Illinois digital-asset tax legal challenge and policy debate

Illinois enacted a targeted 0.2% levy on digital-asset business activities in June 2026 that hits transactions, transfers and custody services when an entity records more than $100,000 in gross receipts connected to the state. Trade groups including the Blockchain Association, the Crypto Council for Innovation and the Digital Chamber have filed separate lawsuits in Sangamon County Circuit Court arguing the measure is unconstitutional. They contend the tax discriminates against a single slice of interstate commerce, raises due process concerns by reaching entities with minimal ties to Illinois, and may violate the federal Internet Tax Freedom Act if digital-asset activity qualifies as electronic commerce. Plaintiffs requested a preliminary injunction on September 9, 2026 to block enforcement before the law’s January 1, 2027 effective date, warning firms face costly compliance: industry estimates range from tens or hundreds of thousands of dollars up to more than $1 million per firm. The challenges also criticize the legislative process that adopted the tax as part of the fiscal 2027 budget package, arguing limited debate accompanied the creation of a novel state tax category that could set a broader precedent.