Transaction Thresholds are Disappearing: What Small Sellers Need to Know

If you’re a micro-seller or small online retailer making high volumes of low-dollar sales, a major shift is happening in small business sales tax compliance—and luckily, it’s good news. More states are eliminating their transaction thresholds and relying instead on dollar-based economic nexus standards.

But what does this mean for your online business?

This change reduces administrative burden, simplifies filing requirements, and helps small e-commerce sellers who struggle under the weight of multistate sales tax obligations. Whether states are doing this because micro-sellers yield little tax revenue, or because they want more uniformity, the result is the same: fewer surprise sales tax triggers for small sellers and clearer, fairer rules across the board.

Key Takeaways

• Many states are removing their 200-transaction thresholds and relying solely on dollar-based economic nexus standards.
• Micro-sellers and digital product businesses benefit the most from this simplification.
• State tax experts and policymakers increasingly agree that transaction tests unfairly burden small sellers.
• Streamlined Sales Tax (SST) initiatives continue to push for more consistency between states.
• Small businesses should reassess their nexus exposures.
• Outsourcing to professionals like SalesTaxSolutions.US ensures compliance while avoiding unnecessary filings.

💡 Wondering if you can de-register in certain states?

A quick Nexus Checkup can be the sales tax solution you need. We map your economic nexus exposure, review your sales by state, and tell you exactly where you must collect—and where you no longer need to.

How Transaction Thresholds Burden Low-Revenue Sellers

Under economic nexus laws adopted after South Dakota v. Wayfair, most states adopted a two-part economic nexus test:

• A dollar threshold (commonly $100,000 in annual sales), or
• A transaction count threshold, usually 200 sales in a 12-month period.

Typically, in states with both nexus types, a seller would only need to hit one to find themselves struck with new sales tax obligations.

This created a lopsided system where small online shops, digital sellers, and print-on-demand creators accumulated sales tax obligations without meaningful revenue to support the compliance burden.

For example, according to this article from TRENDHIJACKING, the average small to mid-sized Shopify store earns roughly $66,996 per year, well below any state’s dollar threshold. However, many of these smaller stores still exceed 200 transactions, instantly triggering economic nexus and requiring registration, filing, and remittance.

Diane Yetter of the Sales Tax Institute highlighted the scale of the issue in Senate testimony in 2022:

“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.”

Luckily, states are finally responding.

States That Have Recently Removed Their 200-Transaction Threshold

A growing number of states have removed transaction thresholds within the past three years. Examples include:

• Utah – Removed their 200-transaction threshold effective July 1, 2025.
• Indiana – Remove their threshold retroactively as of January 1, 2024.
• Wyoming – Eliminated effective July 1, 2024.
• Louisiana – Removed for remote sellers and marketplaces effective August 1, 2023.
• Illinois – Scheduled to drop the 200-transaction threshold January 1, 2026.

States That Still Have Transaction Thresholds

Here is the current list of states that continue to enforce transaction sales tax nexus:

State / Jurisdiction	Transaction Nexus Thresholds
Arkansas	200 or more separate transactions
Connecticut	$100,000 and 200 transactions
District of Columbia	200 or more separate retail sales
Georgia	200 or more transactions
Hawaii	200 or more transactions
Kentucky	200 or more transactions
Maryland	200 or more transactions
Michigan	200 or more transactions
Minnesota	200 or more transactions
Nebraska	200 or more separate transactions
Nevada	200 or more separate transactions
New York	$500,000 and more than 100 transactions
Ohio	200 or more separate transactions
Puerto Rico	200 or more separate transactions
Rhode Island	200 or more separate transactions
Vermont	200 or more separate transactions
Virginia	200 or more separate transactions
West Virginia	200 or more separate transactions

Even with some states removing transaction tests, sellers still risk compliance issues in any of the above states if they aren’t monitoring both sales and order volumes.

Simplification & Uniformity in Sales Tax

The Streamlined Sales and Use Tax Agreement (SST) has long pushed for aligned state rules and simplified compliance for remote sellers. Amongst their efforts, one major priority has been encouraging states to remove transaction thresholds.

As more states adopt similar sales tax standards, small businesses benefit from:

• Clearer nexus rules
• Fewer surprise filing obligations
• More predictable compliance costs

Alongside SST, there has been increased noise from tax professionals and business owners about the need for more sales tax uniformity. However, there is much to consider as to how this would affect state legislation and future economic growth.

What Small Sellers Should Do Next

If you’re a small online seller, consider these steps to take advantage of the transaction threshold changes happening:

1. Reevaluate your economic nexus exposure – you may no longer have nexus in states where you previously did.
2. Review your last 12 months of sales by state – if you don’t exceed dollar thresholds, consult with a tax professional or state legislation to determine if you can de-register in certain states.
3. Separate marketplace sales – some states count marketplace facilitator sales toward nexus—others don’t. This handy chart from Sales Tax Institute can help you determine whether you need to count marketplace sales toward your economic nexus thresholds.
4. Consider a professional nexus analysis – if this all sounds like Greek to you, a consultant can determine where you’re legally required to collect—and where you no longer need to.
5. Stay updated – it’s an unfortunate but unavoidable truth that sales tax laws are always changing. The more you know and the more tax-savvy you are, the better your business will fare.

Conclusion

This shift away from 200-transaction thresholds represents a major opportunity for micro-businesses to reduce unnecessary sales tax obligations. By focusing on revenue-based thresholds, states are acknowledging that small sellers shouldn’t be treated like enterprise-level companies.

This simplification gives small sellers breathing room, lowers stress, and helps businesses grow within the vast online retail space.