Trade group The Digital Chamber sues Illinois over 0.2% gross-value crypto tax, calling it unconstitutional. The law hits every transaction regardless of profit, with no wallet-to-wallet exemption. A repeal bill is pending.
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The Digital Chamber, a crypto trade group, filed a lawsuit in Sangamon County on Wednesday to block Illinois' 0.2% blanket tax on digital asset transactions. The group argues the law violates the state constitution and burdens interstate commerce.
The law, set to take effect January 2027, applies the 0.2% tax to the gross value of every crypto transaction. It does not distinguish between profitable trades and loss-making ones. It does not exempt transfers between a user's own wallets. Users would still owe capital gains tax on top of the fee, making it one of the most aggressive state-level crypto tax regimes in the country.
The provision was slipped into legislation the night before the bill's final consideration, the lawsuit argues, without a public committee hearing. State Representative John Cabello has introduced a separate measure to repeal the tax, citing the same procedural concerns.
The Digital Chamber's complaint seeks a declaration that the Act is invalid and an injunction against its enforcement. The group argues the tax violates the Illinois Constitution, burdens interstate commerce, and is preempted by the Internet Tax Freedom Act.
There is no single federal crypto tax regime, leaving states to set their own rules. A congressional push for crypto tax clarity, including treatment of mining and staking, has drawn industry support. The proposals have not cleared committee. With the November election window tightening, action may slip into next year.
Illinois is not the first state to test a transaction-based crypto tax. The 0.2% gross-receipts structure, layered on top of existing capital gains rules, sets a punitive benchmark that other states could follow. The legal challenge gives the industry a chance to stop the template before it spreads.
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