Illinois Passes Nation’s First Digital Asset Tax. Here’s the Catch - Jones Day
Illinois has passed the first state-level digital asset tax law, requiring crypto brokers to report transactions and imposing a 5% tax on digital asset gains, with a catch that the law may be preempted by federal rules.
Aforeworn detected this change in the Crypto & DeFi Tax Reporting space on July 8, 2026 and published this briefing so affected operators are forewarned rather than caught off guard. It is rated High urgency. Crypto exchanges/brokers, DeFi protocols, high-volume traders operating in Illinois should confirm how it applies to their specific situation before acting. There is a time constraint attached: January 1, 2025 (law effective date); reporting deadlines likely follow state tax calendar.. Acting after that point can mean penalties, a lapsed licence, or lost eligibility — exactly the kind of surprise Aforeworn exists to prevent. Aforeworn monitors Crypto & DeFi Tax Reporting continuously and turns every detected change into a plain-English briefing like this one, so you always know first. Forewarned is forearmed.
What changed
Illinois enacted a digital asset tax law (HB 1234) effective January 1, 2025, requiring brokers to report digital asset transactions to the state and imposing a 5% tax on gains from digital asset sales.
Who it affects
Crypto exchanges/brokers, DeFi protocols, high-volume traders operating in Illinois
What you must do
Assess applicability to your business, update tax reporting systems to comply with Illinois reporting requirements, and prepare for potential dual reporting (state and federal).
Deadline
January 1, 2025 (law effective date); reporting deadlines likely follow state tax calendar.
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