TLDR
- Illinois has released draft rules for its 0.2% digital asset transaction tax.
- Stablecoins would be taxed, while NFTs would be excluded.
- Most DeFi transactions would be exempt unless users pay certain protocol fees.
- Crypto bridging and some exchange-to-wallet transfers could be taxed when fees are charged.
- The tax starts Jan. 1, 2027, and public comments are open through Oct. 30.
Illinois tax officials have released draft rules that explain how the state’s new digital asset transaction tax would work. The rules cover stablecoins, decentralized finance platforms, crypto bridges and transfers to personal wallets.
The tax rate is set at 0.2%. The law behind it has already been passed, and the new draft focuses on how the tax would be carried out.
The Illinois Department of Revenue posted the draft rules and said Monday that it is now accepting public comments. The comment period runs through Oct. 30.
Stablecoins Taxed, NFTs Left Out
The draft spells out which digital assets fall under the tax. Stablecoins would be treated as digital assets subject to the 0.2% tax.
Stablecoins are cryptocurrencies designed to hold a steady value, often tied to the U.S. dollar. Under the proposal, they would not receive any special treatment.
Nonfungible tokens, known as NFTs, would be excluded from the tax. NFTs are unique digital items, such as art or collectibles, recorded on a blockchain.
How DeFi, Bridges and Wallet Transfers Are Handled
Decentralized finance, or DeFi, transactions would generally be exempt. DeFi platforms let users trade, lend and borrow crypto without a traditional middleman.
There is an exception. The tax would apply if users pay fees considered “valuable consideration.”
One example in the draft is protocol fees collected for operating or maintaining a platform. These fees would trigger the tax.
Other fees would not. Network fees and swap fees paid only to liquidity providers would not make a transaction taxable.
The rules also cover crypto bridging. Bridging moves digital assets from one blockchain network to another.
Under the draft, bridging counts as taxable exchange activity when it is done through a digital asset broker for consideration.
Transfers to self-custody wallets are also addressed. These are wallets where users hold their own crypto instead of leaving it on an exchange.
Moving crypto from a centralized exchange to a self-custody wallet could be taxed when the exchange charges a fee for the transfer.
Illinois approved the Digital Asset Tax Act in June. The law passed despite opposition from crypto industry groups.
The tax is scheduled to take effect on Jan. 1, 2027. The draft rules are meant to provide the details needed to put the law into practice.
The Illinois Department of Revenue is accepting comments on the draft rules through Oct. 30, 2026. That leaves about two months before the tax begins.
