Illinois enacts 0.2% tax on crypto transfers, effective 2027

Governor JB Pritzker signed the Digital Asset Tax Act in mid-June as part of the state’s fiscal 2027 budget. The law imposes a 0.2% privilege tax on digital asset transfers and takes effect Jan. 1, 2027. The charge applies whether a trade results in a gain or a loss.

The statute covers exchanges, transfers, custodial services and storage of digital assets. The levy is based on the gross value of each covered transaction rather than on capital gains. Routine activity such as rebalancing a portfolio or moving assets between platforms would trigger the tax on the full amount transferred.

Liability falls on digital asset brokers that have a physical presence in Illinois or that earn more than $100,000 a year from Illinois customers. Brokers must show the charge as a separate line item on customer bills. The Illinois Department of Revenue projects the measure will generate about $60 million in annual revenue.

The Crypto Council for Innovation and the Illinois Blockchain Association called the law “the most punitive digital asset tax in the United States” and urged lawmakers to repeal it before the January 2027 start date. Critics argue that taxing gross transaction value will increase costs for ordinary users and small investors, and that frequent transfers will add up quickly.

Accounting firms and tax advisers warned that the law’s definitions could capture more activity than a conventional capital gains regime. Firms highlighted potential compliance challenges for national exchanges that serve Illinois residents once they cross the $100,000 revenue threshold, including how platforms will identify Illinois customers and allocate revenue tied to those users.

At the federal level, lawmakers and regulators are reviewing proposals that could extend wash sale and constructive sale rules to a range of digital assets, which could affect loss-harvesting strategies. The law’s Jan. 1, 2027 start date leaves time for legal, legislative or administrative action before enforcement begins.

Supporters of the state budget described the levy as a modest, narrowly defined revenue source within a multibillion-dollar spending plan. Opponents called for repeal or revision, citing the tax’s transactional design and potential scope.