Illinois Seeks Six-Month Delay for Controversial Digital-Asset Tax

Illinois officials have joined crypto industry groups in seeking a six-month delay to the state’s controversial digital-asset tax.

The agreed motion, filed Oct. 1 in Sangamon County, asks a judge to postpone the levy’s Jan. 1 start until July 1, 2027, while a constitutional challenge brought by The Digital Chamber and the Illinois Blockchain Association proceeds.

Revenue Director David Harris and Attorney General Kwame Raoul joined the request even as the state continues to dispute the industry groups’ claims against the law. If granted, the injunction would temporarily spare brokers from collecting the tax and defer corresponding liabilities for covered customers.

The court had not been confirmed to have entered the order as of Oct. 4.

The move marks a shift in the immediate battle over a levy that crypto firms have spent months warning could raise compliance costs and push activity outside Illinois. The law remains in force, and the joint filing does not concede that it is unconstitutional or seek its repeal.

Instead, both sides would preserve their legal positions while delaying collection as the lawsuit and the state’s rulemaking process continue.

Illinois crypto tax burden moves back six months

Illinois enacted the Digital Asset Tax in June, imposing a 0.2% levy on the value of digital assets involved in certain covered transactions rather than on investors’ trading profits.

Draft rules from the Illinois Department of Revenue show how broadly that structure could reach. A fee-paid withdrawal from a broker to a self-custody wallet can qualify when the statutory conditions are met, while a direct transfer without a covered broker may fall outside the levy.

Brokers are responsible for collecting and remitting the tax and can remain liable when they fail to collect it. Customers face a separate fallback obligation: if the tax is not charged, they may have to calculate and pay the amount themselves by the 20th of the following month.

Those obligations were due to begin in January despite the pending lawsuit. A court-approved delay would remove that immediate deadline for the first half of 2027, giving exchanges and other affected firms more time before they have to build collection and reporting procedures around the new regime.

However, the pause would not necessarily halt all compliance work.

Illinois’ draft rules remain under consultation, with public comments open through Oct. 30. The rules have not yet been filed with the Secretary of State or submitted to the Joint Committee on Administrative Rules, leaving key implementation details unsettled.

The parties have also asked to move the state’s deadline for responding to the lawsuit to Nov. 13.

That leaves crypto companies with two separate questions before year-end: whether the judge grants the agreed delay and how the Revenue Department changes its rules after receiving industry feedback.

If the injunction is entered, firms would gain another six months before customers begin seeing the tax on covered transactions. The legal challenge would continue during that window, leaving open the possibility that companies could use the reprieve to prepare for a levy whose ultimate validity remains before the court.