US Senators Patrick Toomey and Kyrsten Sinema have introduced a bill to the US Senate that would see crypto transactions under $50 in value exempt from capital gains tax with potential provisions for inflation.
The Virtual Currency Tax Fairness Act, proposed to the US Senate on July 27, seeks to provide cryptocurrency users with tax exemptions for cryptocurrency transactions under $50 in value or trades that generate a capital gain of under $50.
The proposed bill aims to render smaller cryptocurrency transactions and investments from taxation and follows the structure of previous proposals introduced in the House of Representatives that would see cryptocurrency transactions under $200 exempt from tax.
US Senators Push for Streamlined Tax Structure
The concept of establishing a tax-free threshold for cryptocurrency transactions or investments has appeared elsewhere within US regulatory frameworks before, with similar proposals submitted to the US Senate by Senators Cynthia Lummis and Kirsten Gillibrand in the first half of 2022.
Statements released by Senator Toomey highlight the growing ubiquity of cryptocurrency as an everyday payment method in the United States:
“While digital currencies have the potential to become an ordinary part of Americans. The Virtual Currency Tax Fairness Act will allow Americans to use cryptocurrencies more easily as an everyday method of payment by exempting from taxes small personal transactions like buying a cup of coffee.”
Crypto Tax Bill Will Minimize Tax Obligations for Everyday Crypto Use
Further commentary by Senator Sinema noted the improvements to cryptocurrency accessibility and transparency in cryptocurrency tax proposed within the bill, assisting cryptocurrency users that may be unaware of the tax implications of smaller transactions and investments.
“We’re protecting Arizonans from surprise taxes on everyday digital payments, so as use of digital currencies increases, Arizonans can keep more of their own money in their pockets and continue to thrive,”
Current US cryptocurrency taxation law classifies all cryptocurrency transactions as taxable events. A cryptocurrency user that purchases an item such as a coffee at a retailer that accepts digital assets, for example, would owe capital gains tax on the transaction should the price of the asset at the time of retail use exceed the value at the original time of purchase.