Illinois Governor J.B. Pritzker signed a $55.9 billion state budget that includes the Digital Asset Privilege Tax Act, a 0.2% tax on crypto activity effective January 1, 2027. This makes Illinois the first US state to tax digital asset transactions directly rather than just capital gains. The tax applies to brokers—exchanges, custodians, and platforms—who must register, remit 0.2% of transaction value, and face felony charges for violations. Out-of-state brokers are covered once Illinois sales exceed $100,000. The tax is projected to raise about $60 million. Industry groups like the Crypto Council for Innovation and a16z criticize it as anti-crypto, arguing it singles out digital assets for a tax that does not apply to stocks or bonds. The cost is expected to pass through to users, taxing every buy, sell, transfer, or even holding crypto on an exchange. With the law already signed and the legislature out of session, near-term changes are unlikely, and lawsuits are expected.

Key facts

• Illinois imposes 0.2% tax on crypto transactions starting Jan 1, 2027, first state to do so.
• Tax applies to brokers, passed through to users for each buy, sell, transfer, or hold.
• Law signed by Governor Pritzker as part of $55.9 billion budget, expected to raise $60M.
• Industry groups criticize the tax as anti-crypto and discriminatory compared to stocks.
• No near-term legislative fix; lawsuits are likely as the only recourse.

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