Illinois to tax crypto trades 0.2% even when traders lose money

What happened

Illinois regulators issued draft rules on Sept. 29 that describe which crypto activities fall under a 0.2% state tax, and the Department of Revenue says the text remains a draft with public comments open through Oct. 30. The tax is scheduled to take effect on January 1, 2027, and it would apply whether a trader is in profit or loss.

The draft treats stablecoins as taxable digital assets and keeps nonfungible tokens outside the tax, along with tokenized securities and commodities. DeFi swaps generally avoid the charge unless a platform collects protocol fees or other qualifying valuable consideration. Moving coins from an exchange to self-custody can become taxable when a broker charges a fee to complete the transfer. The charge is calculated from the value of the asset involved, not from the broker's fee.

Providers that operate in Illinois, or earn more than $100,000 a year from residents there, must register with the state. Failing to comply is a Class 3 felony. Supporters say the tax would contribute an estimated $60 million to the budget. Brokers would set the U.S. dollar value when the covered activity is completed, using their own spot price or a benchmark from a regulated market-data provider.

Why it matters

The proposal faces public, corporate and lawmaker resistance. Crypto groups led by the Crypto Council for Innovation and the Blockchain Association jointly filed a motion to block it, arguing it violates federal and state law. Venture firm a16z says the measure creates a double taxation system, and Strategy's Michael Saylor warns it could dry up state liquidity and push providers toward Texas or Florida. Opposing lawmakers filed counter-bill HB 5798, which would strike the tax.

Background

The tax comes from the Digital Asset Tax Act, which Governor JB Pritzker approved on June 16 as part of Public Act 104-468. A second report says he signed the measure as part of the state's fiscal 2027 budget bill, SB 3019. Most states instead follow federal IRS rules, where crypto counts as property and draws standard capital gains taxes.

What is still unclear

• The Department of Revenue has not yet filed the rules with the Illinois Secretary of State or submitted them to the Joint Committee on Administrative Rules, so the final text is not settled.
• Public comments on the draft run through Oct. 30, the feedback window the department set.
• It is not clear how the challenge from crypto groups or counter-bill HB 5798 will affect the tax before it starts.

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