The State of Illinois has approved legislation that will dampen crypto activities in the state. The Digital Asset Privilege Tax Act, was signed into law by controversial Governor JB Pritzker.
The legislation is part of the states’ budget for 2027.
Beginning January 1, 2027, Illinois will assess a 0.2% tax on all crypto transactions. It taxes the entire amount of the transaction is not related to a capital gains assessment.
Of course leadership in the nascent industry, one the federal government has highlighted for global dominance, has taken umbrage to the new tax. The Crypto Council for Innovation stated:
“Illinois Governor Pritzker just signed the most punitive digital asset tax in the country into law. This will create an unprecedented tax regime that disproportionately burdens Illinois residents for simply using digital assets and will drive innovation and builders out of the state.”
The organization sent a letter to the Governor on June 16, 2026, expressing their opposition to the bill stating it will disproportionately burden state residents and impair usage as well as undermine the states ability to attract innovators in the digital asset sector.
The governor ignored the organization’s concerns.
Paul Grewal, Chief Legal Officer at Coinbase, who frequently comments on policy issues, stated:
“Just when it seemed that we have enough dumb tax policies, here’s one more. There is no more effective way to kill an innovation that to tax its mere use. The people of IL deserve better.”
Pritzker, a potential Democrat Candidate for President in 2028, has struggled with overseeing a state that has experienced an exodus of firms and people from the city of Chicago and elsewhere due to an inability to curtail crime, and an environment that is deemed to be not friendly towards business.
Illinois experienced a net loss of 40,000 residents in 2025.
According to the group Illinois Policy, in “2023, 218 businesses exited Illinois — the second-worst year in state history and the third-worst total in the country, behind New York and California.”
“These businesses symbolize lost jobs, lost investment, shrinking futures and fewer opportunities for Illinois families,” said Bryce Hill, director of fiscal and economic analysis at the nonpartisan Illinois Policy Institute.
A state crypto tax should add fuel to the exit fire.
One of the most prominent losses to the state was the exit of Ken Griffin and his hedge fund and stock transfer operation. Citadel exited Chicago taking high paid employees and the tax revenue to the state of Florida representing a loss for the state that is not easily rectified. Reports indicate that Illinois lost an estimated $100 million to $250 million in annual tax revenue.
