Illinois to Tax Crypto Trades 0.2%—Even on Losing Trades

On September 29, the Illinois Department of Revenue officially released a draft outlining details of its Digital Asset Tax Act (DATA).

Notably, Governor J.B. Pritzker signed the unparalleled bill into law on June 16 as part of the state’s fiscal 2027 budget bill (SB 3019). 

Illinois mandates 0.2% crypto transaction tax

Most states have defaulted to the federal IRS rules, where crypto is treated as property and therefore attracts standard capital gains taxes.

Differently, Illinois’s DATA will charge a 0.2% transactional “privilege tax” based on the gross value of the digital asset.

More specifically, this tax will cover any type of crypto activity, including crypto conversions, crypto movements, and basic custodial storage.

To enforce this, Illinois will require mandatory state registration by all crypto service providers operating within the state or earning over $100,000 annually from its residents. Failure to comply will constitute a Class 3 felony.

Reaction from supporters and critics

The law is set to take effect starting January 1, 2027. Supporters argue that the state has the right to impose taxes on digital infrastructure. Crypto taxation would also contribute an estimated $60 million to the budget.

Meanwhile, the greater public is pushing heavy backlash against the proposal, saying it goes against Trump’s directive to make America the world’s crypto capital.

Crypto giants led by the Crypto Council for Innovation (CCI) and the Blockchain Association jointly filed a motion to block it earlier this month. Their argument is that it violates federal and state laws, calling it “discriminatory” and “the most punitive” of its kind in the US.

Venture capitalist a16z warns that DATA creates a double taxation system, in addition to demonstrating a fundamental misunderstanding of blockchain technology. Strategy’s Michael Saylor warns it could dry up the state’s liquidity, while forcing crypto service providers to relocate to tax-friendlier states such as Texas and Florida.

Opposing lawmakers stepped in with a counter-bill (HB 5798) that completely strikes off the tax.