Illinois has become the first U.S. state to tax digital asset trading directly. The Digital Asset Privilege Tax Act, folded into the state's roughly $56 billion fiscal 2027 budget, sets a 0.2% levy on covered crypto transactions handled by digital asset brokers operating in Illinois. Lawmakers approved the package along party lines on June 2, 2026, and the measure resurfaced in public debate this week after Chicago attorney and former federal prosecutor Renato Mariotti argued lawmakers quietly slipped the provision into the budget at the last minute, per CoinDesk.
The tax lands at a moment when prices have been climbing back. Bitcoin traded near $65,712, up about 2% on the day as of June 14, 2026, while the broader market still sat in "Fear" on sentiment gauges. Because the levy is charged on the value of the asset moved, not a flat fee, a rising market means a rising tax bill on the same volume of trades.
A 0.2% levy on every covered transaction
The new law charges 0.2% of the value of a digital asset involved in an exchange, transfer, storage, or custodial service. Starting January 1, 2027, it applies to any digital asset broker with a place of business in Illinois, a category the statute draws widely: exchanges, trading firms, custody and wallet providers that hold customer assets, and firms that transmit digital assets between accounts. The threshold pulls in any broker with at least $100,000 in annual digital asset business receipts.
State budget documents project the tax will raise roughly $60 million a year. It is one piece of a spending plan that carries more than $800 million in new revenue measures, with fresh taxes also landing on social media companies, fantasy sports operators, prediction market betting, remote tobacco sellers, and digital advertising. Crypto was bundled into a much larger revenue grab, which is part of why the industry says it got little scrutiny.
Felony exposure for unregistered brokers
The penalty structure is what separates this from a routine tax line. Brokers must register with the state before facilitating covered transactions. An unregistered broker faces a Class 3 felony, carrying prison sentences of two to five years and fines up to $25,000.
Criminal liability for a compliance lapse is unusual in tax law, and it raises the stakes for any firm uncertain about whether it counts as a "broker" under the act. The definition is broad enough that custody services, transfer agents, and wallet operators holding customer funds could all fall inside it, which leaves limited room for a firm to assume it is exempt.
Pushback from Chicago's trading establishment
Industry groups moved quickly to ask Governor JB Pritzker to pull the measure. The Digital Chamber and the Illinois Blockchain Association called it "substantively unsound, procedurally deficient, and economically destructive," and noted that no other state imposes a privilege tax on digital asset trading. They also flagged the process: the provision sat inside a 1,624-page budget bill with no stakeholder consultation before passage.
The criticism is not coming only from advocacy groups. Don Wilson, founder of the Chicago trading firm DRW, warned the tax threatens Illinois' standing as a hub for crypto and traditional trading firms. Chicago is home to some of the largest market makers and derivatives venues in the country, and a transaction-value tax on storage and transfers, not just trades, gives those firms a concrete reason to route activity through other states.
Reach beyond exchanges into custody and wallets
The detail that matters for everyday users sits in the scope. By taxing "storing" and "custodial services," the act reaches firms that hold balances on a customer's behalf, including the custodial setups behind many crypto debit products. A self-custody wallet, where the user holds the keys and no broker takes custody, sits in a different position than an account at a custodial provider with an Illinois footprint. The line between the two is exactly the kind of question the statute's broad "broker" definition leaves open until the state issues guidance.
For now, nothing changes at the point of sale. The tax falls on brokers, not directly on cardholders, and it does not take effect until 2027. Costs charged to brokers tend to migrate toward customers over time through fees or spreads, but how Illinois-based firms respond, and whether they pass the 0.2% along, push activity out of state, or challenge the law, will not be clear until closer to the effective date. Crypto users in the United States, and especially those in Illinois and other states watching the precedent, should expect the broker-registration scramble to start well before January.
Overview
Illinois approved a Digital Asset Privilege Tax of 0.2% on covered crypto transactions by brokers operating in the state, effective January 1, 2027, with a projected $60 million in annual revenue. Unregistered brokers face Class 3 felony charges of two to five years in prison and fines up to $25,000. The tax covers exchanges, transfers, storage, and custody, applies to brokers with at least $100,000 in annual receipts, and is the first of its kind in the country. Industry groups and Chicago trading firms are pressing Governor Pritzker to reverse it, arguing it was buried in a 1,624-page budget without consultation and risks pushing firms out of the state.
