Illinois families and businesses already face one of the highest state and local tax burdens in the nation, yet the Fiscal Year 2027 budget pushed by Illinois Democrats added hundreds of millions of dollars in new taxes and fees. Now, three of the new taxes and fees are facing a legal battle.
The measures include a Digital Asset Tax, a Targeted Advertising Services Tax commonly referred to as the Digital Ad Tax, and a Social Media Platform Fee. All three were approved as part of the revenue package accompanying the FY27 state budget.
The Digital Asset Tax imposes a 0.2 percent tax on qualifying digital asset business activity involving Illinois customers. The Digital Chamber has filed a lawsuit challenging the measure, alleging that it unlawfully singles out digital asset transactions for different tax treatment. The courts have not yet resolved those claims.
Separate lawsuits filed by NetChoice challenge the Digital Ad Tax and Social Media Platform Fee, alleging violations of federal law and constitutional protections. Those claims likewise remain pending before the courts.
While the revenue from the Digital Asset Tax and Social Media Platform Fee, a total of $260 million, was included in the FY27 budget, Illinois Democrats didn’t even include the revenue from the Digital Ad Tax because they knew it would face a legal challenge.
That fact alone raises serious questions about why Democrats would pass a new tax that they didn’t have enough confidence in its legality to rely on it for their budget. Illinois should be focused on reducing costs and creating a more competitive environment for families and employers rather than continually searching for new sources of tax revenue.
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