If you run an online shop that ships hundreds of low-dollar orders into Illinois every year — candles, phone cases, printables, anything with a low price tag and a loyal following — you may have spent the last few years collecting and remitting Illinois sales tax you technically never needed to collect. Starting January 1, 2026, Illinois threw out the rule that put you on the hook in the first place, and it's part of a much bigger shift in how states decide which out-of-state sellers owe them tax.
What Changed in Illinois
Since the 2018 South Dakota v. Wayfair Supreme Court decision let states tax remote sellers without a physical presence, most states — including Illinois — set economic nexus at two possible triggers: $100,000 in annual sales to in-state customers, or 200 separate transactions, whichever came first. Either one was enough to require registration and tax collection.
That "or 200 transactions" clause is what just disappeared. Under HB 2755, signed by Governor JB Pritzker in June 2025, Illinois eliminated the transaction-count threshold effective January 1, 2026. Now there is exactly one test: whether your cumulative gross receipts from sales of tangible personal property to Illinois purchasers exceed $100,000 over the applicable 12-month lookback period. Retailers are expected to reassess that number quarterly.
The practical effect is narrow but real. A seller who ships 5,000 small orders a year at $15 apiece — $75,000 in total Illinois sales — used to cross the 200-transaction line by February and owe Illinois tax on every sale after that. Under the new rule, that same seller never crosses $100,000 and owes Illinois nothing. High-volume, low-ticket sellers are the biggest winners; anyone already clearing $100,000 in Illinois sales sees no change at all, because the revenue threshold was already going to catch them.
Why This Matters More Than It Sounds
The 200-transaction test was never really about ability to pay — it taxed volume, not revenue. A seller of $8 phone accessories could trip the threshold with barely $2,000 in Illinois sales, while a seller of $9,000 industrial equipment could ship 20 units and stay well clear of both. States adopted the transaction count in the first place mostly by copying South Dakota's original Wayfair statute, not because it made economic sense on its own — it just seemed like a reasonable companion number to the dollar threshold.
Small, high-volume sellers — the Etsy shops, print-on-demand storefronts, and subscription-box businesses that ship constantly but at low average order values — were the ones actually burdened by it. They had to track and file in states where their total dollar exposure was trivial, purely because of order count. Illinois' repeal, alongside similar moves in Utah (July 2025) and Alaska (January 2025), specifically targets that mismatch.
Illinois Isn't Acting Alone
This is a trend, not an isolated policy tweak. As of the start of 2026, roughly 28 states use a sales-only economic nexus test, while about 15 states plus Puerto Rico and Washington, D.C. still run some version of the transaction-count test. States that have already dropped it include North Dakota (2018), Massachusetts (2019), Louisiana (2023), Indiana (2024), Alaska (2025), Utah (2025), and now Illinois (2026) — with Kentucky scheduled to follow on August 1, 2026.
The direction of travel is consistent: states are converging on revenue-only thresholds, typically $100,000, because it is simpler to administer and better targets sellers who actually generate meaningful in-state revenue. If you sell into multiple states, expect more of these repeals over the next couple of years rather than fewer — which also means the state-by-state nexus chart you built last year is quietly going stale.
A One-Time Amnesty Window
Illinois paired the repeal with a limited amnesty program. From August 1 through October 31, 2026, remote retailers who had economic nexus with Illinois at any point between January 1, 2021, and June 30, 2026 — but never registered or collected — can come forward, file a single consolidated application covering that whole window, and pay tax at flat rates (9% for general merchandise, 1.75% for qualifying food, medicine, and medical appliances) without interest or penalties.
This is worth taking seriously if you crossed the 200-transaction threshold at some point in the last five years and didn't register — a scenario more common than sellers like to admit, since the trigger was easy to hit accidentally and easy to miss. Outside the amnesty window, Illinois can still assess back tax, penalties, and interest on any exposure it finds. If you're unsure whether you ever crossed 200 transactions in Illinois in a given year, this is the moment to check your historical order data, not after October 31.
What to Actually Do About It
- Re-run your Illinois exposure using dollars only. Pull your trailing-12-month Illinois sales and check it against $100,000. If you're comfortably under and were only registered because of transaction count, you may be able to deregister — talk to a sales tax professional before doing so, since deregistering while still under old exposure can trigger its own scrutiny.
- Check whether you qualify for the amnesty. If you had nexus under the old rule and never registered, gather your Illinois order history for 2021–mid-2026 now, before the August–October window opens, so you're not scrambling.
- Don't assume other states followed suit. Fifteen-plus states still run transaction-count tests. A seller who drops Illinois collection because of this change but keeps shipping 300 orders a year into, say, New York or D.C. can still trip nexus there on volume alone.
- Rebuild your nexus tracking around dollars, not orders, where the rule allows it — but keep transaction counts in your records anyway, since you'll need them to prove which test applied in which year if a state ever asks.
Why This Is a Bookkeeping Problem, Not Just a Tax One
Economic nexus determinations run on data your books already contain — state-by-state revenue, order counts, and dates — but only if that data is broken out cleanly rather than buried in a single "Sales" account. A ledger that tracks revenue by destination state, even informally, turns a question like "did we cross $100,000 in Illinois this quarter" from a manual export-and-pivot exercise into a query you can run in seconds. That distinction matters more every year, as more states change their thresholds and the penalty for missing a registration deadline is back taxes plus interest, not just an awkward email from your accountant.
Keep Your Nexus Tracking as Clean as Your Books
State sales tax rules keep shifting, and the businesses that adapt fastest are the ones whose financial records were already organized enough to answer the question in the first place. Beancount.io gives you plain-text accounting with the transparency to slice revenue by state, customer, or channel without wrestling a spreadsheet — no black boxes, no vendor lock-in. Get started for free and see why developers and finance-minded business owners are switching to plain-text accounting.
