Illinois officials have agreed to support a six-month delay to the state’s incoming digital asset tax while a court considers whether the law is constitutional.
The tax was scheduled to take effect on January 1, 2027. Under a joint court request, enforcement would instead begin on 1 July, but that is provided the judge approves the agreement.
Illinois crypto tax heads back to court
The Digital Chamber and Illinois Blockchain Association filed the lawsuit against the Illinois Department of Revenue and state Attorney General Kwame Raoul.
Their case challenges the Digital Asset Tax Act, which introduces a 0.2% tax on certain digital asset transactions involving a fee.
On October 1, both sides submitted an agreed motion asking the Sangamon County Circuit Court to pause implementation for six months.
The Digital Chamber described the development as an agreement by Illinois to delay the tax.
The pause would become effective only when the judge enters the order.
Illinois officials must respond to the amended complaint by November 13. The additional time would allow the court to consider the legal arguments before businesses have to collect or pay the tax.
Why crypto groups are challenging the law
The groups argue that Illinois has singled out digital assets for treatment that does not apply equally to other similar financial transactions.
They also claim the law could affect businesses and users outside Illinois, and this could potentially interfere with trade between states.
Other things they pointed out included due process, penalties, and Illinois’s restriction on taxing personal property according to its value. The plaintiffs also argued that the tax was in conflict with federal rules that were intended to prevent discriminatory taxation of online commerce.
Illinois disputes those allegations.
The temporary pause was agreed, but state officials did not say that the tax was unlawful. Both sides await as the court considers the case.
If it is approved, it would offer temporary relief to exchanges and other parties that will be affected by the new law.
Final Summary
- Illinois and crypto industry groups jointly requested a six-month delay to the state’s digital asset tax.
- The agreement will not start until the court enters the injunction, and the wider lawsuit remains unresolved.