Key takeaways
- New Jersey plans to remove the 200-transaction threshold and base sales tax nexus solely on $100,000 in gross revenue.
- The change aims to simplify sales tax compliance and eliminate loopholes that allow high-value sellers to avoid tax obligations.
- A revenue-only model promotes fairness, reduces administrative burdens, and aligns with broader efforts to standardize U.S. sales tax laws.
New Jersey’s recent proposal to eliminate the 200-transaction threshold for economic nexus reflects a growing push to simplify sales tax compliance. Instead of requiring businesses to track both revenue and transaction counts, the state would base tax obligations solely on gross revenue—aligning tax policy with actual economic activity.
The 200-transaction rule, introduced after South Dakota v. Wayfair, has proven inefficient. Small businesses face unnecessary complexity, while high-value sellers can avoid taxes by keeping transactions under the limit. New Jersey’s $100,000 revenue-only threshold would remove this loophole, creating a fairer and simpler system.
A revenue-only model reduces administrative burdens for businesses and ensures states collect taxes fairly. The current patchwork of state-specific thresholds increases compliance costs and disrupts interstate commerce. Standardizing sales tax laws could simplify operations for businesses, particularly in the digital economy.
With states under pressure to secure stable revenue, expect more legislatures to reevaluate their nexus rules in 2025.
Frequently asked questions
What is New Jersey’s new proposal for sales tax nexus?
New Jersey has proposed eliminating the 200-transaction threshold for sales tax nexus, meaning tax obligations would be based solely on $100,000 in gross revenue. This change aims to simplify sales tax compliance and align tax collection with real business activity.
How will removing the 200-transaction threshold affect small businesses?
If approved, the revenue-only nexus rule will make compliance easier for small businesses by removing the need to track transaction counts. It also ensures that only businesses with significant economic activity in New Jersey are required to collect and remit sales tax.
