Illinois Governor JB Pritzker has signed a $55.9 billion state budget that introduces a new tax on digital asset transactions, making Illinois one of the first states in the U.S. to impose a broad transaction-level levy on crypto. The tax, set at 0.2%, applies to activity carried out by digital asset brokers, including exchange, transfer, custody, and wallet services. The measure takes effect on Jan. 1, 2027, under the Digital Asset Tax Act.
Scope: Out-of-state brokers also liable
Brokers must register with the Illinois Department of Revenue before the compliance deadline. Registration lasts one year and renews automatically unless canceled or revoked. BDO USA noted that out-of-state brokers fall under the rule if they have at least $100,000 in annual receipts from Illinois customers. The law uses a broad sourcing standard: a transaction can be counted as Illinois activity based on customer location, account records, mailing address, IP address, or other data points.
Industry outcry over discriminatory structure
The Crypto Council for Innovation urged Pritzker to issue a line-item veto on Article 3 before signing, arguing the tax would "drive innovation and builders out of the state." The group likened the logic to "taxing correspondence because it is delivered by email rather than by post." The Digital Chamber and the Illinois Blockchain Association opposed the measure, saying lawmakers gave the industry "zero advance notice." a16z Crypto's policy head Miles Jennings stressed there is "no comparable state financial transaction tax" on stocks, bonds, or derivatives in the United States, calling the disparate treatment problematic.
Brokers to collect tax as separate line item
Brokers are required to collect the tax from customers and present it as a separate charge. Customers legally owe the tax to the provider, and brokers must keep records and file monthly reports covering prior-month activity. The signed budget transforms the proposal into a compliance deadline, giving brokers less than six months to adjust systems and workflows.
Federal crypto tax debate continues
While Illinois moves ahead, U.S. House lawmakers are reviewing federal crypto tax proposals covering stablecoin payments, staking rewards, mining income, DeFi lending, wash-sale rules, charitable donations, and taxpayer disclosure programs. The Illinois law differs from those federal proposals because it taxes covered digital asset activity rather than income, gains, or profit. Industry groups say the design treats crypto differently from traditional financial assets, and the state has now codified that distinction.