Illinois to Impose 0.2% Tax on Crypto Trading, Custody From 2027
Summary
- Illinois said it will impose a 0.2% tax on cryptocurrency trading and custody starting Jan. 1, 2027.
- It said brokers with Illinois exposure will be subject to a registration requirement from Jan. 1, 2027, regardless of whether they meet the $100,000 revenue threshold.
- The cryptocurrency industry is pushing back against the transaction-based tax, which has no equivalent in other US states, and Jones Day said the law could face constitutional challenges.
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Illinois will impose a 0.2% tax on cryptocurrency trading, custody and related activities starting in 2027.
PYMNTS reported on July 3, citing a recent commentary by US law firm Jones Day, that brokers with Illinois exposure should start preparing for registration and reviewing their record-keeping systems.
The new tax law takes effect on Jan. 1, 2027. A tax equal to 0.2% of a digital asset's value will apply when customers in Illinois exchange, transfer or custody those assets. Customers will bear the cost, but brokers will collect the tax.
The collection requirement applies to brokers with a physical place of business in Illinois or at least $100,000 in gross receipts from the state. Jones Day wrote that brokers that have not yet met the tax-collection threshold will still be required to register starting Jan. 1, 2027.
Illinois will presume all receipts are sourced to the state unless a broker proves otherwise. Registration is required before a broker conducts digital-asset transactions with Illinois customers, rather than after it exceeds the $100,000 threshold, Jones Day said.
The law firm also advised brokers operating across multiple states or overseas to review how the new tax interacts with existing federal reporting obligations and digital-asset regulatory frameworks in other jurisdictions.
The tax was introduced after Illinois Governor J.B. Pritzker signed the bill into law in June. The cryptocurrency industry has objected, arguing the levy is a transaction-based tax with no equivalent in other US states.
Commodity Futures Trading Commission Chairman Brian Quintenz wrote in a post on X on July 2 that Illinois' new tax could weigh on Chicago's status as a financial hub.
"As blockchain technology is changing markets, choosing to raid crypto wallets rather than promote economic growth could be remembered as Chicago's last trade," Quintenz wrote.
Jones Day added that the Illinois law could face constitutional challenges.
