Illinois hopes to impose an unprecedented 0.2% tax on cryptocurrency transactions, which traders will have to pay regardless of whether they make a profit or suffer a loss.
This legal plan is set to take effect on January 1, 2027, but it is currently facing opposition from the public, businesses, and legislators.
On September 29th, the Illinois Department of Revenue officially released a draft that details the content of its "Digital Assets Tax Law" ( Digital Asset Tax Act, referred to as DATA for short).
It is worth noting that Governor J.B Pritzker signed this unprecedented bill on June 16th, making it a part of the state's 2027 fiscal year budget SB 3019 and officially bringing it into effect.
Illinois State requires a 0.2% tax on crypto transactions
Most states default to the rules of the United States Internal Revenue Service ( IRS ), which consider cryptocurrencies to be property, and therefore standard capital gains tax applies.
In contrast, DATA in Illinois will impose a 0.2% transactional “privilege tax” based on the total value of digital assets.
More specifically, this tax will cover all types of crypto activities, including crypto exchanges, crypto transfers, as well as basic custodial storage.
To enforce this regulation, Illinois will require all crypto service providers that operate in the state or generate more than $100,000 in revenue from residents of the state each year to register within the state. Failure to comply will constitute a third-degree felony.
Reactions from Supporters and Critics
This law is set to take effect on January 1, 2027. Supporters argue that state governments have the authority to levy taxes on digital infrastructure. Cryptocurrency taxation is also expected to generate approximately $60 million in revenue for the budget.
At the same time, public backlash against the proposal has been even stronger, with claims that it violates Trump's directives for the United States to become a global hub for crypto capital.
Earlier this month, encryption giants led by the Cryptography Innovation Committee ( Crypto Council for Innovation , CCI ) and the Blockchain Association ( Blockchain Association ) jointly submitted a motion to block the bill. They believe that the bill violates federal and state laws and claim that it is "discriminatory," describing it as the "most punitive" of its kind in the United States.
Venture capital firm a16z warns that DATA will create a dual taxation system, and also indicates a fundamental misunderstanding of blockchain technology. Michael Saylor of Strategy warns that this could deplete the state's liquidity and force crypto service providers to relocate to more tax-friendly states such as Texas and Florida.
Legislators who hold opposing views have proposed a countermeasure bill HB 5798, aiming to completely abolish this tax.
