Illinois Crypto Tax Faces New Court Bid Before It Hits Residents

Two industry groups have asked a Sangamon County judge to block Illinois’ new digital‑asset tax before it takes effect on Jan. 1, 2027. The groups argue the 0.2% levy could impose millions of dollars in compliance costs on crypto firms and expose them to felony penalties for mistakes.

Preliminary injunction request

The Crypto Council for Innovation and the Blockchain Association filed a motion for a preliminary injunction on Sept. 8. The request builds on an Aug. 21 lawsuit that claims the tax discriminates against electronic commerce, burdens interstate transactions, denies due process, and violates state constitutional tax provisions.

How the tax works

Illinois’ Digital Asset Tax Act (Public Act 104‑0468) imposes a 0.2% tax on the value of each covered exchange, transfer, or storage of digital assets received by an Illinois customer. The tax must be shown separately from the purchase price and applies to any broker that earned at least $100,000 in gross receipts from Illinois digital‑asset activity in the prior 12 months.

The state projects the levy will generate roughly $60 million annually. Violations of registration, filing, or record‑keeping requirements can carry Class 3 felony penalties, which in Illinois may result in two to five years of imprisonment.

Compliance concerns

The plaintiffs say the statute is unclear about how often a single exchange‑transfer‑storage sequence could trigger the tax, how brokers should value assets, and how to determine a customer’s Illinois residency. They cite an example where a broker’s service fee of $1‑$10 on a $1 million transaction would be dwarfed by a $2,000 tax charge.

Broader legal challenge

The Digital Chamber filed a similar suit on July 21, alleging violations of the Commerce Clause, due‑process protections, the Illinois Constitution, and the federal Internet Tax Freedom Act. The court will decide whether to halt enforcement while these constitutional challenges proceed.