June 8, 2026 Aidan Boleyn-Fitzgerald and Shaurya Vohra
We previously highlighted appropriations in the Illinois budget that will benefit the small business community. This blog highlights four Illinois tax changes that will raise revenue and impact our economy.
A New Tax on Targeted Advertising Services
Starting next year, Illinois will impose a new 10% tax on gross receipts from targeted advertising services. The tax will apply to providers whose annual gross receipts from targeted advertising services in the state totaled at least $1 million in the prior year.
Businesses that will likely be subject to this tax include social media platforms, search engines, and streaming platforms that sell targeted ads, such as Meta, Google, and Netflix, as well as retail media networks that use purchase data, such as Amazon Ads.
Businesses that purchase targeted advertising would not be immediately responsible for this tax, but may pay more for advertising services if providers pass on increased costs. Ads sold by news media entities and services provided to the federal government are expressly exempt from this tax.
A New Tax on Digital Assets
Starting next year, Illinois will impose a new 0.2% excise tax on digital assets used in business activities in Illinois, such as storing or transferring cryptocurrency. The tax will apply to all brokers with a physical presence in Illinois and to out-of-state brokers whose gross receipts from Illinois customers totaled at least $100,000 in the prior year.
A New Fee for Social Media Platforms
Illinois will impose a new monthly fee on social media platforms based on the number of Illinois users they collect data from. The fee will have three tiers:
While this fee targets large platforms and will not directly apply to small businesses, it may indirectly affect them if platforms pass increased costs on to businesses purchasing advertising.
Removal of the Qualified Small Business Stock Tax Exemption
Investors who sell qualified small business stock (QSBS) can exclude certain gains from federal taxable income. QSBS is stock issued by certain domestic C corporations that meet federal eligibility requirements, including a $50 million gross asset limit at the time stock is issued. Starting next year, Illinois will tax those gains even if they remain exempt from federal income tax. The change will apply to individuals, trusts, estates, and partnerships. However, because this change affects only C Corporations, it will not apply to most small businesses.
Our next blog will highlight an expanded tax deduction and three extended tax credits that will impact some small businesses.
Shaurya Vohra is a Policy Research Intern at the SBAC and a rising sophomore at the University of Chicago studying Economics and Data Science.