On Thursday, July 23, 2026, the Chicago Tribune reported that a digital asset industry group has filed a lawsuit challenging Illinois’ newly enacted cryptocurrency tax.
The Chamber of Digital Commerce, representing over 250 members of the global digital asset industry, is seeking to block the implementation of this first-in-the-nation tax. The lawsuit, filed in Sangamon County Circuit Court, argues that the tax is unconstitutional and violates due process rights, as well as state and federal provisions protecting interstate commerce and uniform taxation.
The tax, approved by Democrats in the General Assembly as part of a nearly $56 billion spending plan, is set to take effect on January 1, 2027. It is projected to generate $60 million in new revenue for the state.
The Chamber of Digital Commerce contends that the law unfairly targets cryptocurrencies and other digital assets by imposing a tax based solely on the method of transaction recording, specifically blockchain technology. They argue that these assets are economically identical to traditional property like cash and stocks, and that taxing them differently simply because of the underlying technology constitutes an unfair burden.
The lawsuit draws parallels to historical technological shifts, such as the transition from paper stock certificates to electronic systems, asserting that such advancements have never before been the basis for disparate tax treatment on identical property.
Governor JB Pritzker, who signed the bill into law, has previously expressed opposition to similar financial transaction taxes. His office declined to comment on the lawsuit, with the Illinois Department of Revenue stating that any comments at this time would be premature.
The state law imposes a 0.2% levy on cryptocurrencies and other digital assets traded through brokers, excluding private transactions. Brokers will be required to register with the Department of Revenue and collect the tax from Illinois customers starting January 1, 2027. Violators face potential Class 3 felony charges, punishable by up to five years in prison.
The Chamber of Digital Commerce further argues that the law is riddled with vague definitions and lacks clear guidance from the Department of Revenue on crucial aspects, such as how to determine customer location for tax purposes or how to classify multiple taxable occurrences within blockchain operations.
They highlight the potential for a single customer to be taxed multiple times for transferring the same asset between digital wallets without any change in ownership. Additionally, the lawsuit claims the law places an undue burden on brokers to prove that certain transactions should not be taxed, essentially requiring them to disprove an Illinois connection for transactions that, by their nature, may not have a single physical location.
The industry group is seeking preliminary and permanent injunctions to block the tax’s implementation, as well as reimbursement for legal fees.
This cryptocurrency tax is not the only component of the state’s new tax package facing legal scrutiny. Separately, online prediction market Kalshi has sued the state in federal court over a tax on sports prediction markets. This law imposes a 1.75% tax on each exchange wager up to $5 million per operator annually, with a higher 3.5% tax on wagers exceeding that amount. Kalshi argues this is an unconstitutional attempt by the state to regulate “event contracts,” which they claim fall under federal jurisdiction.
The state, however, maintains that the measure is intended to increase taxes on existing licensees within sports betting law. While the tax is in effect, the state has agreed not to pursue regulatory or criminal action against Kalshi while the preliminary injunction request is pending.
The state’s budget also anticipates revenue from a new tax on targeted digital advertising, which is set to take effect on January 1, 2027, imposing a 10% tax on the gross receipts of companies with digital ad revenue exceeding $1 million annually. This measure has also faced legal challenges, with Maryland experiencing similar issues with its comparable law.
Furthermore, a proposed per-user tax on large social media companies, also part of the budget package, could potentially face legal challenges, despite being acknowledged by some proponents. The current year’s budget relies on $200 million in anticipated revenue from this levy.
Source: Chicago Tribune
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