Illinois' 0.2% Crypto Tax: Industry Pushes Back

Illinois approved a 0.2% tax on digital asset businesses, catching the crypto industry off guard. Governor J.B. Pritzker signed the broader budget bill on June 16. The tax applies to any firm based in Illinois or serving residents, provided total gross receipts reach $100,000. A person following the process said the measure is expected to raise around $60 million.

The tax covers “any single occurrence of exchanging, transferring or storing a digital asset as part of a business or on behalf of a customer,” according to the bill’s text. Austin Campbell, an adjunct professor at NYU Stern School of Business, said on X that the wording could extend beyond crypto to electronic bank transfers. That ambiguity has fueled industry concern.

Industry groups quickly mobilized. The Crypto Council for Innovation sent a letter to Pritzker on June 16 requesting a line-item veto. “Unlike traditional tax frameworks that are tied to income, gains or profits, this law would impose a 0.2% tax on everyday customers' use of digital asset services such as exchange, transfer or custody activities,” the letter said. The group argued the measure singles out crypto for unique treatment. “There is effectively no comparable state financial transaction tax imposed on the exchange, transfer or custody of stocks, bonds or derivatives anywhere in the country.”

Miles Jennings, head of policy and general counsel at Andreessen Horowitz Crypto, called the new law “one of the most anti-crypto laws in the U.S.” in a post on X. The criticism stands in contrast to Illinois’ recent Digital Assets and Consumer Protection Act, which Jennings described as “a constructive approach to blockchain technology.”

The tax was inserted into the budget at the last minute, according to two people following the matter. The budget also includes new taxes on fantasy sports and social media. The state legislature is out of session for the rest of the year. A veto session in the fall offers one window for Pritzker to reverse the tax, though it is not clear he will act.

A person following the process said the most likely path to change is a lawsuit. Several entities are already discussing litigation, though nothing has been filed yet.

The political backdrop adds tension. Illinois’ Democratic Senate primary saw the crypto industry back Rep. Raja Krishnamoorthi with $10 million, opposing Pritzker’s preferred candidate, Lieutenant Governor Juliana Stratton. Stratton won the primary and is expected to replace retiring Senator Dick Durbin. Stand With Crypto, a Coinbase-backed advocacy group, gave Stratton an “F” grade on digital assets. Stratton had posted on X that “MAGA-backed crypto bros are dumping $7 million” into the primary race.

The tax takes effect on Jan. 1, 2027. Until then, crypto firms with Illinois ties face uncertainty over compliance costs and the threat of litigation.