Illinois to Levy 0.2% Tax on Crypto Transfers in 2027, Industry Leaders Call It a "Big Mistake"

Illinois is set to introduce a new crypto tax in 2027, becoming the first U.S. state to impose a transaction-based tax on digital assets. Experts are projecting that about $60 million could be raised through this new measure. Meanwhile, crypto industry groups did not take the news lightly. They warn that this could drive businesses away from Illinois.

Governor of the state, JB Pritzker, signed the Senate Bill 3019 into law as part of the state's 2027 budget. The legislation includes the Digital Asset Tax Act, which introduces a 0.2% tax on certain digital asset activities from January 1, 2027.

The new tax will apply to any form of exchanging, transferring, and storing of digital assets. It will be collected by digital asset brokers. This includes exchanges and other platforms that serve customers in Illinois. Critics have since argued that the law unfairly targets the crypto industry.

Industry leaders push back against Illinois crypto tax

The Crypto Council for Innovation (CCI), a trade group representing companies in the digital asset sector, was quick to respond to the news, strongly criticizing the crypto tax.

In a letter to Pritzker, the group called the measure the "most punitive digital asset tax" in the country. According to the CCI, no other state currently charges this kind of tax on digital assets.

The organization warned that the law could make Illinois less attractive for crypto companies and investors looking to establish businesses in the state. They also highlighted that residents could end up paying more for utilities simply because they use digital asset services.

"Illinois would be an outlier," the group said, while also adding that stocks, bonds, and derivatives are not subject to a comparable state transaction tax. 

The CCI also berated how the proposal was passed, saying the industry had no chance to provide its feedback before it became law.

Meanwhile, Strategy executive chairman Michael Saylor joined voices with other critics, calling the move a “Big Mistake”.

Questions remain on how the tax will work

Since the report, there have been unanswered questions about how the tax will be applied in practice. The legislation already designated the collection of the tax on digital asset brokers. However, it is still not clear whether activities like self-custody wallets or decentralized finance platforms will fall under these rules.

The Illinois Digital Chamber said in a June 3 letter that the broad language of the bill could create confusion for both businesses and users. They highlighted that the law says thecrypto  tax should be imposed on " a digital asset business activity."  Now, because the definition of digital asset activity is wide, questions would still remain on what kind of transactions would be taxed.

This is a big concern for crypto companies already operating in Illinois.  Businesses may decide to absorb the new tax or choose to leave the state in its entirety.

“The Tax will discourage the use of digital assets at the very time when financial services are moving to the blockchain,” Digital Chamber added. “...pushing the existing IL blockchain and crypto companies out of the state.”