Illinois Crypto Tax Draws Court Challenge Ahead of January 2027 Launch

The Illinois state government has introduced a new tax on cryptocurrency transactions, which is set to take effect on January 1, 2027. The Digital Asset Tax Act imposes a 0.2% tax on the value of digital assets exchanged, transferred, or stored through a broker in Illinois, regardless of whether a profit is made.

The Crypto Council for Innovation and Blockchain Association have filed a preliminary injunction motion to block the tax before it takes effect, arguing that it discriminates against electronic commerce, burdens interstate transactions, denies due process, and violates Illinois constitutional requirements governing taxation and lawmaking.

The associations claim that unclear rules could cause a single exchange or storage sequence to trigger the 0.2% levy as many as three times, and that companies are already facing millions of dollars in compliance costs and may lose customers before the court resolves the case.

Illinois Governor JB Pritzker signed the budget legislation on June 16, which is expected to generate approximately $60 million annually. The tax also carries Class 3 felony penalties for failing to register, filing a fraudulent return, or failing to maintain required records.