TLDR
- The Digital Chamber filed a lawsuit seeking to block Illinois’ incoming crypto transaction tax.
- Governor JB Pritzker signed the 0.2% digital asset levy into law on June 16.
- Qualifying businesses would pay tax on gross transaction value rather than profits or net gains.
- Legal claims cite Illinois constitutional protections, the Commerce Clause, and the Internet Tax Freedom Act.
- State officials have not publicly responded, while the tax remains scheduled for January 1, 2027.
The Digital Chamber sued Illinois to block a new digital asset transaction tax before its January 1, 2027, launch. The complaint asks a Sangamon County circuit court to invalidate the measure before businesses begin calculating liabilities. The case challenges the first state tax designed specifically for crypto-related transaction activity.
Illinois Sets 0.2% Crypto Transaction Tax
Governor JB Pritzker signed the Digital Asset Tax Act on June 16 within the state’s fiscal year 2027 budget. Illinois expects the measure to generate about $60 million annually after full implementation. The broader budget totals roughly $56 billion and funds state operations during the coming fiscal year.
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The law applies a 0.2% tax to exchanging, transferring, or storing digital assets. It covers companies located in Illinois and firms serving state customers. Qualifying businesses must report at least $100,000 in annual gross receipts from covered activity.
The tax uses gross transaction value instead of profits, which forms a central part of the challenge. The complaint says the law “does not distinguish between gains and losses, between profitable and unprofitable” trades. Therefore, companies could owe tax after transactions that generated no profit or produced losses.
Lawsuit Cites Commerce Clause Against Illinois Tax
The Digital Chamber argues that Illinois violated state constitutional protections governing uniform taxation and due process. It also claims lawmakers created unequal treatment between digital asset services and comparable financial services. The filing asks the court to stop enforcement and declare the taxing provision invalid.
The complaint also cites the United States Constitution’s Commerce Clause. The group argues the tax could burden interstate activity involving companies outside Illinois. Those businesses may face liability whenever they serve customers located within the state.
A third claim relies on the federal Internet Tax Freedom Act. That law generally restricts discriminatory state taxes on internet-based transactions. The complaint says Illinois taxes blockchain infrastructure while leaving similar traditional finance activity untaxed.
Carbone Frames Lawsuit as Consumer Protection
Digital Chamber President Cody Carbone described the lawsuit as a consumer and industry protection effort. “Today we are asking the courts to protect consumers and our members and stop this unfair tax in Illinois.” Carbone made the statement after the complaint was filed.
The organization said Illinois lawmakers added the tax shortly before the bill’s final consideration. Crypto groups therefore had limited time to review the language or respond publicly. Earlier objections from industry organizations failed to remove the provision before Pritzker signed it.
No public case number has appeared, and state officials have not announced a formal response. The court now faces a limited period before Illinois begins applying the tax to qualifying businesses. The lawsuit seeks a ruling before the Illinois tax takes effect on January 1, 2027.
