The Illinois Department of Revenue (IDOR) released draft rules for the Digital Asset Tax Act on September 28. The legislation, which takes effect on January 1, 2027, imposes a 0.2% tax on the value of digital assets involved in exchange, transfer, or custodial services for clients within the state.
Digital brokers are primarily responsible for collecting and remitting the tax by the 20th of each month. The tax base is calculated based on the asset's dollar value at the time of the transaction. For example, a transfer of assets worth $10,000 would incur a tax of $20, regardless of broker fees.
The draft clarifies that stablecoins are subject to the tax, while NFTs are excluded. DeFi transactions are taxable if a fee is paid to a intermediary. P2P transfers without broker involvement, as well as fees for mining, staking, and validation, are exempt from the tax requirements.
The IDOR is accepting public comments on the draft until October 30. Brokers will be required to register in Illinois starting January 1. The state determines a client's location based on residential addresses, IP addresses, and other service usage data to enforce compliance.
Industry groups, including the Digital Chamber, the Crypto Council for Innovation, and the Blockchain Association, have filed lawsuits challenging the law. They argue that the tax violates the U.S. and Illinois Constitutions, as well as the federal Internet Tax Freedom Act.
