Illinois Governor JB Pritzker signed a $55.9 billion budget that includes a new digital asset levy. The Illinois crypto tax adds a 0.2% charge on covered broker activity. Industry groups opposed the measure before it became state law in Illinois.
It applies to brokers offering exchange, transfer, custody, and wallet services. It makes Illinois one of the first states to have an extensive transaction-level tax on digital assets. The rule is included in the fiscal 2027 budget plan.
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Illinois Crypto Tax Sets 2027 Compliance Deadline
According to BDO USA, the Digital Asset Tax Act will become effective Jan. 1, 2027. Brokers are required to sign up for the Illinois Department of Revenue prior to the beginning of covered activity. The Illinois crypto tax applies to taxable businesses with state users.
Earlier budget documents estimated about $60 million in revenue from the levy. The provision will proceed with the approval of Senate Bill 3019. Pritzker’s signature transformed the proposal into a compliance deadline.
The plan was opposed by crypto groups before it was approved. The Crypto Council for Innovation requested Pritzker exercise a line-item veto of Article 3. It stated that the Illinois crypto tax could push builders and innovations out of the state.
The group stated that the measure is aimed at digital assets for the purpose of taking advantage of blockchain rails. It likened this to the taxing of emails rather than posts. The Digital Chamber and Illinois Blockchain Association said the industry was not given any advance notice.
Some Illinois companies are not covered by the rule. BDO said that out-of-state brokers who do more than $100,000 in business with Illinois customers could be subject to the law. That broadens the scope of the Illinois crypto tax to non-locals.
Brokers Face New Crypto Tax Duties
Multiple sourcing rules that provide the state with several methods of sourcing activity in Illinois. A transaction may be counted if the State is listed as the primary place of use. It can be based on Customer location and other information such as account records, mail address, IP address, etc.
Brokers are required to have the charge as a separate line item paid by the customer. BDO said the customer is liable for that tax under the law. Brokers are required to maintain records and submit monthly reports for the previous month’s activity.
Registration requirements are added to the law before the 2027 start date. Registration is for one year and renews automatically unless it is cancelled by the broker or revoked by the state. Covered brokers are subject to payment and reporting requirements under the Illinois crypto tax.
Miles Jennings, head of policy and general counsel for a16z Crypto, criticized the law. He said no comparable state transaction tax exists on stocks, bonds, or derivatives in the United States. His remarks contributed to concerns of disparate treatment.
Illinois brokers now have a period of planning before enforcement will take place. They might have to look at records, kinds of activities, billing systems, and steps for registering. The Illinois crypto tax is now a signed law with an effective date of Jan. 1, 2027.
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