Illinois Lawmakers Approve Crypto Tax Law with Felony Penalties

The Illinois General Assembly has approved a budget bill for fiscal year 2027, which imposes a new tax on cryptocurrency transactions, specifically aimed at digital asset brokers operating in the state.

This initiative is part of the state’s $56 billion budget package, which introduces a 0.2% tax on cryptocurrency transactions outlined in the Digital Asset Privilege Tax Act. The bill passed along party lines on Monday and is awaiting Governor JB Pritzker’s signature to become law.

State budget forecasts indicate that the tax could yield approximately $60 million in revenue. As stipulated in this proposal, any entity recognized as a digital asset broker must register with the state before conducting any applicable crypto transactions.

Failure to comply may have serious legal consequences. The legislation states that brokers who do not register by January 1 could encounter Class 3 felony charges, which in Illinois can result in prison sentences of two to five years and fines up to $25,000.

Industry Groups Push Back

Opposition emerged quickly after the bill’s passage in the legislature. In a joint statement released on Wednesday, the Digital Chamber and Illinois Blockchain Association urged state officials to reject the Digital Asset Privilege Tax Act, contending that it would adversely impact the local digital asset industry.

Illinois’ proposed 0.2% digital asset tax would adversely affect residents and businesses during a time of accelerating digital asset adoption and innovation.

No other state has imposed a similar tax, and the absence of stakeholder engagement concerning this proposal raises… pic.twitter.com/Yrh2t7uj7C

— The Digital Chamber (@DigitalChamber) June 4, 2026

The organizations noted that the legislation was introduced without proper consultation with industry stakeholders and emphasized that no other state currently enacts a comparable tax on cryptocurrency transactions.

Moreover, the Digital Chamber raised concerns about the rapid incorporation of the tax into the budget without prior notification to stakeholders. They characterized the tax as potentially damaging to economic growth and suggested its removal before final approval.

Critics have also highlighted flaws in the legislative process, claiming that the crypto tax was hidden within a lengthy 1,624-page budget bill instead of being considered as a separate topic.

Increased Attention on Digital Assets by States and Congress

The Illinois tax proposal coincides with an intensified focus by policymakers across the U.S. on the governance and taxation of digital assets.

Earlier this year, Governor Pritzker enacted Executive Order 2026-04, which prohibits Illinois state employees from using nonpublic information obtained during their official duties for trading in prediction market contracts or aiding others in such trades. The governor’s office stated that this move seeks to enhance ethical safeguards as prediction markets expand.

A similar measure was adopted in New York the following day, with Governor Kathy Hochul signing Executive Order 60, which also restricts state officials from exploiting confidential government information for personal benefit in prediction markets, allowing for disciplinary action for violations.

Additionally, federal legislators are reviewing various crypto tax proposals. On June 5, the U.S. House Ways and Means Committee released seven discussion drafts addressing diverse topics like stablecoin payments, staking rewards, mining income, DeFi lending, wash-sale rules, charitable contributions, and voluntary disclosure programs for crypto taxpayers.

The committee plans to discuss these proposals during a congressional hearing on June 9, drawing insights from the PARITY Act and legislation introduced by Senator Cynthia Lummis.

Governor Pritzker has publicly expressed his intention to sign Illinois’ budget package, although the measure had not received final approval as of Friday morning.