Illinois Enacts First State Tax Targeting Cryptocurrency Transactions

Illinois will levy a 0.2% tax on crypto exchanges, transfers, custodial services and wallets starting in 2027, becoming the nation’s first state to single out digital assets for taxation.

In a budget signed by Governor JB Pritzker, Illinois introduced the Digital Asset Tax Act, a 0.2% levy on cryptocurrency exchanges, transfers, custody services and digital wallets effective Jan. 1, 2027. This marks the first state-level tax aimed specifically at digital asset transactions, distinguishing crypto from all other asset classes. While the tax targets service providers, analysts expect the expense to be passed on to consumers via higher transaction fees, potentially raising the cost of buying, selling or storing crypto.

The measure has drawn sharp criticism from industry leaders such as Miles Jennings of a16z crypto, who called it one of the most anti-crypto laws in the country, and has prompted lawsuits from the Chamber of Digital Commerce and NetChoice. Opponents warn the tax could reduce trading volume, impair market liquidity, and encourage a fragmented patchwork of state taxes that could hinder innovation in the fast-growing crypto sector.