Finance

Toomey, Sinema eye exempting small crypto purchases from capital gains tax

FILE - An advertisement for Bitcoin cryptocurrency is displayed on a street in Hong Kong on Feb. 17, 2022.
(AP Photo/Kin Cheung, File)
FILE – An advertisement for Bitcoin cryptocurrency is displayed on a street in Hong Kong on Feb. 17, 2022. Cryptocurrencies have experienced their worst plunge since 2018. As prices drop, companies collapse and skepticism soars, fortunes and jobs are disappearing overnight, and investors’ feverish speculation has been replaced by icy calculation, in what industry leaders are referring to as a “crypto winter.” (AP Photo/Kin Cheung, File)

Sens. Pat Toomey (R-Pa.) and Kyrsten Sinema (D-Ariz.) introduced legislation on Tuesday that would exempt small crypto purchases from a capital gains tax.

The pair of lawmakers introduced a bill that would offer an exemption for personal transactions using cryptocurrency of less than $50 or personal transactions that have gains of under $50 from being subject to a capital gains tax.

The legislation would encourage people to use cryptocurrency for small trades and transactions without worrying about being subject to typical taxation requirements.

Transactions that use cryptocurrency can be taxed, according to the IRS’s website, which notes that “taxpayers transacting in virtual currency may have to report those transactions on their tax returns.”

If the digital assets used in a transaction saw an increase in valuation, that person would currently be subject to a capital gains tax. 

“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,” Toomey said in a statement. 

“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,” Sinema said in a statement. 

The legislation comes amid growing interest in the cryptocurrency market, though it has been known to be very volatile among investors. 

Tags Kyrsten Sinema Pat Toomey
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