The 200-transaction economic nexus rule is gradually disappearing, which could reduce sales tax obligations for some smaller remote sellers.
Illinois removed its 200-transaction threshold on January 1, 2026, leaving a $100,000 gross-receipts threshold for remote retailers. New Jersey is considering a similar change, although its existing 200-transaction rule still applies as of August 2026.
For businesses that registered solely because they exceeded 200 transactions, this raises an important question: Can you now cancel your sales tax registration?
Potentially, but you need to check for other forms of nexus first.
Why Fast-Growing Shopify Stores Face More Sales Tax Risk
Following the 2018 South Dakota v. Wayfair decision, many states introduced economic nexus thresholds based on either:
- A certain amount of sales into the state, or
- 200 separate transactions
The transaction test has been particularly problematic for ecommerce businesses selling inexpensive products.
For example, an online seller making 210 orders worth $30 each could have only $6,300 in state sales but still trigger nexus under a 200-transaction rule. Some states are now moving away from this approach.
States are increasingly removing 200-transaction economic nexus tests, meaning some remote sellers will no longer create sales tax nexus simply because they process a high number of low-value orders.
What Changed in Illinois in 2026?
Illinois eliminated its 200-transaction economic nexus test effective January 1, 2026.
Previously, a remote retailer could trigger economic nexus through either:
- $100,000 or more in qualifying Illinois gross receipts, or
- 200 or more qualifying transactions.
From 2026, the transaction-count test has been removed, leaving the $100,000 gross-receipts test for remote retailers.
Illinois: Before and After
| Illinois Economic Nexus | Through 2025 | From 2026 |
| Gross receipts | $100,000 | $100,000 |
| Transactions | 200 | Removed |
This is particularly significant for high-volume, low-value online sellers.
Illinois also addressed businesses that had registered solely because of the old transaction test. For qualifying sellers below the $100,000 threshold, the Department of Revenue automatically changed certain accounts to voluntary use tax status.
This means affected businesses should check their Illinois account rather than simply cancelling their registration or stopping returns.
Why Are States Removing Transaction Thresholds?
A transaction-count threshold can create very different outcomes for businesses with identical revenue.
Consider two remote sellers with $50,000 of sales:
Seller A makes 50 large transactions.
- Seller B makes 1,000 small transactions.
Under a 200-transaction test, Seller B could create economic nexus while Seller A does not.
Removing the transaction test means sales value, rather than the number of orders, becomes the focus. For smaller ecommerce businesses, that can significantly reduce compliance burdens.
Could New Jersey Be Next?
New Jersey currently uses a $100,000 or 200-transaction economic nexus test. However, proposed legislation S711 would remove the 200-transaction threshold, leaving the $100,000 receipts test.
Importantly, this is not yet current law as of August 2026.
Remote sellers should therefore continue applying New Jersey’s existing economic nexus rules unless and until the legislation is enacted and becomes effective.
If New Jersey does remove the threshold, businesses that registered solely because they exceeded 200 transactions should review whether they still need their registrations.
Can You Cancel a Sales Tax Registration After a State Removes Its Transaction Threshold?
Possibly but removal of the transaction threshold does not automatically mean you should close your sales tax account. First determine why you have nexus.
Even if you are below the new economic nexus threshold, you could still have physical nexus because of:
- Amazon FBA inventory
- A 3PL or warehouse
- Employees
- An office or business location
- Other physical activity in the state
For example, an Amazon seller with $40,000 of state sales might no longer meet a state’s economic nexus test after the 200-transaction rule is removed. However, inventory stored in that state could still create physical nexus.
You also need to follow the state’s proper account-closing procedures. Do not simply stop filing returns. If the account remains active, the state may issue missing-return notices, estimated assessments or penalties.
Example: A Shopify Seller With 300 Transactions
Consider a remote Shopify seller with:
- 300 transactions into a state
- $45,000 in total sales
- No employees
- No inventory
- No physical presence
Under a $100,000 or 200-transaction rule, the seller could have economic nexus because of its transaction count. If the state removes the 200-transaction test, that seller may no longer meet the economic nexus threshold. The business should then review whether its registration can be closed or changed.
That’s very different from a seller with the same $45,000 of sales but inventory stored in the state, because that inventory could independently create physical nexus.
What Should Remote Sellers Do in 2026?
If your business is registered in multiple states, review why each registration was originally required.
Pay particular attention to states where you:
- Registered because you exceeded 200 transactions
- Have relatively low sales revenue
- Have no physical presence
- Have no inventory or employees
Then compare your position against the state’s current economic nexus rules. This could identify registrations that are no longer necessary as states modernise their thresholds.
Common Mistakes to Avoid
- Assuming every state still has a 200-transaction threshold
- Treating proposed legislation as current law
- Cancelling registrations without checking physical nexus
- Forgetting about Amazon FBA inventory
- Simply stopping returns instead of formally closing an account
- Using an outdated nexus threshold spreadsheet
Economic nexus rules change, so your registration footprint should be reviewed periodically too.
FAQs
Did Illinois remove its 200-transaction sales tax threshold?
Yes, Illinois eliminated the 200-transaction economic nexus test from January 1, 2026. The relevant remote-retailer economic nexus test is now based on $100,000 in qualifying gross receipts.
Has New Jersey removed its 200-transaction threshold?
Not yet. Proposed legislation S711 would remove it, but the existing New Jersey 200-transaction test still applies as of August 2026.
Can I cancel my registration if I only registered because of 200 transactions?
Potentially, you first need to confirm that you do not have another nexus trigger and then follow the state’s procedures for ending or changing the registration.
Does Amazon FBA inventory still create nexus?
Physical inventory can create nexus independently of an economic nexus threshold, so Amazon FBA sellers need to review inventory locations before closing registrations.
What happens if I just stop filing returns?
If your sales tax account remains active, the state can continue expecting returns and may issue notices or penalties. The account should be formally resolved.
Final Thoughts
The disappearance of the 200-transaction sales tax nexus rule is good news for many smaller ecommerce businesses, particularly those processing high volumes of low-value orders. Illinois has already removed its transaction test, and New Jersey could potentially follow.
If you originally registered for sales tax solely because you exceeded a state’s transaction threshold, a change in the law could mean that registration is no longer required but never cancel it without checking for other forms of nexus first.
RJM Tax Exemption can review your existing sales tax registrations against current nexus rules, identify registrations that may no longer be necessary, and help close or update state accounts correctly. We can also monitor your nexus and handle new state registrations as your business grows.
