Illinois Proposes Tax Rules for Stablecoins, DeFi Platforms

Illinois has proposed draft rules for its upcoming digital asset tax, which is set to take effect on January 1, 2027. The state's Department of Revenue has published a proposal outlining how the 0.2% tax on digital asset business activity would apply to different types of crypto activity.

The rules would classify stablecoins as taxable digital assets, while non-fungible tokens (NFTs) would be exempt from taxation. Transactions on decentralized finance (DeFi) and decentralized exchange platforms would generally fall outside the tax unless they involve valuable consideration.

Protocol fees charged for operating or maintaining a platform would qualify as taxable income, but network fees and swap fees directed solely to liquidity providers would not. The rules also consider bridging between blockchain networks an exchange activity, making it subject to taxation.