Illinois has approved a new tax on digital asset transactions, becoming the first US state to introduce this type of broad tax on assets like bitcoin. Governor JB Pritzker signed the measure as part of the state’s new $55.9 billion budget for fiscal year 2027.

The new law creates a 0.2% tax on certain digital asset activities. The tax will start on January 1, 2027, and applies to services such as buying, selling, transferring, storing, and managing digital assets through brokers.

State officials expect the new tax to raise about $60 million in revenue. This tax measure is one part of a larger budget plan that also includes new taxes on businesses, digital services, and fantasy sports.

Governor Pritzker claims Illinois is showing that responsible budgeting can support affordability and future growth.

"In a year marked by economic uncertainty, rising costs and unprecedented fiscal challenges created by Donald Trump and the MAGA Congress, Illinois has once again demonstrated that responsible governing and balanced budgets go hand in hand with making life more affordable for working families and investing in the future," Pritzker said.

However, the digital asset tax quickly became one of the most debated parts of the budget. The industry groups strongly opposed the measure before it became law. They argued that the tax unfairly targets digital assets and could make Illinois a less attractive place for digital asset companies and investors.

The Crypto Council for Innovation (CCI) criticized the proposal and asked the governor to remove it before signing the budget. The group said:

Critics say this makes digital assets different from other financial assets because the tax applies to the activity itself rather than profits earned.

Industry groups also warned that ordinary users could feel the impact. According to critics, even simple actions such as moving bitcoin between personal accounts may be affected.

CCI compared the tax to “taxing correspondence because it is delivered by email rather than by post.” Their argument is that a transaction should not be taxed differently just because it uses blockchain technology.

In other words, CCI is arguing that taxing something simply because it is delivered digitally rather than physically makes as little sense as taxing letters just because they're sent by email instead of through the postal service.

They say the method of delivery shouldn't change whether something is taxed if the underlying activity is essentially the same.

Other groups, including the Digital Chamber and the Illinois Blockchain Association, also opposed the law. They said lawmakers moved too quickly and gave the industry little warning. Miles Jennings, head of policy and general counsel at a16z Crypto, was also highly critical of the measure.

“There is effectively no comparable state financial transaction tax on stocks, bonds or derivatives anywhere in the country,” Jennings said.

Jennings argued that bitcoin is being treated differently from traditional financial products and warned that this could create legal and policy concerns.

The law may also affect companies located outside Illinois.

Reports say digital asset brokers outside the state may still fall under the rules if they earn at least $100,000 each year from Illinois customers. Customer records, addresses, account details, IP addresses, and other information may be used to determine whether activity counts as Illinois-based.

Starting in 2027, brokers will have to register with the Illinois Department of Revenue. They will also need to collect the tax separately, keep records, and submit monthly reports.

Many Bitcoin supporters fear the new law could push businesses and investment into other states. Critics say innovation grows best where rules are clear and balanced. They worry Illinois may become less competitive for blockchain companies in the future.