Crypto Groups Seek Injunction Blocking Illinois Digital Asset Tax

Illinois enacted the Digital Asset Tax Act in June 2026 after Governor JB Pritzker signed the measure as part of the state’s fiscal 2027 budget. Unlike a levy on income or capital gains, the law imposes a 0.2% “privilege tax” on the value of digital assets tied to covered services received by Illinois customers, including exchange, transfer and custody activity. The measure, scheduled to take effect on Jan. 1, 2027, has become a test of how far states can go in taxing crypto activity separately from traditional finance.

The Crypto Council for Innovation and the Blockchain Association filed suit on Aug. 21, 2026, in Sangamon County Circuit Court, seeking a declaration that the law is invalid and preliminary and permanent injunctions blocking enforcement. The groups argue the tax violates the U.S. and Illinois constitutions, the dormant Commerce Clause, federal and state due-process protections and the Internet Tax Freedom Act. Their challenge is the industry’s second against the measure, following a separate Digital Chamber lawsuit in July, and comes more than four months before the tax is due to begin.

Illinois enacted the Digital Asset Tax Act as part of its fiscal 2027 budget, creating a 0.2% levy on the value of digital assets involved in services received by customers in the state. Starting Jan. 1, 2027, the measure will cover activities including exchanging, transferring and storing digital assets. Because the tax is based on asset value rather than investment gains or service fees, the law has become a significant test of whether US states can impose transaction-based taxes specifically on blockchain activity.

The Digital Chamber filed a 32-page complaint in Sangamon County Circuit Court on July 21, 2026, naming Illinois Attorney General Kwame Raoul and Department of Revenue Director David Harris as defendants. The trade group is seeking a declaration that the law is invalid and an order blocking enforcement before its Jan. 1, 2027, start date. It argues Illinois unlawfully singles out assets recorded or transferred using blockchain technology and could impose tax even when an investor earns no profit or no ownership change occurs.