Illinois Seeks Six-Month Delay for Controversial Crypto Tax

Illinois officials have aligned with crypto industry groups to request a six-month delay on the state’s Digital Asset Tax, which was set to take effect on January 1, 2027. Filed on October 1 in Sangamon County, the joint motion seeks to push back the tax’s start date to July 1, 2027, while a constitutional challenge brought by The Digital Chamber and the Illinois Blockchain Association is resolved.

The state’s Revenue Director David Harris and Attorney General Kwame Raoul supported the delay, despite ongoing disputes over the law’s constitutionality. If approved, the injunction would temporarily halt the tax collection process, relieving brokers from the obligation to collect the tax and deferring associated liabilities for customers.

The Digital Asset Tax, enacted in June, imposes a 0.2% levy on the value of digital assets involved in certain transactions, rather than on trading profits. Draft rules from the Illinois Department of Revenue indicate that even fee-paid withdrawals to self-custody wallets could be subject to the tax, while direct transfers without a covered broker might not be. Brokers are responsible for collecting and remitting the tax, and customers may have to calculate and pay the tax themselves if it is not charged.

The delay would provide crypto firms additional time to prepare for compliance, though the legal challenge and rulemaking process will continue. Public comments on the draft rules are open until October 30, and the state’s deadline for responding to the lawsuit has been moved to November 13. The outcome of the injunction request and potential changes to the rules will shape the crypto industry’s preparations for the tax.