Illinois Lawmakers Approve New Crypto Asset Tax, Violators Face Serious Criminal Penalties
Illinois lawmakers have approved a new tax on cryptocurrency transactions as part of the state’s US$56 billion budget package. The proposal, called the Digital Asset Privilege Tax Act, would impose a 0.2% tax on crypto transactions. The bill now only needs the signature of Governor JB Pritzker before it becomes law.
State officials estimate the tax could generate around US$60 million in annual revenue. Under the proposal, companies classified as digital asset brokers must register with the state before facilitating certain crypto transactions.
The legislation also includes strict penalties for non-compliance. Beginning Jan. 1, brokers that operate without proper registration could face Class 3 felony charges, which carry penalties of two to five years in prison and fines of up to US$25,000.
The proposal has drawn criticism from industry groups. The Digital Chamber and the Illinois Blockchain Association urged state officials to reject the measure, arguing that it could hurt the state’s digital asset sector. They said the tax was introduced without sufficient consultation with industry participants and noted that no other U.S. state currently imposes a similar tax on crypto transactions.
The Digital Chamber also criticized the legislative process, saying stakeholders were given little notice before the tax was added to the state budget package. Critics further argued that the measure was included within a massive 1,624-page budget bill instead of being debated separately.
The Illinois proposal comes as regulators across the United States increase their focus on digital assets. Earlier this year, Governor Pritzker signed an executive order prohibiting state employees from using confidential government information to trade prediction market contracts or assist others in doing so.
A similar order was signed in New York by Governor Kathy Hochul, barring state officials from using nonpublic information for personal gain in prediction markets.
At the federal level, lawmakers are also considering new crypto tax policies. On June 5, the U.S. House Ways and Means Committee released several discussion drafts covering topics such as stablecoins, staking rewards, mining income, DeFi lending, wash-sale rules, charitable donations, and crypto tax reporting.
The proposals are expected to be discussed during a congressional hearing on June 9. Governor Pritzker has previously indicated that he intends to sign Illinois’ budget package, although final approval had not yet been granted as of Friday morning.
