Illinois digital asset tax faces court challenge over 0.2% privilege tax

Crypto groups are challenging the Illinois digital asset tax in court. The Crypto Council for Innovation (CCI) and the Blockchain Association (BA) sued Illinois officials in Sangamon County, seeking to block a 0.2% privilege tax tied to covered digital-asset broker activity, due to start in January 2027. Illinois Governor JB Pritzker signed the measure in June as part of the fiscal year 2027 budget. The plaintiffs argue the Illinois digital asset tax violates the US and state constitutions, federal and state due process protections, and the Internet Tax Freedom Act. They also claim the law is unconstitutionally vague, making brokers and residents uncertain about what triggers reporting and collection and warning of serious civil and criminal penalties. A central claim is that the Illinois digital asset tax risks duplicative taxation across state lines, potentially breaching the Commerce Clause. The case follows a similar July lawsuit by the Digital Chamber, which alleged the tax discriminates against digital-asset transactions versus economically comparable traditional-asset activity. For traders and exchanges, the key near-term impact is uncertainty: if courts stay or unwind the law, compliance systems for registration, collection, recordkeeping and monthly filings may need adjustment. If it proceeds, the measure could add an ongoing cost and compliance burden, though the dispute is still at the legal challenge stage.