Illinois has approved a new tax on digital asset activity, introducing a 0.2% levy on cryptocurrency transactions and related services provided to customers in the state. The measure, signed into law by Governor JB Pritzker as part of the fiscal year 2027 budget, will take effect on January 1, 2027.
how the tax works
The law applies to intermediaries such as custodians, brokers, and trading platforms operating in Illinois. These entities will be required to collect and remit the tax in a structure similar to sales taxes. The charge is based on the total value of transactions rather than profits, meaning a $100,000 transfer, trade, or purchase would generate a $200 tax regardless of whether a gain or loss occurs.
The scope includes a wide range of activities, from buying and selling to transfers and custody services. While direct peer-to-peer transactions are excluded, uncertainty remains around how the rules will apply to wallet transfers or asset conversions that do not generate profit.
industry pushback grows
Industry groups including the Crypto Council for Innovation, the Digital Chamber, and the Illinois Blockchain Association have opposed the measure, arguing it raises compliance costs for residents and crypto-related firms. Critics say the law departs from earlier cooperation between policymakers and the industry seen in prior Illinois legislation.
Miles Jennings, head of policy and general counsel at Andreessen Horowitz, said the tax effectively applies to the buying, transferring, and storage of digital assets, comparing it to a fee on basic asset handling. He also noted that digital assets are being treated differently from traditional instruments like equities, bonds, and derivatives, which are not subject to similar state-level taxes.
Opponents warn the measure could discourage firms from operating in Illinois and have called for further dialogue, describing the tax as unprecedented in scope.
similarities to past federal rules
The approach echoes elements of the federal “broker rule” introduced under the Infrastructure Investment and Jobs Act of 2021, which imposed broad reporting requirements on digital asset transactions. That rule was later repealed by Congress in 2025 after facing industry criticism.
broad reach and compliance impact
The Illinois law applies to firms with a physical presence in the state or those generating more than $100,000 annually from Illinois customers. Transactions may be tied to the state through factors such as a customer’s location, IP address, or mailing address, potentially capturing out-of-state platforms.
For traders, the tax introduces new considerations. Frequent trading, rebalancing, or transferring assets between platforms could become significantly more expensive due to the cumulative effect of the levy. It also shifts record-keeping requirements toward tracking the total value of each transaction rather than focusing solely on capital gains.
implementation and next steps
The Illinois Department of Revenue will oversee implementation, requiring digital asset brokers to register and submit monthly reports. Platforms are expected to update user agreements and fee structures ahead of the 2027 start date as they prepare systems to collect and remit the tax.
The measure marks the first state-level tax of its kind in the United States, adding to a growing national debate over how digital assets should be regulated and taxed alongside traditional financial markets.
Worried about new crypto taxes and compliance? Learn the basics in our guide here.
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