Could 2025 bring the end of economic nexus transaction thresholds?

As of January 1, 2025, the following states have eliminated their economic nexus transaction threshold:

Other states will likely join this list in 2025.

* There’s no statewide sales tax in Alaska. The Alaska Remote Seller Sales Tax Commission, which administers remote sales tax for participating local governments, eliminated the transaction threshold.

These 13 states never created a transaction threshold in the first place:

Though the needle does seem to be moving toward sales tax simplification for remote sellers, plenty of complexity remains. 

Broadly speaking, there are six different categories of economic nexus thresholds:

• $100,000 (23 states)
• $100,000 or 200 transactions (17 states, Puerto Rico, and the District of Columbia)
• $100,000 and 200 transactions (one state)
• $250,000 (two states)
• $500,000 (two states)
• $500,000 and 100 transactions (one state)

Some thresholds include only taxable sales of tangible personal property (TPP); others are based on gross sales, meaning even businesses that only make exempt sales can also establish economic nexus. Thresholds in some states include services in addition to TPP. 

Selling through a marketplace adds another layer of complexity, because some thresholds include sales made through a marketplace that collects and remits tax on behalf of the seller, while others don’t.

Finally, states base thresholds on a variety of different time periods, including:

• The prior or current calendar year
• The prior calendar year
• The preceding 12 months
• The preceding four calendar quarters
• The preceding four sales tax quarters

For businesses, especially businesses selling a variety of products into numerous states, figuring out where and whether nexus exists is a difficult, time-consuming task.

Furthermore, businesses must be prepared to start collecting sales tax as soon as they cross an economic nexus threshold, as required in at least 13 states and the District of Columbia.

No wonder sales tax experts (and businesses) are calling for increased simplification and uniformity.

“The biggest burden on small businesses and remote sellers is lack of uniformity and consistency between all the states,” Diane Yetter, President of Sales Tax Institute, told the United States Senate Committee on Finance on June 14, 2022. “States should make every effort to reduce unnecessary complexity and variations of law that create avoidable burdens on sellers.” 

The transaction threshold is particularly burdensome for small businesses, according to Yetter: “A third of our clients with sales under $50,000 in a state in the last year were required to register solely by exceeding the 200-transaction threshold.”

Yetter praised the states that have recognized — and removed — “the undue burden of the 200-transaction threshold,” and she encouraged other states to do the same. “Uniformity of economic thresholds, definitions, and compliance will have the greatest impact on reducing the burdens on small businesses and remote sellers.”

The Streamlined Sales Tax Governing Board also recommends member states do away with the transaction threshold. Most states that still use the threshold are SST states.

“There’s a big initiative among the SST states to remove and update the transaction threshold,” says Chad Paulson, Manager of SST Government Affairs at Avalara. “It’s a burden for small sellers who do very low-dollar transactions to collect and remit in all these states where they don’t exceed the dollar threshold.”

If any other states decide to eliminate their economic nexus transaction thresholds, the Avalara blog will let you know. In the meantime, here’s what you need to know about nexus.