Illinois Agrees to Six-Month Delay in Crypto Tax Amid Court Fight

Illinois’ 0.2% crypto tax could be delayed until July 1 if a state court approves an agreement between the state and industry groups, giving both sides more time to focus on the ongoing legal challenge.

The unexpected tax, introduced by Illinois earlier this year, was originally set to take effect Jan. 1. The Digital Chamber and Illinois Blockchain Association negotiated the proposed six-month postponement with state officials, according to the Digital Chamber, which shared details with CoinDesk. The agreement still requires approval from a judge.

Under the proposal, the 0.2% levy would be pushed back to July 1. The delay could ease the immediate compliance pressure on crypto companies as industry groups continue their efforts to challenge the tax in court.

Illinois approved the tax in June as part of its Digital Asset Tax Act. The measure applies to crypto-related activity by companies generating more than $100,000 in receipts, including transactions and the acceptance of digital assets for custody.

Court Challenge Continues

The parties were expected to submit their joint request for the delay Thursday morning to the Illinois state circuit court in Sangamon County.

If the judge grants the request, the state and industry groups would not need to continue litigating over temporary injunctions at this stage. Instead, they could concentrate on the central legal questions surrounding the case, including the “constitutionality and enforceability” of the Digital Asset Tax Act.

Crypto advocacy organizations have joined forces to challenge the measure. On Sept. 9, the groups asked the state court for a temporary halt, arguing that businesses were already incurring significant costs to prepare for the tax.

“We’re pleased that the State of Illinois has agreed to delay implementation of its Digital Asset Tax, giving digital asset businesses and users relief from costly compliance obligations while we continue to seek to have this tax permanently repealed through the courts,” Digital Chamber CEO Cody Carbone said in a statement.

Industry Challenges Tax’s Legality

The crypto industry has questioned whether Illinois had the legal authority to impose the tax and has also argued that the measure violates the state constitution.

Crypto organizations have separately claimed that the tax is barred by federal law under the Internet Tax Freedom Act.

The proposed agreement, according to the filing reviewed by CoinDesk, says the two sides are seeking the six-month delay “in the interest of justice while the matter works towards resolution on the merits.”

The postponement would change the tax’s planned start date but would not resolve the underlying lawsuit. The court will still need to consider the industry’s broader challenges to the law.