Illinois sued over digital tax, fee

NetChoice Litigation Center Director Paul Taske said the Supreme Court has been clear that taxes applied to the press must be applied generally.

“Both of these taxes, the social media tax and the digital ads tax, violate the First Amendment because they single out specific segments of the press, of publishers, of speakers for disfavored tax treatment,” Taske told The Center Square.

Taske said Gov. J.B. Pritzker cannot get around the First Amendment by calling the social media tax a fee.

“It is in fact a tax, is structured as a tax, was discussed as a tax by the legislature when they were considering the tax,” Taske said.

Jared Walczak, senior fellow at the Tax Foundation, said the undefined nature of social media, users and what it means to be in the state all create due process and commerce clause concerns.

“This is discriminatory against interstate commerce. It is overtaxing out-of-state activity and targeting it in a way that states aren't allowed to do,” Walczak told The Center Square.

On Aug. 5, State Rep. Travis Weaver, R-Peoria, filed House Bill 5806 to repeal the social media platform fee and HB 5807 to repeal the digital “targeted advertising services” tax.

The digital ad tax is a 10% tax on gross receipts.

“It's a pretty significant tax, and this is why I think it was really important to note that Illinois isn't just passing these taxes in a way that is anti-speech, anti-innovation and anti-Internet, but it's also anti-its own business community,” Taske said.

The case against Illinois’ social media platform fee follows a complaint NetChoice filed in March against Chicago’s social media amusement tax that took effect on January 1, 2026.

“They're very similar taxes, and that actually raises a separate taxing issue, the issue of double taxation under the Internet Tax Freedom Act and other places,” Taske said.

In July, the Digital Chamber filed a lawsuit against Illinois’ 0.2% digital assets tax. State Rep. John Cabello, R-Machesney Park, filed House Bill 5798 to repeal the tax less than a week after Pritzker signed it into law in June.

Last month, Maryland’s tax court ruled that the state’s digital advertising gross revenues tax violates the Tax Freedom Act, the Commerce Clause and the Due Process Clause.