Summary
- Illinois Governor JD Pritzker has enacted a new digital asset tax law, imposing a 0.2% tax on transactions starting in 2027.
- The Crypto Council for Innovation has labeled it the "most punitive digital asset tax" in the U.S.
- Projected revenue for the state from this tax could reach approximately $60 million in its first year.
The recently enacted digital asset tax in Illinois may have “serious repercussions” for the local cryptocurrency sector, according to some advocates.
The “Digital Asset Tax Act”, which was signed into law by Governor Pritzker as part of the state's budget for 2027, will introduce a 0.2% tax on cryptocurrency transactions, including purchases and transfers. This tax is scheduled to be implemented on January 1, 2027.
The Crypto Council for Innovation (CCI) expressed concerns in a letter to Governor Pritzker, stating, “If enacted, the Digital Asset Privilege Tax Act would position Illinois as the only state in the country to punitively tax Illinois customers for simply receiving covered digital asset business activity.”
This coalition of crypto supporters from various sectors, including finance, technology, law, and government, described the tax as the “most punitive digital asset tax” nationwide.
They further warned that this new tax regime would impose an unfair burden on Illinois residents simply for utilizing digital assets, potentially pushing innovation and developers out of the state.
The tax will apply to transactions conducted within the state and those made by individuals whose primary use location is in Illinois, as outlined in the legislation. Digital asset brokers and major cryptocurrency exchanges operating in Illinois will be responsible for collecting these taxes.
The Illinois Policy Institute, which advocates for taxpayers, mentioned that lawmakers anticipate this tax could generate around $60 million in revenue next year.
According to the CCI, “No other state in the country has adopted a similar transaction-based tax, meaning Illinois would be an outlier in an increasingly competitive landscape for digital asset innovation.”
The group also criticized the manner in which the bill was passed, arguing that stakeholders did not have the opportunity to voice their opinions on the proposal. They stated, “A first-of-its-kind tax targeting an entire industry and the Illinois residents who use its products and services calls for meaningful stakeholder engagement before enactment.”
Earlier this month, seven new crypto tax bills were introduced in the U.S. Congress, addressing topics such as mining and staking taxes, as well as a de minimis tax exemption. However, these bills encountered resistance during a House Committee hearing shortly after their introduction.