Illinois has passed a new crypto tax into law that some industry advocates have called "the most punitive digital asset tax in the country."

On Tuesday, Governor JB Pritzker signed the Digital Asset Tax Act, enacting a 0.2% charge on the value of digital asset transactions or services provided to Illinois customers, as part of the state’s FY2027 budget planning. 

The tax is set to take effect on Jan. 1, 2027, and will primarily target service providers like exchanges, custodians, and brokers that must now collect and remit the tax, not unlike sales taxes. 

Several industry groups, including the Crypto Council for Innovation, Digital Chamber, and Illinois Blockchain Association, alongside other crypto representatives, have strongly opposed the law. 

"This will create an unprecedented tax regime that disproportionately burdens Illinois residents for simply using digital assets and will drive innovation and builders out of the state," the CCI wrote on X. 

Crypto tax uncertainty

While the tax is not designed to tax peer-to-peer transactions, like direct wallet-to-wallet transfers between individuals or onchain use cases that bypass centralized service providers, the Illinois Digital Chamber has raised concerns about a lack of clarity and specificity in the act. 

"It is also unclear how the Tax will work," the lobbying group wrote in a June 3 message opposing the DATA legislation. "Thus, a digital asset business or their customers, who merely transfer assets between wallets, convert one digital asset to another, or place assets in custodial storage, could be taxed at 0.2% of full asset value regardless of whether any economic gain has been realized, and even in instances where economic loss occurs."

This is a point echoed by Andreessen Horowitz Head of Policy & General Counsel Miles Jennings, who called DATA "one of the most anti-crypto laws in the U.S."

"It taxes the exchange, transfer, or storage of digital assets — you buy BTC, you pay a tax; you hold your BTC on Coinbase, you pay a tax; and so on," he added. 

Echoes of the 'broker rule'

As a so-called "privilege" tax on brokers and other service providers, the law resembles several recent bills that the crypto industry has opposed, most notably the so-called "broker rule."

Passed as part of the 2021 Infrastructure Investment and Jobs Act, the IRS’s "broker rule" imposed broad information reporting obligations on a wide range of entities, "effectuating" digital asset sales — including many DeFi platforms, software providers, and decentralized actors, along with exchanges and other service providers. 

Crypto groups called the broker rule unworkable, privacy-invasive, and harmful to innovation, and Congress ultimately repealed it in a 2025 bipartisan decision via the Congressional Review Act.

Illinois’ law encompasses exchanges, custodians, platforms, wallet services, and other businesses with either a physical presence in the state or over $100,000 in annual gross receipts from Illinois customers. 

Jennings noted that it appears "crypto is being singled out in violation of several federal laws" for this tax. "There is effectively no comparable state financial transaction tax on stocks, bonds, or derivatives anywhere in the country," he said. 

In 2025, Pritzker signed the Digital Assets and Consumer Protection Act and Digital Asset Kiosk Act, creating Midwest-first rules for exchanges, businesses, and crypto ATMs, a law the Digital Chamber said "reflected industry input and numerous compromises that vastly improved the final product."

"By contrast, [DATA] epitomizes the discriminatory treatment of the digital asset industry and the shortsighted policymaking that could drive innovators out of Illinois. A first-of-its-kind tax targeting an entire industry demands meaningful engagement with those it directly affects," the organization said.