Illinois Halts Crypto Tax Amid Industry Lawsuit

Illinois crypto users have secured a six-month reprieve, pending judicial approval. State officials have agreed to postpone the implementation of Illinois’ Digital Asset Tax from January 1 to July 1, 2027, according to a joint motion filed Thursday in Sangamon County Circuit Court. The filing requests the court to preliminarily enjoin, or temporarily block, the tax and stay its effective date until July.

Legal Challenge and Stipulated Delay

The motion arises from a lawsuit initiated by the Chamber of Digital Commerce, known as The Digital Chamber, and the Illinois Blockchain Association against Illinois Department of Revenue Director David Harris and Attorney General Kwame Raoul. As the motion is stipulated, meaning both parties have agreed to its terms, they are jointly requesting the same outcome from the judge. However, the court must still grant its approval.

The Digital Chamber announced the agreement on X, formerly Twitter, and acknowledged the work of its legal team at Bellementis PLLC. This delay does not resolve the underlying case, as the industry groups continue to contest the constitutionality and enforceability of the tax.

Background of the Digital Asset Tax

Governor JB Pritzker signed the Digital Asset Tax Act into law in June as part of the state’s 2027 budget. The legislation imposes a 0.2% tax on cryptocurrency activities within Illinois, including purchases and transfers, to be collected by digital asset brokers such as major exchanges. The Crypto Council for Innovation has characterized it as the “most punitive digital asset tax” in the nation. Lawmakers had projected the tax could generate up to $60 million in 2027.

Criticisms and Broader Concerns

Critics have focused on the broad scope of the levy, with The Digital Chamber arguing that the tax applies to users regardless of whether they have realized any gains.

The Blockchain Association and the Crypto Council for Innovation are pursuing their own separate legal challenge. On September 9, they filed a request with the same court to block the tax, asserting that companies were already incurring significant expenses to develop compliance systems without adequate guidance from the state.

Federal Legislative Developments

Meanwhile, in Washington D.C., the House Ways and Means Committee advanced the Digital Asset Tax Certainty Act last month. This proposed legislation includes provisions that would, among other changes, eliminate gain-or-loss calculations for qualifying network fees of $10 or less, effective from 2028.