The Illinois Department of Revenue (IDOR) published draft proposed rules for the state’s Digital Asset Tax Act on September 28, opening a public comment period through 5:00 p.m. on October 30 before the 0.2% levy takes effect on January 1, 2027. The draft rules, posted to tax.illinois.gov, mark the first formal step toward enforcing the nation’s first state-level tax on crypto transactions.
What the draft rules cover
The proposed rules will apply to digital asset brokers that provide “digital asset business activities” to Illinois customers — a term the statute defines to include exchanging, transferring, and storing digital assets on a customer’s behalf. The law treats a broker as operating in the state if it has an office, facility, or agent there, or if it is headquartered elsewhere and earns at least $100,000 in gross receipts from Illinois customers. IDOR is seeking feedback on issues the draft rules may not address, along with additional examples that would help brokers understand how the tax applies in specific situations.
How the 0.2% tax works
Under Article 3 of Public Act 104-0468, beginning January 1, 2027, Illinois imposes a tax of 0.2% on the value of the digital asset tied to any digital asset business activity received by an in-state customer. Brokers that maintain a place of business in Illinois must collect the tax from customers, remit it to the department, and register for a certificate before engaging in business in the state. The levy is imposed in addition to all other state and local occupation or privilege taxes. For electronic or phone sales, a customer is presumed to be in Illinois when their contact information shows an in-state address or IP address, placing the burden of proof on the broker.
Why the industry is watching
IDOR Director David Harris framed the comment window as a way to add clarity to a first-of-its-kind tax. “Given the novelty of the tax and the complexity of the digital asset industry, we want to ensure the rules implementing the tax provide clear direction for those affected by the new law,” Harris said. The measure has already drawn legal challenges: the Digital Chamber sued the state in July, and crypto advocates later joined the fight against the 0.2% levy. Comments received by the deadline will inform the formal rulemaking process that follows.
