Illinois Governor JB Pritzker signed Senate Bill 3019 into law yesterday, making Illinois the first state in the country to impose an income tax on crypto. This quickly drew criticism from crypto industry groups who urged him to take action on his post before it went live.
The Digital Asset Privilege Tax Act, contained within the 1,624-page bill that is part of Illinois’ $55.9 billion fiscal year 2027 bill. budgetcharges 0.2% of the value of any digital product involved in an exchange, transfer, storage, or wallet service performed on behalf of an Illinois customer.
The tax it goes into effect on January 1, 2027, and is expected to generate about $60 million a year — a fraction of the more than $800 million in new revenue the general budget is expected to generate.
The ‘chilling effect’ of crypto
Unlike gross profit or income taxesIllinois’ new levy does not wait for benefits. It lights up for action – regardless of whether the customer made a purchase. No comparable wealth tax exists anywhere in the country for stocks, bonds, or derivatives.
Crypto Council for Innovation (CCI), an international industry alliance, to be invited The measure is “the nation’s most punitive digital tax” and warns that it will create “a significant disruption to digital services in Illinois.”
Miles Jennings, Director of Policy and General Counsel at a16z Crypto, went further, compare tax on paying customers extra for receiving email instead of a letter – putting the technology to use for the payment rather than the transaction itself.
CCI’s letter to Pritzker made the same point, stating that an investor who owns a stock, bond, or paper derivative is not subject to the same tax, while the same instrument is subject to tax when running on the blockchain.
The law imposes collection duties on sellers of digital goods – exchanges, custodians, wallet providers, and companies that transfer goods between accounts.
Out-of-state sellers are subject to a one-time deduction when their annual sales from Illinois customers reach $100,000. Brokers must register with the Illinois Department of Revenue before January 1, 2027, file monthly reports, and list the tax as a separate line item on customer bills.
Failure to register for an inspection slip – unregistered sellers face a Class 3 felony, two to five years in prison and a fine of up to $25,000.
Chicago is home to a number of well-known crypto and trading companies, including Bitnomial – the first crypto exchange operator in the US – and Jump Crypto. Industry groups fear that businesses will move to the hospitality industry, eroding the capital and skills that the Illinois sector has built in the city.
The CCI argued that the order came at the worst possible time, as digital asset businesses are already driving market volatility. to give up from the implementation of Illinois’ Digital Assets and Consumer Protection Act.
Crypto taxes are not what is proposed in the SB 3019 subpoena opposition. There was also an uproar over social media and digital advertising taxes in the same bill, citing federal preemption and First Amendment concerns.
