If your business sells to customers in Illinois, you may be required to collect and remit sales tax—even if you're not physically located there. This guide covers when you’re considered to have nexus in Illinois, the registration process, and how to stay compliant.
🔍 What is Sales Tax Nexus?
Sales tax nexus is the level of connection between a business and a state that legally requires the business to collect and remit sales tax on sales made to customers in that state.
There are two primary types of nexus:
Physical Nexus: This occurs when a business has a physical presence in a state — such as an office, warehouse, retail location, inventory, or employees. Even a remote employee or temporary sales rep can trigger physical nexus in some states.
Economic Nexus: Introduced after the 2018 South Dakota v. Wayfair decision, economic nexus is based on sales activity alone — typically measured by the dollar amount of sales or number of transactions into a state, regardless of physical presence.
Once a business has nexus in a state, it must register with the state’s tax agency, collect the correct amount of sales tax on taxable transactions, and file regular returns.
🧾 Does Illinois have economic nexus rules?
Yes. As of Oct 1, 2018, Illinois enforces economic nexus laws requiring out-of-state sellers to collect and remit sales tax if they exceed the defined thresholds.
📊 What are the economic nexus thresholds in Illinois?
You must register and collect sales tax in Illinois if, during the Preceding 12 calendar months, your business meets the following thresholds:
- Sales Threshold: $100,000
- Transaction Threshold: 200 transactions
Meeting either the sales or transaction threshold triggers nexus.
🏬 Are marketplace sales excluded from the economic threshold in Illinois?
✅ Yes, sales made through a marketplace facilitator are excluded from the threshold calculation in Illinois.
A marketplace facilitator is a third-party platform — like Amazon, Etsy, Walmart Marketplace, or eBay — that enables sellers to list and sell their products. In most states including Illinois, if the facilitator is registered and collects sales tax on your behalf, those sales typically do not count toward your economic nexus threshold.
However, if you make direct sales (e.g., via your own website) to customers in Illinois, those are always considered when determining whether you've triggered nexus.
🔁 Are wholesale or resale transactions excluded from the economic threshold in Illinois?
✅ Yes, resale or wholesale transactions are excluded from the economic threshold in Illinois.
Resale transactions occur when you sell goods to another business that intends to resell them, often under a resale certificate. Some states exclude these sales when calculating economic nexus because the end buyer is expected to handle the tax obligation.
In Illinois, these exempt sales do not push you closer to the nexus threshold — but you must maintain valid resale certificates to support the exclusion.
🚫💵 Are non-taxable or exempt sales excluded from the economic threshold in Illinois?
✅ Yes, non-taxable sales are excluded from the nexus threshold in Illinois.
Non-taxable sales include transactions involving exempt products or exempt buyers (like nonprofits, government entities, or resale scenarios). Even though no tax is collected, some states still count these sales toward the economic nexus threshold.
In Illinois, these sales are excluded from threshold calculations — but documentation must be maintained to prove their exempt status.
🏢 What types of physical presence trigger sales tax nexus in Illinois?
You have a physical nexus in Illinois if your business has any of the following in the state:
- A business office, storefront, or retail location
- A warehouse or fulfillment center storing inventory or goods
- Temporary or permanent employees working in sales including pre or post sales
- Temporary or permanent employees working in marketing
- Temporary or permanent employees working in support/servicing
- Agent, representive, freelancer, contract worker, independent consultant or gig worker working in sales
- Agent, representive, freelancer, contract worker, independent consultant or gig worker working in marketing
- Agent, representive, freelancer, contract worker, independent consultant or gig worker working in support/servicing
Even if your business is not based in Illinois, any of the above may create a tax obligation.
📝 How do I register for sales tax in Illinois?
Once you meet either the economic nexus or physical nexus threshold, you must:
- Register for a Illinois sales tax certificate at the MyTaxIllinois Portal Portal
- Start collecting sales tax on all taxable sales shipped to Illinois customers
- File returns and remit collected taxes on the assigned schedule
📅 How often do I need to file returns in Illinois?
Illinois assigns a filing frequency (monthly, quarterly, annually, others) based on your taxable sales volume. This will be confirmed during the registration process.
📊 What Counts Toward Nexus in Illinois?
Understanding exactly which sales count toward your nexus threshold is critical. Here's what does and doesn't count in Illinois:
| Transaction Type | Counts Toward Threshold? | Notes |
|---|---|---|
| Direct sales (your website/store) | ✅ Yes | Always included |
| Marketplace sales (Amazon, Etsy, etc.) | ❌ No | Excluded if facilitator collects tax |
| Wholesale/resale transactions | ❌ No | Excluded with valid resale certificate |
| Tax-exempt sales (nonprofits, etc.) | ✅ Yes | Even exempt sales count toward threshold |
| Shipping charges | ✅ Yes | Generally included in gross sales |
🗺️ Related State Nexus Guides
Understanding nexus in nearby or similar states can help you plan your multi-state compliance strategy:
- View all state nexus guides
- Get a free nexus study — analyze your sales data across all 50 states
🧭 What’s the easiest way to track sales tax nexus and stay compliant in Illinois and other states?
Tracking sales tax nexus across multiple states can be time-consuming and error-prone, especially as economic and physical nexus rules vary by state and change frequently. Businesses often struggle to know when they’ve triggered nexus in a new state, what steps to take next, and how much they may owe.
The Galvix Nexus Tracker solves this problem by automatically monitoring your sales activity and compliance risk in Illinois and all other U.S. states.
By connecting directly to platforms like QuickBooks Online, Stripe, Shopify, NetSuite and others, Galvix analyzes your transaction data and compares it against each state’s nexus thresholds. It identifies where you may have established nexus — or are getting close — and alerts you in time to take action.
You'll get:
- Automated alerts when nexus thresholds are approached or exceeded
- Detailed reports showing why and when nexus was triggered
- Estimated tax liability exposure for states where registration is overdue
Not sure if you have nexus in Illinois? Get a free nexus study — our experts will analyze your sales data and provide a detailed report showing exactly where you have obligations, including Illinois.
Looking to simplify ongoing nexus tracking and sales tax compliance? Book a demo to see how Galvix can help you stay ahead of your obligations.
This page is updated regularly. For official guidance, visit the MyTaxIllinois Portal website.