Illinois recently enacted just about every conceivable digital tax as part of the state’s budget legislation, including a:
- Social Media Data Extraction Tax
- Digital Advertising Tax
- Cryptocurrency Transaction Excise Tax
- Prediction Market “Betting” Tax
- Fantasy Sports Tax
More detail below the fold.
Michael Bologna (Bloomberg Law): Illinois to Tax Online Ads, Social Media, Prediction Markets
The General Assembly approved a broad revenue bill (SB 3019) … that includes new taxes on digital advertising, prediction markets, cryptocurrency, and social media platforms. Large corporations would pay more to the state through a change in the way net operating losses are treated. And a plan to eliminate the Illinois Tax Tribunal and pull adjudication of tax disputes into the Illinois Department of Revenue was removed from the final bill.
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Illinois will join the growing list of states taxing advertising with a 10% levy on the gross receipts derived from “targeted advertising services” within its borders. The new levy will be applied to any business whose annual cumulative gross receipts from such services exceed $1 million during the previous 12 months. It also would apply to companies earning revenue from digital, social media, and display advertising.
Total revenue from the levy is unclear, but the institute projected it would bring in $200 million for the state.
The bill imposes a levy on cryptocurrency users, for the “privilege of receiving any digital asset business activity by a customer in this State at the rate of 0.2% of the value of the digital asset.” Digital asset brokers, including exchanges, brokerages, and transmission facilities, would be required to collect the tax and remit their collections to the state. The institute estimated the privilege tax would raise $60 million.
The measure also creates a graduated system of fees on social media platforms linked to their in-state users. The institute estimated the new levy would raise more than $200 million.
The new fee system is pegged at 10 cents per month on platforms with more than 100,000 Illinois users, but not more than 500,000. Social media platforms with over 500,000 Illinois users, but not more than 1 million, would pay $40,000, plus 25 cents per month multiplied by the number above 500,000. And those with more than 1 million users would pay $165,000, plus 50 cents per month multiplied by the number of Illinois users over 1million.
The three new taxes would take effect Jan. 1, 2027.
A fourth feature of the bill would pull the booming prediction markets into the tax scheme embedded in Illinois’s Sports Wagering Act. Prediction markets permit players to trade contracts based on the outcome of real-world events including elections, economic data, and sports games. … Earlier this year Kentucky became the first state to tax such markets.
Maria Koklanaris (Law360): Ill. Lawmakers OK Targeted Ad Tax, Social Media Platform Fee
The governor said he would be pleased to sign it.
“Every element of the budget for the upcoming fiscal year was thoroughly deliberated with the aim of achieving widespread affordability for all Illinoisans,” Pritzker said in a statement. “I look forward to signing the FY27 budget and delivering for Illinois’ working families in all stages of life.”
Emily Hollingsworth (Tax Notes): Illinois Lawmakers OK Social Media Fee, Ad Services Tax
As enrolled, S.B. 3019 would levy a 10 percent tax on providers of targeted advertising services, beginning in 2027. The bill defines targeted advertising services to include ads conveyed on digital interfaces “that use personal information about the people to whom the ads are being served” and would apply to providers with cumulative annual gross receipts of $1 million or more. The measure would also prohibit localities from implementing ad services taxes.
With the bill, Illinois is poised to join Utah, the most recent state to enact a digital ad tax. Maryland’s and Washington state’s digital advertising taxes — enacted in 2021 and 2025, respectively — are the subjects of ongoing legal challenges.
S.B. 3019 would also create a 0.2 percent tax on digital assets received through business activity and a monthly fee on social media platforms that collect the data of Illinois users, both taking effect in 2027. The social media platform fee — proposed by Pritzker in his February budget plan and similar to Chicago’s fee that took effect at the beginning of the year — would be levied at the following rates:
- 10 cents per active user, per month, if the company has 100,000 to 500,000 Illinois users;
- $40,000 plus 25 cents per user, per month, if the company has 500,001 to 1 million Illinois users; and
- $165,000 plus 50 cents per user, per month, if the company has more than 1 million Illinois users.
Michael Bologna (Bloomberg Law): Crypto Groups Blast Illinois’ Digital Asset Trading Tax Proposal
The Digital Chamber and Illinois Blockchain Association released a joint letter warning that the Digital Asset Privilege Tax Act would set off a mass exodus of digital innovators, emphasizing that no other state imposes a privilege tax on such trading.
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The proposal would impose a levy on cryptocurrency users for the “privilege of receiving any digital asset business activity” in the state. Digital asset brokers, including exchanges, brokerages, and transmission facilities, would be required to collect the 0.2% tax on the value of the traded assets and remit their collections to the state. The Illinois Policy Institute estimated the privilege tax would raise $60 million.
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Tax practitioners and the digital asset groups said they were “blindsided” by the tax proposal, which received no public hearing or request for comment from trade associations.
“There is no state tax like what has been passed in Illinois,” said Mo Bell-Jacobs, a senior manager of state and local taxes at RSM US LLP’s Washington National Tax practice. “Usually we would be clued in on something like this because it’s a very unique tax, it’s a novel tax. I don’t completely understand it. We were completely blindsided as well.”
In their letter, the blockchain groups called the legislature’s process, “unfortunate” and a “severe example of midnight policymaking.”
Related Scholarship:
- Andrew Appleby (Tennessee), Data Extraction Taxes, 79 Tax Law. ___ (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 (May 4, 2026)
- Amanda Parsons (Colorado), Taxing Social Data, University of Colorado Law Legal Studies Research Paper No. 25-20 (2025)
- Young 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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