Paul Taske, Director of the NetChoice Litigation Center, said of two new Illinois internet taxes his group sued over on September 11: “Illinois’ new internet taxes firmly establish the state’s opposition to online speech, innovation, and its own business community.”
And, in a separate part of the same press release, this: “The Supreme Court has made abundantly clear that legislators cannot target a subset of media for disfavored taxation, but that’s precisely what these taxes do. Not only are they flatly unconstitutional under the First Amendment, but they blatantly disregard Congress’s clear judgment under PITFA that digital services cannot be subject to discriminatory taxation.”
Taske was referring to two taxes contained in Public Act 104-0468, the revenue package for the FY2027 budget, which was signed into law by Governor JB Pritzker. One is a monthly charge on social media platforms based on the number of Illinois users they collect data from, and the other takes 10% of gross receipts from targeted advertising services in Illinois. Both are set to kick in on January 1, 2027.
Governor Pritzker said the fee “requires companies to pay for the mental health and educational degradation they’ve caused.” He also said he is “much more confident about the social media platform fee” surviving court than about the budget’s other contested levies.
Both of these taxes are challenged in two separate complaints for declaratory judgment and an injunction, filed by NetChoice in the Circuit Court of Cook County, Chancery Division. The filing concerning the social media tax is before Judge Eve M. Reilly, and is set for a hearing on November 10, 2026. The case is yet to be decided, and the court has not ruled on the merits of the complaint.
The other complaint targets the tax on targeted advertising, and its number is not known at this time.
The “social media” tax is expected to bring in roughly $200 million to the state’s coffers.
The social media charge is not a flat rate, but rather an escalating one, that goes up as the number of Illinois users increases. Those with less than 100,000 users are exempt, as are not-for-profits.
The tax is bracketed like income tax, and the amounts will rise with the Consumer Price Index from January 2028.
But there’s another layer of regulation: 805 ILCS 5/15.98(f) states that a platform “shall not vary the cost of access, features, services, or in-app purchases for any user based on the geographic origin of the user’s login, activity, or account registration for the purposes of recouping the fee under this Section.”
The federal Internet Tax Freedom Act (ITFA) is cited in the filing as prohibiting “multiple or discriminatory taxes on electronic commerce.”
The complaint states that the tax applies exclusively to online services, while leaving untaxed “comparable offline counterparts — social clubs, community centers, professional associations, and traditional advertising.” And as for the charge being “multiple,” Chicago already has its own tax, the Social Media Amusement Tax, on the same services, which NetChoice sued over in March. Illinois calls its charge a “fee,” but the complaint says that the federal statute defines “tax” broadly enough to catch it “regardless of their labeling.”
The complaint argues that the Supreme Court has established that “a discriminatory tax on the press burdens rights protected by the First Amendment” and that such taxation carries “a particular danger of abuse.”
And although the Arkansas Writers’ Project, Grosjean, and Minneapolis Star cases, which are cited, predate the internet and concern newspapers, the filing argues that the rule was never limited to newspapers.
The lawsuit also quotes the Supreme Court as saying that liberty of the press “comprehends every sort of publication which affords a vehicle of information and opinion” – and argues that this includes social media websites.
Defendants in the two cases are the State of Illinois, the Office of the Secretary of State, and Secretary of State Alexi Giannoulias in his official capacity.
The case cites the August 14, 2026, decision of the Maryland Tax Court that found the state’s Digital Advertising Gross Revenues Tax to be in violation of the First Amendment as it “discriminates among online speakers and publishers.” The ruling is not binding, but the complaint calls it persuasive.
