INSIGHT

Illinois Enacts New Digital Asset Tax: Key Considerations for Digital Asset Businesses

Dilyana Antevil, Javier Salinas • July 13, 2026

Services: Tax

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Illinois has enacted a new tax regime that may have significant implications for digital asset brokers and related businesses serving Illinois customers. On June 16, 2026, Governor JB Pritzker signed SB 3019, which included the Digital Assets Tax Act (Act) as part of the state’s $55.9 billion budget bill. Beginning January 1, 2027, Illinois will impose a 0.2% privilege tax on the receipt by an Illinois customer of covered digital asset business activity, with in-scope digital asset brokers generally responsible for collecting and remitting the tax.

The Act makes Illinois the first state to impose this type of transaction-based tax specifically on digital asset brokers. Unlike brokers handling stocks, bonds, or commodities, digital asset brokers may now face a separate Illinois tax obligation, raising important questions regarding classification, sourcing, valuation, customer billing, systems readiness, and multistate planning. Digital asset businesses, custodians, digital asset exchanges, payment processors, hosted wallet providers, and other intermediaries with Illinois activity should begin evaluating the Act’s potential impact well before the January 1, 2027 effective date.

Who Is Subject to the Digital Asset Tax?

The DAT applies to digital asset brokers for the privilege of receiving digital asset business activity by a customer in Illinois. A digital asset broker generally means a person, as defined in Section 6045(c)(1)(D) of the Internal Revenue Code and related Treasury regulations, that is engaged in the business of providing digital asset business activity to Illinois customers. Because the Illinois definition cross-references federal broker reporting rules, determining whether a business is an in-scope broker may require a separate federal tax reporting analysis. This may be particularly important for custodial platforms, hosted wallets, payment processors, kiosks, DeFi interfaces, and other nontraditional intermediaries.

The term “digital asset business activity” generally means a single occurrence of exchanging, transferring, or storing a digital asset as part of a business or on behalf of a customer that has entered into an agreement with a business for those services. Businesses should evaluate not only whether they interact with digital assets, but also whether their specific activities constitute exchange, transfer, or storage activity covered by the DAT. They should also consider whether statutory or regulatory exclusions may apply, including for certain peer-to-peer, decentralized, software, NFT issuance, validation, node operation, or similar blockchain infrastructure activities.

Businesses should also distinguish customer-facing exchange activity from proprietary or principal-capacity trading, because the statutory definition of “exchange” excludes buying, selling, or trading digital assets for a person’s own account in a principal capacity.

How the Digital Asset Tax Works

The DAT is imposed at a rate of 0.2% of the value of the digital asset to which the digital asset business activity relates. The tax is structured similarly to a collection tax: an in-scope broker must collect the DAT from its customer by adding it to the purchase price, generally state it as a separate item, and remit it to the Illinois Department of Revenue. If the broker does not collect the tax, the broker may still be liable, while the customer may also have a direct payment responsibility if no tax was charged. The DAT must be remitted to the Department no later than the 20th day of the month following the month of payment for the digital asset business activity.

Because the 0.2% rate applies to the gross value of the digital assets to which the business activity relates, rather than to the broker’s net profit margin, affected brokers should evaluate whether and how to pass the tax through to customers, and whether customer agreements, invoices, disclosures, or pricing models should be updated.

Valuation

A key open issue is how the value of digital assets will be determined for different types of activity, particularly custody or storage services, transfers between customer accounts or wallets, bundled services, illiquid tokens, and digital assets without reliable market pricing. Additional guidance from the Illinois Department of Revenue will be important.

Nexus Threshold

To fall under the Act, a digital asset broker must “maintain a place of business in the state,” which means crossing one of the following two state tax nexus thresholds:

• Physical presence: Maintaining an office, a distribution facility, a transmission facility, a sales office, a warehouse or another place of business, in Illinois, directly, through a subsidiary, through an agent or other representative operating within the state under the authority of the digital asset broker or its subsidiary; or
• Economic presence: Selling digital asset business activity remotely from outside Illinois and generating $100,000 or more in gross receipts from such sales to Illinois customers.

Once a digital asset broker meets either nexus threshold for the preceding 12-month period, it has a one-year filing obligation. At the end of that one-year period, the broker must determine whether it met the threshold during the preceding 12-month period and, if so, must continue to file returns for another year.

