At the initial meeting of the Arizona State Senate for the year 2023, Senators Sonny Borrelli, Wendy Rogers, and Justine Wadsack brought forward a motion. In addition, the Senators discussed the potential of voting among Arizona citizens to determine whether to draft legislation that would include digital currencies as a property exempt from taxes.
Tax Exemption In Arizona
The proposed bill (SCR 1007) characterizes crypto as a digital representation of an asset that serves as a form of value, a means of exchange, and a unit of measurement apart from the representation of the USD or foreign currency.
Per the Arizona Constitution, all municipal, state, county, and federal property, public debts, and household items are tax-exempt. In addition, a specific and limited number of stocks of finished and raw, unassembled parts, works in progress, or completed products are also exempt from taxes.
Meanwhile, at the national level, the sale and acquisition of digital currencies in America are generally subject to capital tax gains. It is worth noting that on January 19th and 23rd, the SCR 1007 bill went through two readings on the agenda of the Arizona state Senate.
Moreover, there have been prior efforts in 2018 to endorse crypto usage for tax payments. Unfortunately, the governor of Arizona at the time, Doug Ducey, rejected the bill. However, in the past few months, several countries, such as the United Kingdom and the United States, have issued guidelines for crypto taxation.
Presently, crypto investors in the United Kingdom have until the end of January to file their crypto taxes.
Crypto Taxation In The United States
In 2023, the taxation of cryptocurrency remains a complex and evolving topic. At the federal level in the United States, the IRS considers cryptocurrency property for tax purposes.
Thus, sales and purchases of cryptocurrencies are typically subject to federal capital gains taxes. However, the treatment of cryptocurrency for tax purposes varies among states.
Meanwhile, Arizona is not alone in its efforts to potentially exempt cryptocurrency assets from property taxes. Other states within the United States are also developing various policies concerning cryptocurrency and taxation.
On July 16th, 2021, Scott Conger, the Mayor of Jackson, Tennessee, stated that the city is considering accepting tax payments in BTC. On the other hand, Jared Polis, Colorado’s governor, endorsed the usage of digital assets to pay income tax, withholding tax, sales tax, severance tax, excise fuel tax, and use tax.
Last March, Florida’s Governor, Ron DeSantis, in an announcement while endorsing the financial literacy curriculum legislation, said the system is ready to accept digital currencies for tax payments. Other US states, such as New Hampshire, Alaska, Texas, Washington, Nevada, Wyoming, and South Dakota, offer crypto investors a capital tax gain of 0%.
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