Arizona Crypto Tax Exemption: Legislative Developments
In recent legislative activity, Arizona lawmakers are advancing efforts to promote an Arizona crypto tax exemption by moving bills through the Senate Finance Committee. Central to these efforts are SB 1044, intended to exempt virtual currency from property taxation, and SCR 1003, a proposed constitutional amendment aimed at excluding digital currency from taxable property. The passage of SB 1044 by a narrow 4-3 vote signals ongoing legislative interest in adjusting the state’s taxation framework. Notably, the potential implementation of SB 1044 relies on voter approval of SCR 1003, which could appear on the November 2026 ballot. If approved, Arizona would align its laws with this amendment, further shaping its tax landscape.
Arizona’s tax system, characterized by a flat 2.5% personal income tax and relatively low property taxes, has previously seen regulation adjustments concerning cryptocurrency. For example, in 2022, Arizona recognized crypto airdrops as gifts, exempting them from state income tax. These developments mark continued legislative endeavors in adapting to the evolving nature of digital assets within the state’s fiscal policies.
SB 1044 proposes exempting virtual currency from property taxation and passed the Arizona Senate Finance Committee by a 4-3 vote. The bill would change state property tax rules to exclude specified digital assets from ad valorem taxation and was advanced in committee debate. The measure defines “virtual currency” as “a digital representation of value that functions as a medium of exchange, a unit of account and a store of value other than a representation of the United States dollar or a foreign currency.” The bill is presented alongside other legislative measures addressing taxation of digital assets.
SCR 1003 would seek a constitutional amendment to exclude digital currency from taxable property and was passed by the committee. If SCR 1003 becomes law, the proposed amendment would appear on the November 2026 general election ballot. SB 1044 is drafted to align state statute with that proposed constitutional change and would take effect only if the amendment is approved by voters. Both measures’ implementation is therefore conditional on the constitutional amendment process.
SB 1045 would prohibit counties, cities, and towns from imposing taxes or fees on blockchain nodes without voter approval. The proposal addresses local government taxing authority over blockchain infrastructure. SB 1045 was considered alongside other legislative measures focused on taxation of digital assets, including SB 1044 and SCR 1003. SB 1044 and SCR 1003 were advanced in the Senate Finance Committee and concern the property taxation of virtual and digital currency. These proposals are being developed within Arizona’s tax framework, which includes a flat 2.5% personal income tax, transaction privilege taxes, and relatively low property tax rates.
In 2022, Arizona exempted crypto airdrops from state income tax by treating them as gifts. State rules permit the deduction of gas fees when calculating gains or losses on cryptocurrency transactions. Arizona allows cryptocurrency payments through approved service providers. Governor Katie Hobbs vetoed four Bitcoin- and crypto-related bills during the 2025 legislative session. The listed bills and provisions address taxation, exemptions, deduction rules, and payment methods for digital assets under state law.
Arizona tax context and national environment
Arizona’s tax landscape includes a flat 2.5% personal income tax, transaction privilege taxes, and relatively low property tax rates. These components form the broader state fiscal framework within which legislators are advancing measures related to digital assets. The state’s mix of income, transaction and property taxation provides the statutory context for proposals addressing cryptocurrency taxation. Legislative proposals under consideration are being developed against this established tax structure.
At the national level, debate over cryptocurrency taxation continues, and several states do not impose personal income tax on crypto gains. Specific examples mentioned in that context include Missouri and Ohio. This national comparison is cited in discussions of state-level approaches to digital-asset taxation and frames but does not determine Arizona’s legislative process.
Arizona lawmakers have advanced legislative measures aimed at creating an Arizona crypto tax exemption, including movement of SB 1044 through the Senate Finance Committee and committee passage of SCR 1003.
SB 1044 proposes exempting virtual currency from property taxation and was approved by the Senate Finance Committee by a 4-3 vote, while SCR 1003 would place a proposed constitutional amendment before voters to exclude digital currency from taxable property.
If the constitutional amendment established by SCR 1003 becomes law, it would appear on the November 2026 general election ballot, and SB 1044 is written to align state statute with that amendment and would take effect only upon voter approval.
These actions are part of ongoing legislative activity in Arizona concerning taxation of cryptocurrency and related statutory provisions.
