Crypto Tax. Big bad news for Illinois crypto users: Governor J.B. Pritzker just signed off on the Digital Asset Tax Act (SB3019) as part of the new state budget. Illinois is actually the first state in the country to roll out a tax like this on transactions. Starting in January 2027, there will be a 0.2 percent crypto tax on operations like trading, transferring, and even keeping your crypto in custody. The state expects to bring in about $60 million a year from this new rule.
A crypto tax that doesn’t care about profit
The distinction between a capital gains tax and a transactional tax matters a lot here. A capital gains tax applies when you sell an asset for more than your cost basis. A transactional tax applies to the act of moving the asset itself, profit irrelevant. Under SB3019, simply sending crypto from one account to another (even between your own wallets) triggers the 0.2 percent tax.
The law’s definition of “digital asset business activity” covers any exchange, transfer, or custody of digital assets by a business on behalf of a customer. Brokers and exchanges must collect the tax, listing it as a separate line item, much like sales tax, and face Class 3 felony charges for failure to register. Unbelievable.
How this crypto tax really works
The obligation to collect and remit the tax falls on exchanges, not individuals. Any centralized exchange that physically operates in Illinois, or any out-of-state exchange earning more than $100,000 from Illinois customers in a rolling 12-month period, must collect that 0.2 percent and send it directly to the state, much like a merchant collects sales tax at checkout.
Then, the broker would show the tax as a separate line item, and the customer would simply see a smaller amount arrive in their destination account after each transfer. The Illinois Policy Institute estimates the tax could generate as much as $60 million next year.
One of the most anti-crypto laws in the U.S.
The Crypto Council for Innovation (CCI) called it “the most punitive digital asset tax in the country,” warning it will “drive innovation and builders out of the state.” The Council also sent an opposition letter to Governor Pritzker.
Andreessen Horowitz Head of Policy, Miles Jennings, said the law singles out digital assets for special tax treatment not applied to stocks, bonds, or derivatives. Coinbase CEO Brian Armstrong noted the exchange has 1.5 million customers in Illinois and predicted the law will “hurt the state, kill jobs and push innovation out.”
Michael Saylor called it a “Big Mistake.” The provision was added at the last minute without industry input, and while CCI requested a line-item veto, the legislature is out of session until fall, making litigation the most likely path forward.
