Illinois Gov. JB Pritzker has signed a $55.9 billion budget that includes a new tax targeting digital asset transactions and related services. Beginning January 1, 2027, the Digital Asset Tax Act (DATA) will impose a 0.2% tax on specific digital asset activities, including cryptocurrency exchanges, transfers, custody, and wallet services. The act targets primarily service providers including exchanges, custodians, and platforms (digital asset brokers), facilitating the exchange, transfer, or storage of digital assets as part of a business transaction.
Based on initial guidance, it appears the privilege tax will act similarly to a sales tax, requiring digital asset brokers to register with the Illinois Department of Revenue. Brokers must collect the tax by adding it to purchase prices paid by customers for the digital asset business activities subject to tax. The customer legally owes the tax to the company providing the digital asset service. If the customer doesn’t pay, the company can collect the tax just like it would any unpaid customer bill. The tax must be listed as a separate line item on the bill, not included in the price of the digital asset service itself. Digital asset brokers also must maintain sufficient books and records to substantiate transactions, customer locations, etc., and file their reports with the Department by the 20th of every month, covering activity from the previous month.
The tax applies to:
- Digital asset brokers (or subsidiaries) maintaining offices, distribution or transmission facilities, warehouses, other places of business, as well as agents or representatives operating in Illinois, regardless of whether licensed to do business in the state; and
- Out-of-state digital asset brokers with at least $100,000 in annual receipts from Illinois customers, determined quarterly.
DATA’s sourcing rules are broad: Transactions are considered to have occurred in Illinois if the customer is physically located in Illinois or if online transactions, account information, mailing address, IP address, or other data indicate Illinois is the customer's place of primary use. That approach could subject out-of-state companies to Illinois tax obligations if they have sufficient customer activity in the state.
Digital asset brokers must register with the state before January 1, 2027, using a form to be provided by the Department of Revenue. Brokers must specify the party responsible for filing returns and paying tax. Registration lasts one year and is automatically renewed unless canceled by the broker or revoked by the state.
BDO Insights
Digital asset brokers doing business in Illinois — especially those not physically located in the state — should review and monitor their total annual receipts, as well as their physical connections with the state, to determine whether they might fall under DATA’s wide coverage.
Please visit BDO’s State & Local Tax Services, Income, Franchise, & Gross Receipts Tax, and Sales & Use Tax pages for more information on how BDO can help.