Illinois Agrees to Delay Rollout of 0.2% State Crypto Tax

Crypto Tax Takes Time Out

In an agreed motion filed Oct. 1 in Sangamon County Circuit Court, the Chamber of Digital Commerce, the Illinois Blockchain Association, Illinois Department of Revenue Director David Harris and Attorney General Kwame Raoul asked the court to postpone the tax’s effective date from Jan. 1, 2027, to July 1, 2027.

The parties said the delay would preserve the status quo and allow time for briefing and a decision on the underlying legal issues without prejudicing either side.

The industry groups argue that the law violates several provisions of the Illinois Constitution, as well as the U.S. Constitution’s Commerce Clause and Fourteenth Amendment Due Process Clause. They also contend that the measure is preempted by the federal Internet Tax Freedom Act. State officials dispute those claims.

The proposed injunction would remain in effect until July 1 unless modified by the court. The agreement does not resolve the lawsuit, and both sides expressly preserve their claims and defenses.

How Does the Tax Work?

The Digital Asset Tax Act (DATA), signed into law in July by Illinois Governor JB Pritzker, would tax digital assets involved in qualifying transactions conducted for Illinois customers at a rate of 0.2%. Covered activity includes the exchange, transfer, or storage of digital assets when the transaction is recorded on a blockchain and facilitated by a qualifying broker.

The definition of broker would include centralized exchanges, some decentralized finance platforms that collect protocol fees, custodians, broker-dealers, and digital payment processors. Certain peer-to-peer platforms, token issuers, and businesses that merely refer customers to third-party providers would be excluded. Retailers that accept cryptocurrency as payment would also be exempt from being treated as digital asset brokers for purposes of the tax.

The law has faced multiple court challenges since its signing, with the Digital Chamber filing suit in July and The Crypto Council for Innovation and Blockchain Association following in September with their own lawsuit. Beyond constitutionality challenges, crypto industry advocates warn that the law is unclear and that residents could be hit with the same tax multiple times on the same transaction.

“The lawsuit argues that no one should be taxed differently because of how ownership is recorded or transferred,” the Digital Chamber said in July. “Put simply, this tax discriminates against people who transact in digital assets. This tax is universally applied, regardless of whether the investor realizes any gain, or whether ownership is even being transferred. This expansive provision would affect any tech transaction, including potentially AI and cloud-based applications.”