Crypto industry aghast at Illinois' new tax on holding or transferring digital assets in state budget

The crypto industry is pushing back against a new tax law in the state of Illinois that enacts a 0.2% tax on businesses transacting or storing crypto for customers in the state, but it may be too late to change it in the short-term.

The law enacts a 0.2% tax on "receiving any digital asset business activity," according to the text of the bill, which defined digital asset business activity as "any single occurrence of exchanging, transferring or storing a digital asset as part of a business or on behalf of a customer."

The tax applies to firms that are based in Illinois or provide services to residents of the state with total gross receipts of at least $100,000. The tax is expected to raise around $60 million, said a person following the process.

The provision was added last-minute to Illinois' broader budget bill, according to two people following the matter, and was approved by Governor J.B. Pritzker on June 16, according to the bill's status page. The legislation creates a roughly $56 billion budget for the 2027 fiscal year and also includes new taxes on fantasy sports, social media and other areas, ABC 7 reported.

The bill is also broad, and may cover digital money beyond crypto assets — such as electronic bank transfers, NYU Stern School of Business Adjunct Professor Austin Campbell said on X (formerly Twitter).

It's unclear whether the legislation can be changed anytime soon. The Illinois Senate and House calendars both indicate that the legislature is out of session for the rest of the year. There is a veto session in the fall where the governor could enact a line-item veto — which industry interest group Crypto Council for Innovation requested in a letter dated June 16 — but it's not clear if Pritzker would do so. The tax takes effect on Jan. 1, 2027.

"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," CCI noted in its letter to the governor, arguing that the measure uses the tax code to pick winners and losers by singling 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."