Illinois drafts rules for digital asset transaction tax

When the tax would apply

The Illinois Department of Revenue released draft rules for the Digital Asset Tax Act on Sept. 28. The law, adopted in June, takes effect Jan. 1, 2027.

Under the draft, a transaction would be taxable when four conditions are met: The client is in Illinois, receives a digital asset service, pays a digital asset broker to conduct the transaction, and the activity is recorded on a blockchain.

The tax would equal 0.2% of the digital asset’s dollar value when it is exchanged, transferred or stored. A broker could use its own spot price or, if that is unavailable, a benchmark from a regulated market data provider. The calculation would be based on the asset’s value rather than the broker’s fee or the client’s profit. A taxable transfer, for example, would produce a tax.

Transactions covered by the draft

Stablecoins would count as digital assets. DeFi and decentralized-exchange activity could also be taxed when an intermediary receives a fee and the other conditions are met.

A brokered transfer between two accounts belonging to the same person could be taxable if it carries a fee and appears on the blockchain. An internal bank record change without a corresponding blockchain transaction would not be taxed.

Peer-to-peer transfers without a paid broker would be outside the tax. Payments for mining, staking or blockchain validation would not count as broker compensation, and NFTs would be excluded.

Rulemaking and collection

The draft has not been submitted to the Illinois secretary of state or the Joint Committee on Administrative Rules. IDOR is accepting comments through Oct. 30, including feedback about unaddressed transactions or provisions needing clarification.

Covered brokers would register in Illinois, file monthly returns and send collected taxes to the state by the 20th of the following month. For remote transactions, location could be determined through information such as a home or mailing address, IP address and primary place of service use.