Illinois has published proposed administrative rules explaining how its 0.2% digital asset tax will be applied to crypto trades, wallet transfers, stablecoins, DeFi transactions and cross-chain bridge activity when the levy begins on Jan. 1, 2027.
The Illinois Department of Revenue released the draft on Sept. 28. The rules remain open for public comment through Oct. 30 and have not yet been filed with the Illinois Secretary of State or the Joint Committee on Administrative Rules.
Governor JB Pritzker signed the Digital Asset Tax Act into law on June 16 as part of Public Act 104-468. The statute imposes a 0.2% tax on the value of digital assets involved when an Illinois customer receives covered exchange, transfer or storage services from a digital asset broker.
Under the draft, stablecoins are classified as taxable digital assets, even if they are designed to hold a fixed value against fiat currency, commodities or other instruments. Nonfungible tokens are excluded, as are tokenized securities and commodities. The tax is calculated on the value of the digital asset, not merely on broker fees. A $10,000 covered transaction would produce a $20 tax regardless of profit or loss.
The proposal draws several operational lines. DeFi trades do not automatically trigger the tax unless a platform collects protocol fees for operating or maintaining the service. Network gas fees paid to miners or validators are not taxable. A centralized exchange fee for moving assets from an exchange-controlled wallet to a personally managed wallet can create a taxable transfer, even when ownership does not change. Direct peer-to-peer transfers without a paid intermediary are excluded, and internal bookkeeping with no blockchain movement is not taxable.
Cross-chain bridges are treated as taxable exchange activity when performed by a digital asset broker for consideration. Spot trades, fiat-to-crypto purchases and crypto-to-fiat conversions are also covered. Derivatives physically settled in digital assets can be taxable, as can cash-settled derivatives when settlement uses stablecoins, while fiat-settled derivatives are excluded.
Remote brokers may fall under Illinois rules if their gross receipts from covered services to Illinois customers reach at least $100,000. The law requires the tax to be separately stated from the service purchase price.
The tax is facing legal challenges. The Blockchain Association and the Crypto Council for Innovation asked a Sangamon County court on Sept. 9 for a preliminary injunction, arguing the law violates federal and Illinois law. The organizations sued in August, and the Digital Chamber filed a separate lawsuit in July. A repeal bill, HB 5798, remains pending in the Illinois House but has not advanced beyond the filing stage.
