A crypto tax proposal, initially excluded from President Donald Trump’s budget bill, is now moving forward as standalone legislation in the U.S. Senate. The bill, introduced by Senator Cynthia Lummis, seeks to ease tax burdens on crypto users by addressing key industry concerns.
The legislation proposes a $300 threshold for cryptocurrency transactions to be considered in tax calculations, exempting small, routine trades from capital gains taxes up to $5,000 annually. It also aims to eliminate double taxation on rewards from staking, mining, airdrops, and forks by taxing only gains realized at sale rather than at receipt. Additional provisions cover lending, wash sales, charitable donations, and allow traders to mark assets to market value for accounting purposes.
Senator Lummis stated, “We cannot allow our archaic tax policies to stifle American innovation, and my legislation ensures Americans can participate in the digital economy without inadvertent tax violations.”
The timing faces challenges due to a crowded Senate agenda and competing crypto priorities, including bills regulating crypto markets and stablecoin issuers. Lummis, a leading figure in crypto legislation, is also promoting a federal bitcoin reserve bill. The current industry focus is shifting towards legislation that will establish regulatory frameworks for digital asset markets, with a target to deliver the market structure bill by the end of September as agreed upon with Senate Banking Committee Chairman Tim Scott.