The state and industry groups asked a court to delay the Digital Asset Tax Act by six months while litigation over whether federal law blocks it continues.
Illinois' tax on digital-asset businesses will not start in January if a judge agrees.
Two industry groups, the Digital Chamber and the Illinois Blockchain Association, struck a deal with state officials that would move the start of the 0.2% levy under the Digital Asset Tax Act to July 1, 2027, from Jan. 1. The tax covers businesses with more than $100,000 of digital-asset receipts. The two sides planned to ask a Sangamon County circuit judge on Thursday to approve the change.
The fight underneath
The delay does not settle the case. The industry groups are challenging the tax as unconstitutional and arguing that the federal Internet Tax Freedom Act preempts it. That litigation continues.
The Illinois Policy Institute estimates the tax would raise about $60 million in 2027.
What the levy reaches
A tax on receipts applies to revenue rather than profit, so it is owed whether or not a business makes money. At 0.2%, a company with $100 million of qualifying receipts would owe $200,000 a year.
Two readings
One reading is that the delay is a sign the state expects to defend the tax and wants time to do it without forcing businesses to pay a levy that could later be struck down.
A second reading is that six months of delay gives other states a longer look at whether a tax on crypto receipts survives in court before they consider their own.
The court
A judge's order approving the delay is the first step. A ruling on the preemption argument would decide whether the July 2027 start date holds.