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Illinois Becomes First State to Tax Crypto Activity at 0.2%
Illinois becomes first US state to tax crypto transactions at 0.2%, with registration due by Jan 2027 and broad out-of-state reach. Industry groups oppose.
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Governor JB Pritzker signed a $55.9 billion state budget that includes a 0.2% tax on digital asset business activity. The measure targets brokers handling exchange, transfer, custody, and wallet services. It takes effect Jan. 1, 2027.
The tax is not on gains or income. It applies to the activity itself, a design that industry groups say treats crypto differently from traditional assets. Miles Jennings, head of policy at a16z Crypto, said there is "no comparable state financial transaction tax" on stocks, bonds, or derivatives anywhere in the U.S. Illinois is the first state to enact this kind of broad transaction-level crypto tax. Previous state efforts focused on income or property. The law estimates about $60 million in annual revenue.
Who pays and who collects. The tax falls on digital asset brokers, defined broadly. Any firm that facilitates exchanges, transfers, custody, or wallets is included. The rule reaches out-of-state brokers too. If a broker has at least $100,000 in annual receipts from Illinois customers, it must register and collect. The sourcing rules are aggressive. A transaction counts as Illinois activity if customer location, account records, mailing address, IP address, or other data points show the state as the primary use place. That means a broker with no physical presence in Illinois can still owe the tax. Brokers must collect the tax as a separate line item from customers. Customers owe it to the provider. Brokers file monthly reports covering the prior month's activity.
Registration must happen before Jan. 1, 2027. Brokers need to register with the Illinois Department of Revenue before starting covered activity. The registration lasts one year and renews automatically unless canceled or revoked. An earlier version of the bill included criminal penalties for unregistered brokers after the start date. The signed budget keeps those penalties. BDO USA, the accounting firm, noted that registration duties begin before the tax takes effect. Firms with Illinois users should review user records, activity types, billing systems, and registration steps now.