Illinois groups seek injunction on crypto tax

TLDR

Industry groups are suing to block Illinois new 0.2% digital asset tax and are asking a court for an injunction before it starts in 2027.

1. The Blockchain Association and Crypto Council for Innovation have filed a detailed constitutional challenge and requested preliminary and permanent injunctions, but the tax has not been halted yet.
2. Illinois law would levy 0.2% on the value of covered crypto trades, transfers and custody via brokers, even without profit, making it unusually broad compared with typical capital gains taxes.
3. Crypto users and platforms in Illinois face three paths before 2027: court ordered block, legislative repeal, or full implementation, so hearings and repeal efforts will be key to watch.

Deep Dive

1. The Lawsuits And Injunction Request

On 21 August 2026, the Blockchain Association and Crypto Council for Innovation sued Illinois in Sangamon County, seeking to block the 0.2% digital asset tax that begins on 1 January 2027. Their complaint asks for preliminary and permanent injunctions and argues the Digital Asset Tax Act violates the federal Internet Tax Freedom Act, the dormant Commerce Clause, due process, and Illinois constitutional rules on tax uniformity and legislative procedure, among others. A separate case by the Digital Chamber was filed earlier, but as of now no court has granted an injunction, so the law remains scheduled to take effect if nothing changes, according to reporting on the Illinois crypto tax lawsuits.

2. How The 0.2% Crypto Tax Works

Illinois rule imposes a 0.2% charge on the value of digital assets during certain activities that run through a digital asset broker rather than taxing only profit. Coverage includes exchanging, transferring, or storing digital assets for customers, with brokers required to collect and remit the tax, as described in analyses of the 0.2% digital asset tax. Remote brokers cross a threshold at roughly 100,000 dollars in Illinois receipts over 12 months, after which they must register and collect the levy. If brokers fail to collect, customers may be required to remit 0.2% of covered activity monthly, creating potential tax bills based on asset value even when there is little or no trading profit, as highlighted in coverage of monthly tax bills on total asset value.

3. Impact For Crypto Users And What To Watch

For Illinois based crypto users and platforms, this is a state level tax that could apply to routine account transfers and custody, not just profitable trades, which is why industry groups call it discriminatory compared with how stocks, cash and gold are taxed. The state has floated revenue estimates around 60 million dollars a year, but litigation and a repeal bill mean that figure is highly uncertain. Before 2027, the key signals will be any court rulings on injunctions, movement on House Bill 5798 to repeal the tax, and guidance from the Illinois Department of Revenue that clarifies which transactions and users are actually covered.

Conclusion

Illinois 0.2% digital asset tax shifts the focus from taxing gains to taxing the infrastructure that moves and stores crypto, which is why major trade groups are trying to stop it in court. Until judges or lawmakers act, brokers and users in Illinois must plan for a scenario where ordinary trading, transfers, and custody could carry an extra state levy, making regulatory outcomes over the next year especially important for anyone active in that market.