Illinois to impose 0.2% digital asset tax from January 1, 2027

Illinois will impose a 0.2% tax on digital asset activity tied to customers in the state starting in January 2027 after Gov. J.B. Pritzker signed the Digital Asset Tax Act as part of a $55.9 billion budget. The measure, embedded in Senate Bill 3019, applies to the exchange, transfer and custody of cryptocurrencies and is expected to raise roughly $60 million a year. Industry critics say the law singles out crypto with a transaction-based state levy that does not have an equivalent for stocks, bonds or derivatives. Coinbase CEO Brian Armstrong was among the industry figures criticizing the measure, while Miles Jennings of Andreessen Horowitz called it one of the most hostile anti-crypto laws in the country. The law requires digital asset brokers serving Illinois customers to collect the 0.2% charge, and BDO said it will function similarly to a retail sales tax, appearing as a separate line item on customer bills. The sourcing rules are broad enough that out-of-state firms may be covered if they generate at least $100,000 in annual receipts from Illinois customers, with customer location determined using indicators such as physical presence, mailing address, account information or IP address. Opponents including the Crypto Council for Innovation and Paradigm warned the provision was added late in the legislative process with little debate and could push firms to limit service to Illinois residents, especially where decentralized finance activity makes tax calculations difficult. They argue the measure could increase costs for users, encourage businesses and capital to leave the state, and add to uncertainty as Congress works on a national framework for digital asset taxation.