Illinois to Levy 0.2% Tax on Crypto Trading and Custody From 2027, Brokers Told to Register

Illinois will impose a 0.2% tax on cryptocurrency trading, transfers and custody starting in 2027.

PYMNTS reported on July 3 that U.S. law firm Jones Day said in a recent commentary that brokers with exposure to Illinois should start preparing for registration and reviewing their record-keeping systems.

The new tax law takes effect on Jan. 1, 2027. Illinois customers will pay a tax equal to 0.2% of a digital asset's value when they exchange, transfer or store it. Customers will bear the cost, while brokers will collect the tax.

The collection requirement applies to brokers with a physical place of business in Illinois or at least $100,000 in gross receipts from the state. Jones Day added that brokers that have not yet met the tax-collection threshold will still be required to register from Jan. 1, 2027.

Illinois will presume all revenue is sourced to the state unless a broker proves otherwise, Jones Day wrote. Registration will be required before a broker conducts digital-asset transactions with Illinois customers, rather than after it exceeds the $100,000 threshold.

Jones Day also said brokers operating across multiple states or overseas should review how the tax interacts with existing federal reporting requirements and digital-asset regulatory frameworks in other jurisdictions.

The tax was introduced after Illinois Governor J.B. Pritzker signed the bill last month. The crypto industry has pushed back, arguing the transaction-based levy has no equivalent in other U.S. states.

Caroline Pham, acting chairman of the Commodity Futures Trading Commission, said on X on July 2 that Illinois's new tax could weigh on Chicago's status as a financial hub.

"While blockchain technology is transforming markets, choosing to raid crypto wallets instead of fostering economic growth could go down in history as Chicago's last trade," Pham wrote.

Jones Day added that the Illinois law could also face constitutional challenges.