Out-of-state digital asset brokers should analyze their remote economic presence in Illinois on a quarterly basis, measured as of the last day of March, June, September, and December, for the preceding 12-month period. If the $100,000 receipts threshold is satisfied, the broker is required to collect and remit DAT for one year, and test again whether it has crossed the threshold and should continue to file for the subsequent year.

Sourcing

For a sale occurring electronically or by phone, there is a rebuttable presumption that the customer requesting the sale is located in Illinois if the customer’s contact information associated with a device or account on record with or available to a digital asset broker indicates an Illinois physical address, an Illinois Internet Protocol address, or other data showing that the “place of primary use,” as defined in the Mobile Telecommunications Sourcing Conformity Act, is in Illinois. For a sale occurring in person, the physical location of the customer at the time of the transaction determines the sourcing. The burden of proof that the customer is not in Illinois is on the digital asset broker.

Books, Records, and Audit Readiness

The Act requires brokers to maintain books and records reflecting digital asset business activity sold in Illinois, information used to calculate tax due, and documentation supporting the location of each sale, making complete and accessible records essential to audit readiness. These books and records must be available for inspection by the Department during usual business hours until the statute of limitations expires for the applicable tax period.

Registration Requirements

Effective January 1, 2027, digital asset brokers may not operate in Illinois without a certificate of registration from the Illinois Department of Revenue. A digital asset broker must register electronically with the Department as of that date. A certificate of registration is valid for a period not to exceed one year and is automatically renewed for an additional one-year period unless otherwise noted by the Department, subject to revocation, cancellation, or suspension. No certificate will be issued to a taxpayer that is in default to the state of Illinois under the Act or any other Illinois tax law. Businesses should also assign responsibility for monitoring electronic state tax notifications related to registration, filing obligations, and Department correspondence.

Key Compliance and Planning Considerations

Businesses potentially affected by the Illinois DAT should consider addressing the following issues before the January 1, 2027 effective date:

• Classification questions. Is your business structured and documented in a way that clearly defines your role as a broker, custodian, or another category that falls under the state’s definitions?
• Sourcing and nexus analyses. Does your transaction volume from Illinois customers cross the $100,000 threshold, and how would you know if they did?
• Contracting and pricing. How does the DAT change your pricing model, and should you be amending your customer contracts to pass the tax onto your customers?
• Compliance and audit-readiness. How should you assess customer geolocation controls, pricing feeds, tax engine configuration, wallet and account activity mapping, and invoice line-item treatment, and establish crypto compliance and risk management strategies that can withstand audits and examinations?
• Timing pressure and modeling. Given the fast-approaching effective date, do you have a sufficient runway to model the financial impact and adjust your operating strategy to encompass this new tax?
• Multistate complexity. If Illinois is the first state, but may not be the last state, to impose a transaction tax on digital assets, how should you build a tax strategy that can handle additional jurisdictions which may follow suit?

These issues may require cross-functional coordination among tax, legal, finance, product, engineering, compliance, and customer operations teams. Businesses that begin evaluating their exposure now may be better positioned to implement system changes, update contractual terms, and manage customer communications before the effective date.

Why This Development May Extend Beyond Illinois

Illinois previously enacted the Digital Assets and Consumer Protection Act in August 2025, establishing a regulatory framework for digital asset businesses focused on consumer protection. The enactment of a digital asset transaction tax less than a year later suggests that Illinois is treating digital assets not only as a regulatory priority, but also as a potential revenue source.

This development may be relevant even for businesses with limited current Illinois activity. States often monitor one another’s legislative approaches, and Illinois’ DAT may provide a model for other jurisdictions considering digital asset-specific tax measures. Businesses operating across multiple states should consider incorporating the Illinois DAT into broader multistate tax risk assessments and readiness planning.

Preparing for the January 1, 2027 Effective Date

Although the 0.2% rate may appear modest, the impact can be significant for high-volume digital asset businesses when applied to gross transaction value. The operational requirements associated with collection, sourcing, valuation, registration, recordkeeping, and monthly remittance may also require substantial lead time. Digital asset businesses should consider beginning their readiness analysis now to reduce the risk of compressed implementation timelines later in 2026.

How BPM Can Help

BPM’s tax services work with digital asset businesses, blockchain companies, custodians, exchanges, and other market participants to evaluate evolving state tax requirements and develop practical compliance and planning strategies. We can assist with broker classification, nexus and sourcing analyses, valuation considerations, customer billing and contract review, tax engine readiness, recordkeeping processes, and multistate planning. If you have questions about how the Illinois DAT or future state-level digital asset tax policy may affect your business, contact BPM to discuss next steps.