asked Questions
What is the Illinois economic nexus threshold in 2026?
Illinois economic nexus is triggered when a business exceeds $100,000 in sales to Illinois customers within a 12-month period.
Does Illinois still use the 200-transaction threshold?
No. The 200-transaction rule was eliminated starting January 1, 2026.
Do marketplace sales count toward the threshold?
Marketplace platforms often collect sales tax on behalf of sellers, but businesses should still monitor total sales activity.
How often must businesses review their nexus status?
Businesses should evaluate their Illinois sales quarterly using a rolling 12-month period.
How RJM Tax Exemption Supports Online Sellers
If your business sells to customers in Illinois, understanding economic nexus rules is essential to avoiding penalties and maintaining compliance. RJM Tax Exemption helps businesses manage sales tax compliance, exemption certificates, and multi-state tax obligations. Contact RJM Tax Exemption today to ensure your business stays compliant with the latest tax regulations.
