Illinois Governor JD Pritzker signed the Digital Asset Tax Act into law on Tuesday as part of the state's 2027 budget, enacting a 0.2% tax on cryptocurrency transactions that will take effect on January 1, 2027. The legislation imposes the tax on crypto activity including asset transfers and purchases conducted physically in the state or by individuals with a 'place of primary use' in Illinois. The Crypto Council for Innovation called it the 'most punitive digital asset tax' in the country and warned of 'severe consequences' for the industry in the state, while the Illinois Policy Institute estimates the tax could generate approximately $60 million in revenue next year.
Illinois Enacts 0.2% Tax on Cryptocurrency Transactions
The Digital Asset Tax Act institutes a 0.2% tax on crypto activity in Illinois, including when assets are transferred or purchased. According to the bill text, the tax applies to activity physically conducted in the state and to activity made by individuals that have a 'place of primary use' in Illinois. The tax is set to take effect on January 1, 2027.
Crypto Council Calls Illinois Tax Most Punitive in Nation
The Crypto Council for Innovation wrote in a letter addressed to Governor Pritzker on Tuesday that 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. The group called it the 'most punitive digital asset tax' in the country. The organization stated, 'This will create an unprecedented tax regime that disproportionately burdens Illinois residents for simply using digital assets, and will drive innovation and builders out of the state.' The CCI wrote that 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.
Illinois Projects $60 Million Revenue from Digital Asset Tax
The Illinois Policy Institute noted that lawmakers expect the bill to generate as much as $60 million next year.
Digital Asset Brokers Required to Collect Transaction Taxes
All taxes would need to be collected by digital asset brokers, like the major crypto exchanges that offer services in the state, according to the bill.
Industry Groups Criticize Lack of Stakeholder Engagement
The Crypto Council for Innovation took exception to the way that the bill was passed, noting that affected parties did not get the chance to provide input on the proposal. The organization 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.'
Seven Crypto Tax Bills Introduced in U.S. Congress
Seven new crypto tax bills were introduced in the U.S. Congress earlier this month, with focuses ranging from clarity on mining and staking taxes to the introduction of a de minimis tax exemption. Shortly after introduction, the bills faced pushback in a House Committee hearing.
FAQ
What did Illinois Governor Pritzker sign into law on Tuesday?
Governor JD Pritzker signed the Digital Asset Tax Act into law on Tuesday as part of the state's 2027 budget, enacting a 0.2% tax on cryptocurrency transactions that will take effect on January 1, 2027.
Why did the Crypto Council for Innovation criticize the Illinois digital asset tax?
The Crypto Council for Innovation called it the 'most punitive digital asset tax' in the country and stated it would position Illinois as the only state to punitively tax customers for simply receiving covered digital asset business activity, warning it will drive innovation and builders out of the state.
How much revenue does Illinois expect to generate from the digital asset tax?
The Illinois Policy Institute noted that lawmakers expect the bill to generate as much as $60 million next year.
