From 1 January 2027, Illinois will impose a 10% tax on the gross receipts of targeted advertising providers earning over USD 1 million in the state, a tiered monthly fee on social media platforms, and a 0.2% privilege tax on digital asset transactions, under Amendment No. 1 to SB 3019.
Illinois has enacted new taxes on digital activities under SB 3019, effective from 1 January 2027. The measures include a 10% tax on gross receipts from targeted advertising services provided in Illinois, applicable to providers earning more than USD 1 million in Illinois targeted advertising revenue over the prior 12 months. The law also introduces a social media platform fee and a privilege tax on digital asset sales.
The following details the key provisions of Amendment No. 1 to Senate Bill 3019, which serves as the fiscal year 2027 revenue package for Illinois, as filed by Representative Curtis J. Tarver, II.
Digital advertising services tax
Beginning 1 January 2027, Illinois will implement a 10% tax on the annual gross receipts derived from targeted advertising services provided within the state. This tax targets large-scale providers whose cumulative gross receipts from such services in Illinois exceeded USD 1 million during the preceding 12-month period.
The law specifically defines “targeted advertising services” as any programmatic representation (written, oral, or graphic) delivered via a digital interface—such as banner ads, search engine ads, or interstitial ads—that utilises the personal information of the recipient to serve the advertisement.
To determine if a user-consumer is located in Illinois, the state will look at the “totality of the user-consumer contact information” available to the provider, which includes IP addresses, geolocation data, device information, and billing or mailing addresses. Providers must register with the Department of Revenue and remit payments by the 20th day of each month for the previous month’s activity.
Social media platform fee
Effective 1 January 2027, the state will impose a monthly fee on social media platforms based on their Illinois user base from whom they collect data.
Tiered fee structure:
- 100,000 – 500,000 users: USD 0.10 per user per month.
- 500,000 – 1,000,000 users: A base fee of USD 40,000 plus USD 0.25 for each user exceeding 500,000.
- Over 1,000,000 users: A base fee of USD 165,000 plus USD 0.50 for each user exceeding 1 million.
Platforms must report their average monthly Illinois user count to the Secretary of State within 14 days of the start of each month. Failure to pay the fee results in a punitive additional fee equal to 100% of the unpaid amount.
Privilege tax on digital assets
Illinois is introducing a privilege tax on digital asset business activity at a rate of 0.2% of the value of the digital asset involved in the transaction.
This applies to digital asset brokers with a physical presence or economic nexus in Illinois, defined as having at least USD 100,000 in gross receipts from digital asset activity in the state.
The law defines a “digital asset” as a digital representation of value used as a medium of exchange, unit of account, or store of value, specifically excluding fiat currency.
Fiscal relief measures
In addition to the new taxes, the bill includes specific relief measures for Illinois residents:
- Sales tax holiday: A 10-day period from 7 August to 16 August 2026, will see the state sales tax rate on eligible clothing and school supplies reduced to 1.25%.
- Gas tax delay: The scheduled increase in the motor fuel tax, originally set for 1 July 2026, is delayed by six months until 1 January 2027.
Administrative oversight and compliance
Illinois has assigned compliance responsibilities for the new digital taxes to different agencies. The Department of Revenue will administer the digital advertising services tax, requiring providers to register and make monthly 10% tax payments.
The Secretary of State will oversee the social media platform fee, requiring platforms to file monthly user data reports. Social media reports are due within 14 days of each month’s start, while digital advertising tax payments are due by the 20th day of each month.
