Illinois publishes draft rules for 0.2% digital asset transaction tax

The Illinois Department of Revenue has published draft rules for its upcoming 0.2% digital asset transaction tax, scheduled to take effect on January 1, 2027. Enacted under the Digital Asset Tax Act, the rules clarify that stablecoins, cross-chain bridges, and fee-bearing self-custody transfers will face the levy, while nonfungible tokens, peer-to-peer transfers, and standard DeFi transactions remain exempt. The state is accepting public comments on the draft regulations through October 30, 2026.

Administrative status of the draft rules

• ▪The Illinois Department of Revenue proposed draft rules on September 25, 2026, to implement a 0.2% tax on the value of digital asset transactions, including exchanges and transfers, regardless of profit or loss.
• ▪The Illinois Department of Revenue announced on September 28, 2026, that it is accepting public comments on the draft digital asset tax rules through October 30, 2026.
• ▪The Illinois Department of Revenue has not yet filed the draft rules with the Illinois Secretary of State or submitted them to the Joint Committee on Administrative Rules.

Tax treatment of specific digital assets

• ▪The draft rules exclude tokenized securities and commodities from the digital asset tax, listing them as digital equivalents of tangible or intangible goods with separate value or utility.
• ▪The draft rules classify stablecoins as taxable digital assets even when they are designed to maintain a fixed nominal value against fiat currencies, commodities, or other financial instruments.
• ▪The draft rules exclude nonfungible tokens from the digital asset transaction tax because the underlying state definition excludes digital representations with value or utility beyond existing as digital assets.

Tax rules for decentralized finance and transaction fees

• ▪A decentralized exchange that collects protocol fees can qualify as a digital asset broker under the proposed Illinois tax rules.
• ▪Decentralized finance transactions avoid the 0.2% tax unless users pay protocol fees or other qualifying valuable consideration collected by a platform for operating or maintaining the service.
• ▪The draft rules exclude network gas fees paid directly to miners or validators and swap fees directed solely to liquidity providers from the 0.2% transaction tax.

Taxability of wallet transfers

• ▪Transfers from a centralized exchange to a personally managed self-custody wallet are taxable under the draft rules if the exchange charges a fee to complete the transfer.
• ▪Direct peer-to-peer transfers between personally controlled wallets without a broker or paid intermediary are not subject to the Illinois digital asset tax.

Legislation and legal challenges

• ▪Enacted under the Digital Asset Tax Act in the Illinois fiscal year 2027 budget approved by Governor JB Pritzker on June 16, 2026, the 0.2% digital asset transaction tax is scheduled to take effect statewide January 1, 2027.
• ▪The Blockchain Association and Crypto Council for Innovation asked a Sangamon County court on September 9, 2026, for a preliminary injunction to stop enforcement of the Illinois digital asset tax.

Debatable claims

• ▪Illinois should delay the implementation of the digital asset tax until court challenges are resolved
• ▪Illinois is justified in taxing stablecoin transactions
• ▪Illinois' digital asset tax violates constitutional protections
• ▪Illinois' 0.2% digital asset transaction tax does more harm than good