The Illinois Department of Revenue published draft regulations on September 28 spelling out how a 0.2% levy on the gross value of covered crypto transactions will operate, with the tax scheduled to take effect on January 1, 2027.

What does the draft cover?

The 33-page framework implements the Digital Asset Tax Act, which the Illinois General Assembly passed in June over opposition from major crypto industry groups. A $10,000 covered transaction would generate a $20 tax obligation regardless of whether the underlying position returned a gain, a loss or no return at all. The tax attaches to the value of the digital asset transferred rather than to any realized profit, a structural choice that sets Illinois apart from federal proposals debated earlier this year.

Stablecoins fall inside the levy. The draft classifies them as digital assets, confirming that transfers involving major dollar-pegged tokens will trigger the charge for Illinois customers. Nonfungible tokens are expressly excluded.

How does DeFi treatment work?

The proposed rules draw the line at the type of fee charged. Routine network fees paid to miners or validators do not create a taxable brokered transaction, and swap fees remitted solely to liquidity providers are likewise excluded. Protocol fees retained for operating or maintaining a decentralized venue, however, qualify as "valuable consideration" under the draft and bring the activity inside the tax.

Bridging assets from one chain to another triggers the levy only when a digital asset broker facilitates the process for a fee. Centralized exchange withdrawals to self-custody wallets and same-customer internal transfers both fall inside the levy when the exchange charges for handling the blockchain transaction.

Who has to collect the tax?

Covered brokers operating in Illinois must add the tax as a separate line item, collect it from customers, and remit monthly. Out-of-state providers are not shielded: any business earning $100,000 or more annually from digital asset services sold to Illinois customers is treated as having an in-state presence. Customer location can be established through an Illinois residential or business address, mailing address, IP address or comparable data.

IDOR Director David Harris framed the rollout as a guidance exercise. Harris said the department wants to provide "clear guidance to affected parties" given the "newness of the tax system and the intricacy of digital asset markets," and called on industry specialists to file comments before the deadline.

What is the regulatory calendar?

The public comment window closes at 5 p.m. on October 30. The draft had not been filed with the Secretary of State or submitted to the Joint Committee on Administrative Rules when IDOR released it. Final rules are expected to absorb feedback from the consultation before brokers begin collecting the levy in 2027.

House Bill 5798, a separate measure that would repeal the Digital Asset Tax Act, has been introduced but has not advanced. Unless that bill moves before year-end 2026, the 0.2% levy will begin as scheduled and the first remittance cycle will open shortly thereafter.