Tax Insight

Illinois legislature passes budget bill with new digital taxes and social media platform fee, among other items

Insight
5 minute read
June 09, 2026

What happened?

Budget-related tax legislation passed by the Illinois General Assembly on June 1, 2026 includes the following significant changes, effective January 1, 2027:

imposes a new tax on providers of targeted advertising services at a rate of 10% of the gross receipts derived from these services provided in Illinois, whose receipts exceed $1 million during the preceding 12-month period, determined quarterly
establishes a monthly social media platform fee for platforms with more than 100,000 Illinois users from whom the platform collects data, and requires a report of average monthly Illinois users to the Secretary of State within 14 days after the start of each month
applies a new privilege tax at the rate of 0.2% of the value of digital asset business activity received by Illinois customers collected by digital asset brokers who maintain a place of business in Illinois, including remote brokers meeting a $100,000 Illinois gross receipts threshold.

The legislation is pending review by Governor JB Pritzker (D). [SB 3019, passed legislature, 6/1/2026]

Beginning July 1, 2026, the bill would:

impose marketplace facilitator collection obligations on hotel booking platforms
impose a new 15% privilege tax on fantasy contest receipts
consolidate the fee imposed on new or used tires sold and delivered in Illinois
suspend the scheduled July 1, 2026 Consumer Price Index (CPI) inflation adjustment to the motor fuel excise tax rate for the period beginning July 1, 2026 and ending January 1, 2027.

In addition, SB 3019 creates a sales tax holiday for 10 days in August 2026.

Notably, the budget bill does not eliminate the Illinois Independent Tax Tribunal. Additionally, while the budget bill does not include a statutory pause on the availability of data center incentives offered to qualified data centers, Governor Pritzker has directed the Illinois Department of Commerce and Economic Opportunity (DCEO) to pause processing new Data Center Investment Program agreements beginning July 1, 2026. Existing agreements, including those entered into before July 1, 2026, will be honored. Both of these items were considered during the budget process.

Why is it relevant?

The budget bill would add new tax, fee, sourcing, registration, reporting, and systems requirements for companies that monetize user data, sell targeted digital advertising, operate social media platforms with Illinois users, or facilitate digital asset transactions. The budget bill proposes multiple new taxes that are similar to measures subject to ongoing litigation in other jurisdictions and could draw similar scrutiny from industry groups.

Actions to consider

Businesses should consider the following:

determine whether advertising operations meet the definition of "provider of targeted advertising services" and assess sourcing methodologies for locating user-consumers in Illinois
assess whether social media platform operations trigger the monthly user-based fee obligation and model expected monthly costs based on Illinois user counts
evaluate whether digital asset exchange, transfer, or storage activities constitute "digital asset business activity" subject to the 0.2% tax
monitor for rule-making and guidance implementing new taxes, fees, and amendments.