Arizona lawmakers seek to make cryptocurrencies a tax-free property

Arizona State Senate lawmakers are considering a bill aimed at letting voters decide whether virtual currency is exempt from property taxes.

In legislation introduced in the first session of the Arizona State Senate in 2023, Senators Wendy Rogers, Sonny Borrelli and Justine Wadsack proposed that Arizona residents agree to amend the state constitution regarding property taxes. If the measure passes the Legislature, voters could choose whether virtual currency — specifically not “a representation of the United States dollar” — be tax-free in the state in November 2024.

Under the Arizona constitution, all federal, state, county, and municipal property is tax-exempt, as are public debts, many household assets, and certain “inventories of raw or finished materials, unassembled parts, work in progress or finished products”. Data from the Arizona Secretary of State suggested there were more than 4 million registered voters in the November 2022 general election, with the state running mildly Republican.

The bill, SCR 1007, went through two readings as part of the state senate calendar on Jan. 19 and Jan. 23. to send tax payments in cryptocurrency, before Governor Doug Ducey vetoed the bill. Rogers also introduced a bill similar to SCR 1007 in the 2022 second session of the Senate.

However, the proposed legislation would address a different political climate than it did in 2018 or even 2022, with Rogers, Borrelli and Wadsack – all Republicans – denying or questioning the just and legitimate election of some state and federal lawmakers. Democrat Katie Hobbs narrowly defeated Republican Kari Lake to become the governor of Arizona in the 2022 midterm elections.

Related: IRS to Summon Users Who Do Not Report and Pay Taxes on Crypto Transactions

At the federal level, sales or purchases of cryptocurrency are generally subject to US capital gains tax. Legislators in several US states have proposed various policies related to cryptocurrencies and taxes, including Colorado Governor Jared Polis allowing residents to pay taxes in cryptocurrencies and Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming offering 0%. tax capital gains to prospective investors.