Illinois Governor J.B. Pritzker has signed the Digital Asset Privilege Tax Act into law, imposing a 0.2% tax on covered digital asset transactions. The measure, set to take effect on January 1, 2027, is estimated by state officials to generate up to $60 million annually.
The tax was approved as part of the state’s broader budget package. It applies to a range of activities, including transfers between wallets. The legislation also includes a separate 1.75% tax on sports bets placed through prediction market platforms.
Industry Leaders Cry Foul
The new tax has drawn sharp criticism from prominent figures and industry groups. Strategy co-founder Michael Saylor publicly called the governor’s decision a “Big Mistake” in a June 17 post on X.
In a joint letter, the Digital Chamber and the Illinois Blockchain Association urged state officials to reject the proposal, arguing it could harm the state’s digital asset sector. They noted that no other U.S. state currently imposes a comparable transaction-level tax.
The Crypto Council for Innovation also sent a veto request to Governor Pritzker. The organization argued the tax is a departure from traditional systems because it taxes the activity itself, not gains or profits. It also pointed to the lack of a de minimis threshold for small transfers.
Unique Compliance Burden
The law creates new compliance obligations for digital asset brokers. According to tax advisory firm BDO, the rules can apply not only to Illinois-based businesses but also to out-of-state brokers that generate at least $100,000 in annual receipts from Illinois customers.
Brokers must collect the tax as a separate line item, maintain records, and file monthly reports. Registration requirements must be completed before the 2027 start date.
Unresolved questions remain about how the tax applies to common activities. Litigator Joe Carlasare pointed to uncertainty around wallet transfers, questioning whether moving Bitcoin from self-custody to an exchange like Coinbase and immediately selling would constitute one taxable event or two under the statute’s language.
The legislation’s passage intensifies existing tensions between Illinois and parts of the crypto industry. The state is already facing a lawsuit from the CFTC over its attempts to restrict prediction market platforms like Polymarket and Kalshi.
With the law now signed, attention is shifting from legislative debate to preparation. Brokers and users have until 2027 to understand and comply with the new framework.
Based on reporting from crypto.news.
