Arizona lawmakers seek to make crypto tax-exempt property

Arizona State Senate lawmakers are considering a bill to have voters decide whether virtual currency should be exempt from property taxes.

In legislation introduced during the first session of the Arizona State Senate in 2023, Senators Wendy Rogers, Sonny Borrelli, and Justine Wadsack proposed that Arizona residents decide to amend the state constitution in this regarding property taxes. If the measure passes the legislature, voters could choose in November 2024 to make virtual currency — especially tokens that are not “a representation of the US dollar or foreign currency” — tax-exempt.

Under Arizona’s constitution, all federal, state, county, and municipal property is tax-exempt, as are public debts, many household assets, and certain “stocks of raw or finished materials, parts not assemblies, work in progress or finished products”. Data from the Arizona Secretary of State noted that there were more than 4 million registered voters in the November 2022 general election, with the state leaning slightly Republican.

The bill, SCR 1007, received two readings on the state Senate schedule, Jan. 19 and 23. Legislators in previous sessions have attempted to advance crypto and tax legislation, such as a 2018 bill. allowing residents to submit tax payments in crypto, before then-Governor Doug Ducey vetoed the bill. Rogers also introduced a bill similar to SCR 1007 in the 2022 Second Senate Session.

However, the proposed legislation would face a different political climate than in 2018 or even 2022, with Rogers, Borrelli and Wadsack — all Republicans — having denied or questioned the fair and legitimate election of some federal and state lawmakers. Democrat Katie Hobbs narrowly defeated Republican Kari Lake to become governor of Arizona in the 2022 midterm elections.

Related: IRS Summons Users Who Fail to Report and Pay Crypto Transaction Tax

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