Illinois asks a judge to postpone its 0.2% crypto tax until July 2027

Illinois officials join industry groups in asking for a six-month delay

Illinois state officials have joined two crypto industry groups in asking a judge to postpone the start of the state's digital-asset tax by six months, from January 2027 to July 2027. The request comes as the groups continue a court challenge to the law, which the state still defends.

The joint request, filed on October 1 in Sangamon County, is meant to pause the collection of the tax while the lawsuit and the state's rulemaking process continue. The Digital Asset Tax itself remains in force. The filing does not admit that the law is unconstitutional and does not ask for it to be repealed.

Key numbers

• Tax rate: 0.2%, charged on the value of digital assets involved in certain covered transactions, not on trading profits.
• Current start date: January 1, as set when the law was enacted in June.
• Requested start date: July 1, 2027.
• Rule comment deadline: October 30, according to the Illinois Department of Revenue.
• Proposed response deadline in the lawsuit: November 13.

What the joint filing asks the court to do

The agreed motion asks a judge to issue a consent injunction, which is an order agreed to by both sides. If granted, it would temporarily spare brokers from collecting the levy and would push back related obligations for their customers.

Revenue Director David Harris and Attorney General Kwame Raoul joined the request. Even so, the state continues to dispute the industry's claims against the law. Signing the delay request allows officials to pause collection while still arguing in court that the tax is valid.

How the tax would be collected

Because the levy applies to asset value rather than profits, it can apply to movements of crypto itself. Draft rules from the Illinois Department of Revenue show how far that structure could reach.

• A withdrawal from a broker, where a fee is paid, to a self-custody wallet — a wallet the user controls directly — can qualify as a covered transaction when the statutory conditions are met.
• A direct transfer that does not go through a covered broker may fall outside the levy.
• Brokers, which are firms where people buy and sell crypto, are responsible for collecting and remitting the tax, and can remain liable if they fail to collect it.
• Customers have a separate fallback duty. If the tax was not charged, they may have to work out the amount themselves and pay it by the 20th of the following month.

Draft rules are still open for public comment

The Revenue Department's rules are unfinished. Public comments on the draft are open through the close of business on October 30. The draft has not been filed with the Secretary of State or submitted to the Joint Committee on Administrative Rules, so several practical details are still unsettled.

A pause on collection would not necessarily stop that work. Firms can keep building systems for reporting and collection during the delay, and the Revenue Department can still revise its rules after reading industry feedback.

What is confirmed

• A joint motion asking for a delay from January 1 to July 1, 2027 was filed on October 1 in Sangamon County.
• State officials, including Revenue Director David Harris and Attorney General Kwame Raoul, joined the request.
• The tax is a 0.2% levy on covered transaction value, enacted in June.
• The constitutional challenge by The Digital Chamber and the Illinois Blockchain Association is still going forward.
• Comments on the draft rules are open through October 30.

What is still unclear

As of October 4, the court had not been confirmed to have entered the order. The filing is a request, so the delay depends on a judge's decision. Until then, the January start date remains the date written into the law.

The final shape of the levy also remains open. Because the rules have not been filed with state oversight bodies, it is not settled exactly which transactions count as covered or how the reporting would work in practice.

Why the delay matters in practice

The law's collection duties were due to begin in January, even with the lawsuit pending. A court-approved delay would remove that near-term deadline for the first half of 2027 and give exchanges and other covered firms more time to build collection and reporting procedures.

The reprieve would only be temporary. The constitutional challenge would continue during the pause, so the ultimate validity of the tax would still be decided by the court. Crypto firms have spent months warning that the levy could raise compliance costs and push activity out of Illinois; the state still contests those claims.

What happens next

Two separate questions sit ahead before year-end: whether the judge signs the agreed delay, and how the Revenue Department revises its draft rules after the comment period closes on October 30. The parties have also asked to move the state's deadline for responding to the lawsuit to November 13.

Sources

• CryptoSlate