Illinois Enacts New Taxes Targeting Technology and Digital Assets

On June 16, 2026, Illinois enacted legislation¹ that adopts a tax on targeted advertising, a tax on the receipt of digital assets, and a social media user fee. These taxes and the fee take effect January 1, 2027.

Targeted Advertising Tax (Article 1)

The tax is imposed on providers of targeted advertising services at the rate of 10% of the gross receipts derived from targeted advertising provided in the state. The location of the user-consumer (based on contact information) determines whether such services are provided in the state.

Targeted advertising services means any programmatic written, oral, or graphic statement or representation conveyed through a digital interface or any other method of delivery, including, but not limited to, banner advertising, search engine advertising, interstitial advertising, and other comparable advertising services that use personal information about the people to whom the ads are being served. It does not include advertising services on digital interfaces owned, operated by, or operated on behalf of a news media entity.

Other comparable advertising services include display advertising; internet programmatic video advertising; multichannel video programming distributor advertising conveyed via cable television, satellite television, or a digital fiber-optic distribution system; advertising on social media; native advertising; and incentivized or rewarded advertising.

Providers must have annual cumulative gross receipts from targeted advertising services provided in the state in excess of $1 million during the previous 12-month period to be subject to the tax. This threshold will be determined on a quarterly basis. Payment of the tax is monthly. Providers will be required to obtain a certificate of registration with the Department of Revenue, and it is unlawful to provide such services without one. Business entities that are part of a controlled group of corporations are treated as single entities for purposes of meeting the definition of a provider.

Digital Asset Tax (Article 3)

The legislation also imposes a tax on the receipt of any “digital asset business activity” by a customer in the state at the rate of 0.2% of the value of the assets to which the business activity relates. A “digital asset business activity” is any single exchange, transfer, or storage of a digital asset as part of a business or on behalf of a customer who has entered into an agreement with a business for the provision of these services.

The tax is paid to and collected by the digital asset broker, as defined under IRC § 6045(c)(1)(D), that makes the sale and that maintains a place of business in the state. The IRC definition relates to the person effectuating the transfer of digital assets. For brokers headquarterd out of state that sell such assets remotely, the tax applies if the broker’s gross receipts from such activities are $100,000 or more. This amount is determined on a quarterly basis for the preceding 12-month period. If the threshold is reached, the broker is deemed to maintain a place of business in the state. The tax is payable monthly.

“In the state” means at a physical location within the state for a sale occurring in person. If the sale occurs electronically, there is a rebuttable presumption that the customer requesting the sale is located in the state based on that person’s contact information, which must include internet location, home address, or other data showing place of primary use.

A digital asset is defined under the state’s Digital Asset Consumer Protection Act, which was enacted in 2025. It generally means a digital representation of value that is used as a medium of exchange, unit of account, or store of value, and that is not fiat currency, whether or not denominated in fiat currency. There are several exclusions.

Social Media Platform Fee (Article 5)

The new social media platform fee is imposed on social media platforms at the rate of (a) $0.10 per month on the number of Illinois users over 100,000 but not more than 500,000; (b) $40,000 plus $0.25 per month multiplied by the number of Illinois users over 500,000 but not more than 1 million; (c) $165,000 plus $0.50 per month multiplied by the number of Illinois users over 1 million. The fee is payable monthly. Starting in 2028, the fees will be adjusted annually for inflation.

“Social media platform” is a website or internet medium that (1) permits a person to become a registered user, establish an account, or create a profile for the purpose of allowing users to create, share, and view user-generated content through that account or profile; (2) enables one or more users to generate content that can be viewed by other users of the medium; and (3) primarily serves as a medium for users to interact with content generated by other users of the medium.

The legislation also requires each social media platform to submit a monthly report to the Secretary of State of the average number of monthly users of the platform located in the state.

Ryan’s Take and Action Steps

The new taxes and fee take effect January 1, 2027. In the interim, businesses should quickly determine whether they now have additional liabilities in the state. Potential taxpayers and fee payers should examine the provisions and definitions of the new law to see if they have new Illinois obligations. The social media platform fee is an addition to the fee previously adopted by the city of Chicago.

Because these provisions establish entirely new taxes and a fee, businesses should expect additional guidance from the Illinois Department of Revenue regarding registration, reporting, sourcing, and compliance. Similar digital advertising taxes adopted in other jurisdictions have also been the subject of constitutional and federal law challenges. Businesses should monitor both administrative developments and ongoing litigation as the January 1, 2027 effective date approaches.

¹ SB 3019 (Public Act 104-0468), enacted June 16, 2026.

The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals.