SPRINGFIELD, Ill. — NetChoice today filed two complaints against the State of Illinois to block enforcement of two newly enacted tax provisions, the Social Media User Tax and the Digital Ad Tax. Both measures unconstitutionally and discriminatorily single out digital services, in direct violation of the First Amendment and the federal Permanent Internet Tax Freedom Act (PITFA).
“Illinois’ new internet taxes firmly establish the state’s opposition to online speech, innovation, and its own business community,” said Paul Taske, Director of the NetChoice Litigation Center.
“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.”
A Tax on Audience Size Is a Tax on Speech
The Social Media User Tax imposes fees on platforms based on the number of Illinois users they reach, exempting services with fewer than 100,000 users while penalizing those with larger audiences. The U.S. Supreme Court has made clear that the government may not tax one category of speaker more heavily than another. Illinois’ Social Media User Tax follows the same blueprint NetChoice is already challenging in NetChoice v. Chicago, a pending suit over the city’s own per-user Social Media Amusement Tax.
Both Taxes Run Afoul of Federal Law
Both the Social Media User Tax and the Digital Ad Tax are in direct violation of PITFA, the federal law by which Congress expressly barred states from imposing “discriminatory taxes on electronic commerce.” Both taxes apply exclusively to online services while leaving comparable offline counterparts — social clubs, community centers, professional associations, and traditional advertising — untouched. This is precisely the sort of digital-only taxation Congress intended to preempt, and similar laws, including Maryland’s Digital Advertising Tax, have already been struck down by courts on comparable grounds.
Real Costs for Illinoisans and Their Small Businesses
Because the Social Media User Tax is a flat fee untethered to a company’s actual revenue or profit in Illinois, some services may choose to limit or exit the Illinois market altogether — cutting residents off from vital communication, educational, and community-organizing tools they rely on daily. Local businesses, including restaurants, auto dealers, and community organizations, will also face higher costs to reach customers through online ads under the new Digital Ad Tax. This tax raises the cost of doing business, costs that are likely to be passed on to Illinois consumers, and harms entrepreneurs’ ability to grow.
Read the complaint against the Social Media User Tax HERE. Read the complaint against the Digital Ad Tax HERE.
Find case resources for NetChoice v. Illinois HERE.
Please contact press@netchoice.org with inquiries.