Illinois’s two new taxes aimed at the digital economy do not take effect until January 1, 2027. They are already in court.
On September 11, 2026, NetChoice filed two separate complaints in the Circuit Court of Cook County, Chancery Division, challenging provisions enacted through Public Act 104-468. One case challenges Illinois’s new Targeted Advertising Services Tax. The other challenges what the statute calls a “social media platform fee,” which NetChoice argues is a tax for purposes of federal law.
Both lawsuits seek declaratory and injunctive relief before the new provisions become enforceable. At this point, these cases are initial cases filed in the Circuit Court of Cook County.
The Targeted Advertising Services Tax
The Targeted Advertising Services Tax Act, 35 ILCS 190/1-1 et seq., imposes a tax beginning January 1, 2027, equal to 10% of gross receipts from targeted advertising services provided in Illinois. The statute generally reaches providers with more than $1 million in Illinois targeted-advertising receipts during the applicable prior 12-month period. Illinois sources the service based on the location of the person to whom the advertisement is delivered.
The Act defines targeted advertising broadly to include programmatic advertising using personal information about the people receiving the advertisements. It also contains a news-media exclusion and requires covered providers to register with the Illinois Department of Revenue. Notably, the enforcement provisions provide that certain violations can constitute a Class 3 felony.
NetChoice filed NetChoice v. State of Illinois, et al., No. 2026CH08791, against the State, the Illinois Department of Revenue, and Director David Harris. The case was assigned to Calendar 2 before Judge Joel Chupack, with an initial system-generated hearing date of November 17, 2026.
The complaint raises five claims: federal preemption under the Internet Tax Freedom Act, lack of fair apportionment under the Commerce Clause, discrimination against interstate commerce, extraterritorial taxation under the Due Process Clause, and violation of the First Amendment.
The Internet Tax Freedom Act, or ITFA, may be particularly important. ITFA prohibits state and local governments from imposing discriminatory taxes on electronic commerce. NetChoice contends that, despite language saying targeted advertisements may be conveyed through a digital interface “or any other method of delivery,” the tax in operation applies to Internet-based targeted advertising while comparable offline advertising remains untaxed.
There is an interesting statutory issue embedded in that argument. The Illinois law itself expressly includes, among “other comparable advertising services,” certain advertising conveyed through cable television, satellite television, and digital fiber-optic distribution systems. Whether the tax is properly characterized as an Internet-only tax, and what constitutes a sufficiently “similar” offline transaction under ITFA, could therefore become important as the litigation develops.
The Social Media Platform Fee
The second case challenges new Section 15.98 of the Illinois Business Corporation Act, 805 ILCS 5/15.98.
Beginning January 1, 2027, social media platforms with more than 100,000 Illinois users from whom they collect data will owe a monthly charge. The amount increases with the number of Illinois users, beginning at $0.10 per user in the first tier and reaching $0.50 per user above one million users, along with fixed amounts at the higher tiers. The statute also imposes a 100% addition to an unpaid fee and restricts platforms from changing prices based on a user’s geographic location for the purpose of recovering the fee.
NetChoice filed NetChoice v. State of Illinois, et al., No. 2026CH08789, against the State, the Office of the Illinois Secretary of State, and Secretary Alexi Giannoulias. That case was assigned to Calendar 7 before Judge Eve Reilly, with a system-generated November 10, 2026 hearing date.
Although Illinois calls the assessment a “fee,” NetChoice argues that ITFA treats it as a tax because the charge raises governmental revenue rather than paying for a particular privilege, service, or benefit. The statute directs the first $170,000 collected each month to the Secretary of State Special Services Fund and the remainder to the Common School Fund.
The social media complaint raises the same basic constitutional theories as the advertising case, but it adds another ITFA argument: multiple taxation.
Chicago already imposes its own Social Media Amusement Tax. NetChoice alleges that the state and Chicago taxes can apply to the same social media activity and the same Chicago users without any credit for the other tax. The complaint gives the example of one million Chicago users potentially producing both a $500,000 state liability and a $500,000 Chicago liability on essentially the same activity.
An Illinois precedent sits in the background
Both complaints rely heavily on Performance Marketing Association, Inc. v. Hamer, 2013 IL 114496.
There, the Illinois Supreme Court held that Illinois could not impose a use-tax collection obligation based specifically on Internet performance marketing when comparable national or international offline marketing did not trigger the same obligation. The court concluded that the distinction constituted a discriminatory tax on electronic commerce under ITFA and held the challenged provisions preempted. Id. ¶ 23.
The complaints also point to an August 2026 Maryland Tax Court ruling involving Maryland’s digital advertising tax as a recent analogue. That decision is not binding on an Illinois court, but NetChoice cites it in support of both its ITFA and First Amendment theories.
What comes next?
These cases are still at the pleading stage. No court has yet determined that either Illinois measure violates federal law or the Constitution.
But the timing matters. Both provisions are scheduled to become operative January 1, 2027, and the complaints seek injunctions preventing collection before businesses must begin complying. The litigation therefore places several recurring state-and-local-tax questions squarely before the Cook County Chancery Division: when does a digital tax discriminate against electronic commerce, how must digital activity be sourced and apportioned, and how far may a state distinguish among different forms of media and advertising when imposing a tax?
For Illinois tax practitioners, the cases are worth watching well beyond the technology sector. Wayfair did not eliminate the federal limitations on state taxation. Nexus is only one part of the analysis. ITFA, fair apportionment, nondiscrimination, due process, and, in these cases, the First Amendment remain separate constraints on how states tax an increasingly digital economy.
And further one additional interesting element is the procedural steps that will be taken within the walls of Daley Center. The cases may be consolidated and the State may ask the Court to transfer the matters to the Tax & Misc. Remedies Section of the Law Division, rather than hearing the cases in Chancery.
Leahy Tax will continue to follow both cases as they proceed in Cook County.
The two cases are:
Social Media Platform Fee:NetChoice v. State of Illinois, et al., No. 2026CH08789.
Targeted Advertising Services Tax:NetChoice v. State of Illinois, et al., No. 2026CH08791.
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