Illinois issues draft rules for its 0.2% digital asset transaction tax

Illinois tax authorities have released draft rules for the state’s enacted 0.2% digital asset transaction tax, laying out how the levy would apply across several crypto activities. The draft says stablecoins would be treated as taxable digital assets, while non-fungible tokens, or NFTs, would fall outside the tax scope. The proposal also draws lines around decentralized finance activity. DeFi transactions would generally qualify for an exemption, but fees paid by users that are deemed "valuable consideration" could still trigger the tax. The draft gives protocol fees used to operate or maintain a platform as an example. By contrast, network fees and swap fees paid only to liquidity providers would not be taxed. The rules also say cross-chain bridging conducted through a digital asset broker and involving consideration would count as a taxable exchange. Transfers from centralized exchanges to self-custody wallets could also be taxed if the exchange charges a fee. The law was approved in June and is scheduled to take effect on Jan. 1, 2027. Illinois tax authorities are accepting public comments on the draft through Oct. 30, according to ChainCatcher.