Illinois is moving closer to introducing a new tax on cryptocurrency transactions after state lawmakers approved a budget bill that includes stricter rules for digital asset businesses.
The proposal is part of the state’s $56 billion budget package and would impose a 0.2% tax on certain cryptocurrency transactions under a measure called the Digital Asset Privilege Tax Act.
The bill has already passed the Illinois General Assembly and now only requires the signature of Governor JB Pritzker to become law.
State officials estimate the new tax could generate around $60 million in annual revenue. Under the proposal, companies and businesses classified as digital asset brokers would be required to register with the state before facilitating covered cryptocurrency transactions.
The legislation also includes strict penalties for businesses that fail to comply. Brokers operating without proper registration after January 1 could face Class 3 felony charges. These penalties may include prison sentences ranging from two to five years and fines of up to $25,000.
The proposal has drawn strong criticism from cryptocurrency industry groups. The Digital Chamber and the Illinois Blockchain Association have both urged Governor Pritzker to reject the measure.
According to the groups, the tax could hurt the state’s growing digital asset industry and make Illinois less attractive for crypto businesses. They also argue that the proposal was introduced without meaningful consultation with industry participants.
Critics have raised concerns about the way the measure was passed. Rather than being debated as a separate bill, the crypto tax was included within a massive 1,624-page state budget package, limiting public discussion of the proposal.
Industry representatives also point out that no other U.S. state currently imposes a similar tax specifically targeting cryptocurrency transactions.
The Illinois proposal comes as governments across the United States increase their focus on regulating and taxing digital assets. State and federal lawmakers are exploring a variety of approaches aimed at improving oversight, increasing tax compliance, and addressing emerging issues within the cryptocurrency sector.
At the federal level, lawmakers are currently reviewing several crypto-related tax proposals covering areas such as stablecoins, staking rewards, mining income, decentralized finance activities, charitable donations, and tax reporting requirements.
Governor Pritzker has previously indicated that he intends to sign the state’s budget package, although final approval had not yet been granted at the time of the latest reports.
If signed into law, Illinois would become one of the first states in the country to introduce a dedicated tax on cryptocurrency transactions, potentially setting a precedent that other states may watch closely.
