Illinois just lately enacted nearly each conceivable digital tax as a part of the state’s funds laws, together with a:
- Social Media Information Extraction Tax
- Digital Promoting Tax
- Cryptocurrency Transaction Excise Tax
- Prediction Market “Betting” Tax
- Fantasy Sports activities Tax
Extra element beneath the fold.
Michael Bologna (Bloomberg Legislation): Illinois to Tax Online Ads, Social Media, Prediction Markets
The Basic Meeting approved a broad income invoice (SB 3019) … that features new taxes on digital promoting, prediction markets, cryptocurrency, and social media platforms. Massive firms would pay extra to the state by a change in the best way internet working losses are handled. And a plan to eliminate the Illinois Tax Tribunal and pull adjudication of tax disputes into the Illinois Division of Income was faraway from the ultimate invoice.
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Illinois will be part of the rising checklist of states taxing promoting with a ten% levy on the gross receipts derived from “focused promoting companies” inside its borders. The brand new levy will likely be utilized to any enterprise whose annual cumulative gross receipts from such companies exceed $1 million in the course of the earlier 12 months. It additionally would apply to firms incomes income from digital, social media, and show promoting.
Complete income from the levy is unclear, however the institute projected it will usher in $200 million for the state.
The invoice imposes a levy on cryptocurrency customers, for the “privilege of receiving any digital asset enterprise exercise by a buyer on this State on the fee of 0.2% of the worth of the digital asset.” Digital asset brokers, together with exchanges, brokerages, and transmission amenities, can be required to gather the tax and remit their collections to the state. The institute estimated the privilege tax would elevate $60 million.
The measure additionally creates a graduated system of charges on social media platforms linked to their in-state customers. The institute estimated the brand new levy would elevate greater than $200 million.
The brand new charge system is pegged at 10 cents per thirty days on platforms with greater than 100,000 Illinois customers, however no more than 500,000. Social media platforms with over 500,000 Illinois customers, however no more than 1 million, would pay $40,000, plus 25 cents per thirty days multiplied by the quantity above 500,000. And people with greater than 1 million customers would pay $165,000, plus 50 cents per thirty days multiplied by the variety of Illinois customers over 1million.
The three new taxes would take impact Jan. 1, 2027.
A fourth characteristic of the invoice would pull the booming prediction markets into the tax scheme embedded in Illinois’s Sports activities Wagering Act. Prediction markets allow gamers to commerce contracts based mostly on the end result of real-world occasions together with elections, financial information, and sports activities video games. … Earlier this 12 months Kentucky became the first state to tax such markets.
Maria Koklanaris (Law360): Ill. Lawmakers OK Targeted Ad Tax, Social Media Platform Fee
The governor stated he can be happy to signal it.
“Each ingredient of the funds for the upcoming fiscal 12 months was completely deliberated with the goal of attaining widespread affordability for all Illinoisans,” Pritzker stated in a press release. “I look ahead to signing the FY27 funds and delivering for Illinois’ working households in all phases of life.”
Emily Hollingsworth (Tax Notes): Illinois Lawmakers OK Social Media Fee, Ad Services Tax
As enrolled, S.B. 3019 would levy a ten p.c tax on suppliers of focused promoting companies, starting in 2027. The invoice defines focused promoting companies to incorporate advertisements conveyed on digital interfaces “that use private details about the folks to whom the advertisements are being served” and would apply to suppliers with cumulative annual gross receipts of $1 million or extra. The measure would additionally prohibit localities from implementing advert companies taxes.
With the invoice, Illinois is poised to hitch Utah, the latest state to enact a digital advert tax. Maryland’s and Washington state’s digital promoting taxes — enacted in 2021 and 2025, respectively — are the subjects of ongoing authorized challenges.
S.B. 3019 would additionally create a 0.2 p.c tax on digital belongings obtained by enterprise exercise and a month-to-month charge on social media platforms that acquire the info of Illinois customers, each taking impact in 2027. The social media platform charge — proposed by Pritzker in his February funds plan and just like Chicago’s fee that took impact at first of the 12 months — can be levied on the following charges:
- 10 cents per lively person, per thirty days, if the corporate has 100,000 to 500,000 Illinois customers;
- $40,000 plus 25 cents per person, per thirty days, if the corporate has 500,001 to 1 million Illinois customers; and
- $165,000 plus 50 cents per person, per thirty days, if the corporate has greater than 1 million Illinois customers.
Michael Bologna (Bloomberg Legislation): Crypto Groups Blast Illinois’ Digital Asset Trading Tax Proposal
The Digital Chamber and Illinois Blockchain Affiliation launched a joint letter warning that the Digital Asset Privilege Tax Act would set off a mass exodus of digital innovators, emphasizing that no different state imposes a privilege tax on such buying and selling.
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The proposal would impose a levy on cryptocurrency customers for the “privilege of receiving any digital asset enterprise exercise” within the state. Digital asset brokers, together with exchanges, brokerages, and transmission amenities, can be required to gather the 0.2% tax on the worth of the traded belongings and remit their collections to the state. The Illinois Coverage Institute estimated the privilege tax would elevate $60 million.
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Tax practitioners and the digital asset teams stated they have been “blindsided” by the tax proposal, which obtained no public listening to or request for remark from commerce associations.
“There isn’t any state tax like what has been handed in Illinois,” stated Mo Bell-Jacobs, a senior supervisor of state and native taxes at RSM US LLP’s Washington Nationwide Tax follow. “Normally we might be clued in on one thing like this as a result of it’s a really distinctive tax, it’s a novel tax. I don’t utterly perceive it. We have been utterly blindsided as properly.”
Of their letter, the blockchain teams referred to as the legislature’s course of, “unlucky” and a “extreme instance of midnight policymaking.”
Associated Scholarship:
- Andrew Appleby (Tennessee), Data Extraction Taxes, 79 Tax Legislation. ___ (2026)
- Robert D. Plattner, Michael Mazerov & Darien Shanske (UC-Davis), A Model Tax on the Collection of Consumer Data by Commercial Data Collectors Based on New York’s Senate Bill 4489, 2025-2026 Legislative Session
- Peter D. Enrich, Michael Mazerov, Darien Shanske, Robert D. Plattner & Doug Sheppard, Checking In on Data Taxes and Related Reforms, 120 Tax Notes State 333 (Might 4, 2026)
- Amanda Parsons (Colorado), Taxing Social Data, College of Colorado Legislation Authorized Research Analysis Paper No. 25-20 (2025)
- Younger Ran (Christine) Kim (Cardozo) & Darien Shanske, State Digital Services Taxes: A Good and Permissible Idea (Despite What You Might Have Heard), 98 Notre Dame L. Rev. 741 (2022)
- Andrew Appleby, Subnational Digital Services Taxation, 81 Md. L. Rev. 1 (2021)
- Darien Shanske & Kenneth C. Wilbur, Better Arguments Still Favor Maryland’s Digital Ad Tax, 118 Tax Notes State 205, (Oct. 27, 2025)
- Walter Hellerstein (Georgia) & Andrew D. Appleby, The Internet Tax Freedom Act at 25, 107 Tax Notes State 7 (2023)
- Darien Shanske, Christopher N. Moran & David Gamage (Missouri), Maryland’s Digital Tax and the ITFA’s Catch-22, 100 Tax Notes State 141 (Apr. 12, 2021)
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