Illinois has published draft rules for its Digital Asset Tax Act, giving brokers, customers and other interested parties until 5 p.m. on October 30 to comment before formal rulemaking begins. The Department of Revenue released the proposal on September 28. The tax itself is scheduled to start on January 1, 2027.
The proposal puts important limits around the headline rate. It would impose a tax equal to 0.2% of the value of the digital asset involved in a covered activity. A taxable event must involve an Illinois customer, a digital-asset business activity, valuable consideration and a digital-asset broker. The draft defines those activities as exchanging, transferring or storing digital assets for a customer.
The tax base is the asset value
Under the draft, the rate applies to the value of the asset being exchanged, transferred or stored, measured when the activity is completed. That is different from applying 0.2% only to a broker’s fee. The broker must collect the tax from the customer, list it separately from the purchase price and remit it to the state.
The proposal does not treat every movement on a blockchain as taxable. The activity must satisfy all four statutory conditions, including the exchange of valuable consideration. The rules also say that storage is generally incidental when an exchange or transfer and custody are sold together for one fee, producing one taxable event rather than separate taxes for each component.
Illinois would treat some brokers based outside the state as maintaining an Illinois place of business when their gross receipts from covered services sold remotely to Illinois customers reach at least $100,000. The draft also gives brokers sourcing rules and recordkeeping requirements. Records used to determine a customer’s primary place of use may include an address, the IP address used for a purchase and a signed IRS Form W-9.
A draft, not a finished compliance rulebook
The document is labeled a notice of proposed rule, and its effective-date field remains blank. The Department of Revenue says this public-comment stage comes before the formal rulemaking process. It is asking for questions the proposal may not answer and examples that could make the eventual rules clearer.
The draft contains boundaries that deserve close reading. Its definition of digital assets excludes several categories, including tokenized securities and tokenized commodities with value or utility beyond their existence as digital assets. It also distinguishes network fees paid directly to miners or validators from fees charged by exchanges and platforms.
For brokers, the immediate task is not to calculate a final bill from a news headline. It is to map which services involve Illinois customers, where valuable consideration is charged, how asset value would be measured and which records would support the customer’s location. Those are the operational questions the state’s 28-page proposal begins to answer, and the comment window gives affected parties a chance to identify gaps before the rules advance.
Adapted from Illinois Opens Public Comment on Draft Rules for Digital Asset Tax.