Arizona Eyes Major Crypto Tax Overhaul

• Arizona bills could exempt virtual currencies from property taxes starting 2026, pending voter approval.

• Local governments may no longer tax or fine blockchain node operators under new proposed rules.

• The state aims to compete nationally for crypto businesses, following moves in Texas, New Hampshire, and Ohio.

Amid increased calls for regulation of digital assets, Arizona lawmakers are fast tracking their approach towards reshaping the taxation and regulation of digital assets. A series of bills have been proposed by state Sen. Wendy Rogers.

The proposals include the exemption of virtual currencies from property taxes, the immunity of blockchain node runners from local taxes, and the amendment of the State Constitution to clarify the taxation status of virtual assets. Rogers’ act arises in the light of the increasing nationwide discussion about the nature of virtual asset taxation and the competitiveness among states to lure crypto companies.

The legislative package comprises three major bills. SB 1044 aims for the total exemption of virtual currency from taxes, while SCR 1003 proposes a constitutional amendment for the exemption of digital assets from property taxes. Both will have to undergo a referendum in the 2026 general election.

Additionally, SB 1045 focuses on blockchain node operators, barring counties, cities, and towns from imposing fees or fines on those running blockchain nodes. “The bill would prevent local governments from singling out node operators through taxes or penalties,” Rogers said, highlighting the growing importance of decentralized infrastructure.

Arizona’s Crypto Positioning

Arizona already ranks among the few U.S. states with crypto-specific legislation. The state allows the government to take custody of digital assets deemed abandoned after three years, a framework initially developed during attempts to establish a state-level bitcoin reserve.

Rogers previously co-sponsored a bitcoin reserve bill, which Governor Katie Hobbs vetoed in May. Following the veto, Rogers vowed to refile similar legislation, emphasizing Arizona’s ambition to become a hub for digital asset innovation.

Besides Arizona, other states are experimenting with digital asset policies. New Hampshire and Texas enacted laws around state-held crypto reserves, while Ohio proposed exempting cryptocurrency transactions under $200 from capital gains taxes.

In New York, a draft 0.2% excise tax on digital asset transactions remains under committee review. Federally, Sen. Cynthia Lummis introduced draft legislation proposing a de minimis exemption for transactions under $300, though she will retire from the Senate in January 2027.