Key Takeaways:
Illinois is one step from becoming the first US state to impose a direct privilege tax on crypto transactions, after lawmakers approved a 0.2% levy on digital asset trades as part of a $56 billion budget plan.
"No other state has imposed a similar tax, and the lack of stakeholder engagement surrounding this proposal raises significant concerns," the Digital Chamber said in a statement Thursday.
The measure, embedded in Senate Bill 3019, would require digital asset brokers to register with the Illinois Department of Revenue and collect the tax from customers starting Jan. 1. Brokers who fail to comply could face a Class 3 felony charge, carrying a prison sentence of two to five years and fines of as much as $25,000. Lawmakers project the tax will generate $60 million annually for the state.
Governor JB Pritzker said he plans to sign the budget package into law, though he had not done so as of Friday. If enacted, Illinois would set a precedent that other cash-strapped states could follow, potentially reshaping the compliance landscape for crypto brokers operating across the US.
The tax applies to transactions executed through registered brokers, not private peer-to-peer trades. If a broker fails to collect the levy, the purchaser is responsible for paying the tax by the 20th day of the following month, according to the bill text.
The Digital Chamber and the Illinois Blockchain Association co-signed a letter Wednesday urging state lawmakers to reject the Digital Asset Privilege Tax Act, arguing the industry received no notice before the provision was inserted into the 1,624-page budget bill. The groups described the tax as "economically destructive" and warned it could drive crypto activity out of Illinois.
The crypto tax provision is one of several new revenue measures in the budget. Others include a per-user tax on large social media platforms expected to raise $200 million and a 15% tax on fantasy sports operators projected to generate $5 million. The budget does not raise Illinois' sales or income tax rates.
Pritzker's push to tax digital assets follows his April 21 executive order banning state employees from betting on prediction market contracts through platforms such as Kalshi and Polymarket, citing concerns about insider trading.
This article is for informational purposes only and does not constitute investment advice.
