Illinois Digital Asset Tax Act Draws Scrutiny as Repeal Effort Emerges

Illinois’ newly enacted state budget includes the Digital Asset Tax Act (DATA), a transactional tax regime aimed at certain digital asset activities. DATA is scheduled to take effect January 1, 2027, and would impose a 0.2% tax that covered service providers must collect, separately state, report, and remit to the Illinois Department of Revenue. The measure has drawn criticism—particularly regarding sourcing rules—and a repeal bill, HB 5798, was filed June 22, 2026, by Rep. John M. Cabello.

Illinois Digital Asset Tax Act Effective Date and Tax Rate

Last month, Illinois Gov. J.B. Pritzker signed a $55.9 billion state budget into law. The budget package includes DATA, described as a privilege tax intended to function similarly to a sales tax by requiring in-scope businesses to collect the tax from customers and remit it to the state.

DATA is scheduled to become effective January 1, 2027. Beginning on that date, it would impose a 0.2% tax on qualifying digital asset transactions and services—potentially creating meaningful compliance buildout for high-volume platforms.

Which Digital Asset Transactions Are Taxable in Illinois?

Based on the provided description, covered activities include cryptocurrency exchange transactions, digital asset transfers, digital asset custody services and digital wallet services, as well as other services involving the facilitation, transfer or safeguarding of digital assets. For platforms offering bundled services, how fees are characterized and allocated may be important to determining the tax base.

The definition of “digital asset” reportedly excludes non-fungible tokens (NFTs), gaming tokens and digital representations of art, music, collectibles and tickets, along with similar rights to attend events or participate in activities. Classification questions may still arise for hybrid assets that mix access rights and tradable features.

Illinois Digital Asset Tax Collection and Filing Requirements

DATA primarily affects businesses that facilitate, transfer, broker or safeguard digital assets. That includes digital asset exchanges, custodians, brokers and wallet service providers, along with other marketplace intermediaries. The Act’s reach will likely depend on Illinois’ nexus concepts and how transactions are sourced to the state.

Covered providers would be responsible for collecting and remitting the 0.2% tax on taxable activity, separately stating the tax on customer invoices (rather than embedding it in service costs) and maintaining books and records sufficient to support taxable transactions, customer-location determinations and fee/tax calculations. Returns and related payments would be due to the Illinois Department of Revenue by the 20th day of each month for the preceding month’s activity.

Illinois Digital Asset Tax Sourcing Questions and HB 5798 Repeal Effort

DATA has reportedly faced opposition over sourcing rules critics view as broad or vague. Sourcing questions can be particularly difficult for digital asset activity that may involve multiple locations (customer address, device/IP, account profile and other data points) and decentralized transaction flows, raising compliance and audit-risk concerns.

Against that backdrop, Rep. Cabello filed HB 5798 on June 22, 2026, which would repeal DATA, according to the provided summary. The filing creates uncertainty for businesses weighing near-term implementation planning against the possibility of amendment, delay, narrowing or repeal.

Considerations for Digital Asset Service Providers

Businesses with Illinois customers or operations may want to begin scoping potential exposure now while monitoring legislative developments. Practical steps include mapping potentially taxable activity, checking product and asset classifications against exclusions and assessing the availability and reliability of customer-location data for sourcing. Businesses may also want to confirm invoicing capability to separately state the tax and design recordkeeping and monthly reporting processes aligned with DATA’s requirements.